S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9125
 
                             I N  S E N A T E
 
                               May 10, 2022
                                ___________
 
 Introduced  by  Sen. ADDABBO -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN ACT to amend the administrative code of the  city  of  New  York,  in
   relation to the pensionable earnings of first grade police officers
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Section 14-111 of the administrative code of  the  city  of
 New  York  is  amended by adding two new subdivisions c and d to read as
 follows:
   C. WHEN A FIRST GRADE POLICE OFFICER SHALL HAVE SERVED IN THE RANK  OF
 POLICE  OFFICER  FOR A PERIOD OF TWENTY-FIVE YEARS, HE OR SHE SHALL HAVE
 THE SAME RIGHTS IN RESPECT TO THE POLICE PENSION FUND AS A POLICE  OFFI-
 CER  DESIGNATED  TO  ACT  AS DETECTIVE OF THE THIRD GRADE WHO SHALL HAVE
 SERVED AS SUCH FOR A PERIOD OF TIME AGGREGATING TWO YEARS AT THE HIGHEST
 SALARY RATE FOR A DETECTIVE OF THE THIRD GRADE.
   D. WHEN A FIRST GRADE POLICE OFFICER SHALL HAVE SERVED IN THE RANK  OF
 POLICE  OFFICER  FOR  A PERIOD OF THIRTY YEARS, HE OR SHE SHALL HAVE THE
 SAME RIGHTS IN RESPECT TO THE POLICE PENSION  FUND  AS  A  SERGEANT  WHO
 SHALL  HAVE SERVED AS SUCH FOR A PERIOD OF TIME AGGREGATING TWO YEARS AT
 THE HIGHEST SALARY RATE FOR A SERGEANT.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation would amend Section  14-111
 of  the Administrative Code of the City of New York (ACCNY) to allow for
 a Police Officer 1st Grade  of  the  New  York  City  Police  Department
 (NYPD), who has been a Police Officer for at least 25 years, to have the
 same rights in respect to the New York City Police Pension Fund (POLICE)
 as  a  Police  Officer  designated  to  act  as a Detective 3rd Grade by
 including, for pension purposes, the highest salary for  such  Detective
 aggregating for two years. This proposed legislation will also allow for
 a  Police  Officer  1st Grade of the NYPD, who has been a Police Officer
 for at least 30 years, to have the same rights in respect to POLICE as a
 Sergeant by including, for pension purposes, the highest salary for such
 Sergeants aggregating for two years.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD11440-02-2
 S. 9125                             2
 
   Effective Date: Upon enactment.
   IMPACT  ON  BENEFITS:  The  proposed legislation would permit a Police
 Officer 1st Grade, who have met certain service  requirements,  to  have
 their pension calculations based on a higher salary.
   A  Police  Officer  1st Grade with at least 25 years of service would,
 under this proposed legislation, if  enacted,  receive  an  increase  in
 their  annual pension benefit of approximately $5,300 per year. A Police
 Officer 1st Grade with at least 30 years of service  would,  under  this
 proposed  legislation,  if  enacted, receive an increase in their annual
 pension benefit of approximately $15,300 per year. This is  due  to  the
 assumed  higher  salary  and  overtime, and assumes a service retirement
 benefit with 25 years and 30 years of service, respectively.
   Based on this increase and an estimate of the number of POLICE members
 that are expected to be impacted by this change, it is estimated that if
 this proposed legislation is enacted,  the  annual  increase  in  POLICE
 pension benefits paid will be approximately $0.7 million per year.
   With  respect  to  an individual member, the impact on benefits due to
 this proposed legislation could vary greatly depending on  the  member's
 age, years of service, retirement cause, and Tier.
   FINANCIAL  IMPACT - PRESENT VALUES: Based on the actuarial assumptions
 and methods described herein, the enactment of this proposed legislation
 would increase the Present Value of Future Benefits (PVFB)  by  approxi-
 mately $8.5 million every year.
   FINANCIAL  IMPACT  -  ANNUAL EMPLOYER CONTRIBUTIONS: Enactment of this
 proposed legislation would increase employer contributions,  where  such
 amount  would  depend on the number of members affected as well as other
 characteristics including the age, years of service, and salary  history
 of the member.
   Since the number of Police Officers 1st Grade that will retire with 25
 or  more  years of service or Police Officers 1st Grade that will retire
 with 30 or more years of service cannot be known in advance with  credi-
 bility,  the  PVFB  will  be financed over the same time period used for
 actuarial losses in accordance with Section 13-638.2(k-2) of the  Admin-
 istrative  Code  of the City of New York. Using this approach, the addi-
 tional UAL would be amortized over a closed 15-year period (14  payments
 under the One-Year Lag Methodology (OYLM)) using level dollar payments.
   Based  on  the  Actuary's  actuarial assumptions and methods described
 herein, the enactment of  this  proposed  legislation  is  estimated  to
 increase  annual  employer  contributions  by approximately $1.0 million
 each year.
   The costs above represent the estimated impact  for  retirees  in  the
 first  year  the bill is enacted. Future years' costs in addition to the
 aforementioned cost would depend on the number of retirees  who  benefit
 under the legislation amongst other factors.
   CONTRIBUTION  TIMING:  For  the  purposes  of  this Fiscal Note, it is
 assumed that the changes in the PVFB and annual  employer  contributions
 would be reflected for the first time in the Final June 30, 2022 actuar-
 ial  valuation  of POLICE. In accordance with the OYLM used to determine
 employer contributions, the increase  in  employer  contributions  would
 first be reflected in Fiscal Year 2024.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2021 (Lag) actuarial valuation  of
 POLICE  to  determine the Preliminary Fiscal Year 2023 employer contrib-
 ution. To estimate the number of retirees who could potentially  benefit
 from this proposed legislation, data from the prior actuarial valuations
 S. 9125                             3
 
