S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7131
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 11, 2023
                                ___________
 
 Introduced  by  M.  of A. PHEFFER AMATO -- read once and referred to the
   Committee on Governmental Employees
 
 AN ACT to amend the retirement and social security law, in  relation  to
   calculating the final average salary for members of the New York state
   and local police and fire retirement system

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 1209 of the retirement and social security law,  as
 added by chapter 18 of the laws of 2012, is amended to read as follows:
   §  1209. Final average salary. A. For members who first become members
 of the New York state and local police and fire retirement system on  or
 after  April first, two thousand twelve, a member's final average salary
 shall be equal to one-fifth of the highest total wages  earned  by  such
 member  during  any continuous period of employment for which the member
 was credited with five years of service credit;  provided,  however,  if
 the  wages  earned  during  any year of credited service included in the
 period used to determine final average salary exceeds the average of the
 wages of the previous four years of credited service by  more  than  ten
 percent,  the amount in excess of ten percent shall be excluded from the
 computation of final average salary. Wages in excess of the annual sala-
 ry paid to the governor pursuant to section three of article four of the
 state constitution shall be excluded from the computation of final aver-
 age salary for members who first become members of the  New  York  state
 and local police and fire retirement system on or after April first, two
 thousand twelve.
   B.  BEGINNING  ON  AND  AFTER APRIL FIRST, TWO THOUSAND TWENTY-FOUR, A
 MEMBER'S FINAL AVERAGE SALARY SHALL BE EQUAL TO ONE-THIRD OF THE HIGHEST
 TOTAL  WAGES  EARNED DURING   ANY CONTINUOUS PERIOD  OF  EMPLOYMENT  FOR
 WHICH  THE  MEMBER  WAS  CREDITED  WITH  THREE  YEARS OF SERVICE CREDIT;
 PROVIDED, HOWEVER, IF THE WAGES  EARNED  DURING  ANY  YEAR  OF  CREDITED
 SERVICE  INCLUDED  IN  THE PERIOD USED TO DETERMINE FINAL AVERAGE SALARY
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD10815-03-3
              

 A. 7131                             2
 
 EXCEEDS THE AVERAGE OF THE WAGES OF THE PREVIOUS TWO YEARS  OF  CREDITED
 SERVICE  BY  MORE  THAN  TWENTY  PERCENT, THE AMOUNT IN EXCESS OF TWENTY
 PERCENT SHALL BE EXCLUDED FROM THE COMPUTATION OF FINAL  AVERAGE  SALARY
 PURSUANT  TO THIS SECTION.  WAGES IN EXCESS OF THE ANNUAL SALARY PAID TO
 THE GOVERNOR PURSUANT TO SECTION THREE OF  ARTICLE  FOUR  OF  THE  STATE
 CONSTITUTION  SHALL  BE  EXCLUDED  FROM THE COMPUTATION OF FINAL AVERAGE
 SALARY FOR MEMBERS WHO FIRST BECOME MEMBERS OF THE NEW  YORK  STATE  AND
 LOCAL  POLICE  AND  FIRE  RETIREMENT SYSTEM ON OR AFTER APRIL FIRST, TWO
 THOUSAND TWELVE.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This bill would provide Tier 6 members in the New York State and Local
 Police and Fire Retirement System  (NYSLPFRS)  a  final  average  salary
 based  on  the  highest  three  years of salary where salary in any year
 cannot exceed the average of the previous two years by  more  than  20%.
 Currently,  a final average salary is based on the highest five years of
 salary where salary in any year cannot exceed the average of the  previ-
 ous four years by more than 10%.
   Insofar  as  this bill affects the NYSLPFRS, the increased costs would
 be shared by the State of New York and the local participating employers
 in the NYSLPFRS. If this bill were enacted during the  2023  legislative
 session, the increase in the present value of benefits would be approxi-
 mately $289 million.
 
     NYSLPFRS        Increase in present      Increase in required
                        value benefits           contributions
     Tiers 1 - 5           $0 million             $36 million
          Tier 6         $289 million            $253 million
           Total         $289 million            $289 million
 
   This  benefit  improvement  will  be  funded by increasing the billing
 rates charged annually to cover both retrospective and prospective bene-
 fit increases. The annual contribution  required  of  all  participating
 employers  in  the NYSLPFRS is 0.7% of billable salary, or approximately
 $6 million to the State of New York and approximately $24 million to the
 local participating employers. THE ANNUAL COST WILL INCREASE as  Tier  6
 salary  grows and will vary by employer based upon the plan coverage and
 salary reported in Tier 6.
   These estimated costs are based  on  14,513  Tier  6  members  in  the
 NYSLPFRS,  with  annual salary of approximately $1.2 billion as of March
 31, 2022.
   Summary of relevant resources:
   Membership data as of March 31, 2022 was used in measuring the  impact
 of the proposed change, the same data used in the April 1, 2022 actuari-
 al  valuation.  Distributions  and  other statistics can be found in the
 2022 Report of the Actuary and the 2022 Annual  