 for POLICE was used. Below is a summary of the data from the prior valu-
 ations:
     *  Police  Officer  1st Grade who retired with 25-29 years in rank -
     875 retired over the past 10 years.
     * Police Officer 1st Grade who retired with 30+ years in rank -  155
     retired over the past 10 years.
   Additional  salary data for Police Officers, Detectives, and Sergeants
 was provided by POLICE. Below is a summary of the data provided:
     *  Salary  (excluding  overtime  and   outstanding   wage   contract
     increases)
       o Police Officer 1st Grade - $101,225
       o Detective 3rd Grade - $111,594
       o Sergeant - $123,933
   ACTUARIAL  ASSUMPTIONS AND METHODS: The changes in the PVFB and annual
 employer contributions presented herein have been  calculated  based  on
 the  actuarial  assumptions  and methods in effect for the June 30, 2021
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2023 employer contributions of POLICE.
   Due to the outstanding wage contract for Police Officers,  Detectives,
 and Sergeants as of the date this Fiscal Note was released, the salaries
 provided  for this analysis have been adjusted to reflect the assumption
 of pattern bargaining based on the first year of  the  recently  settled
 Captains  Endowment  Association contract of 7.95% plus an assumed addi-
 tional 3.0% for Police Officers.
   RISK AND UNCERTAINTY: The costs presented in this Fiscal  Note  depend
 highly  on the realization of the actuarial assumptions used, as well as
 certain  demographic  characteristics  of  POLICE  and  other  exogenous
 factors  such  as  investment,  contribution, and other risks. If actual
 experience deviates from actuarial assumptions, the actual  costs  could
 differ  from  those  presented  herein.  Costs are also dependent on the
 actuarial methods used, and therefore different actuarial methods  could
 produce  different  results. Quantifying these risks is beyond the scope
 of this Fiscal Note.
   Not measured in this Fiscal Note are the following:
         * The initial, additional administrative costs to implement  the
         proposed legislation.
         *  The  impact of this proposed legislation on Other Postemploy-
         ment Benefit (OPEB) costs.
   STATEMENT OF ACTUARIAL OPINION: I, Michael J. Samet,  am  the  Interim
 Chief  Actuary  for,  and  independent  of, the New York City Retirement
 Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
 a Member of the American Academy of Actuaries. I meet the  Qualification
 Standards  of  the American Academy of Actuaries to render the actuarial
 opinion contained herein. To the  best  of  my  knowledge,  the  results
 contained  herein  have  been  prepared  in  accordance  with  generally
 accepted actuarial principles and  procedures  and  with  the  Actuarial
 Standards of Practice issued by the Actuarial Standards Board.
   FISCAL  NOTE  IDENTIFICATION: This Fiscal Note 2022-36 dated April 25,
 2022 was prepared by the Interim Chief Actuary for  the  New  York  City
 Police  Pension  Fund. This estimate is intended for use only during the
 2022 Legislative Session.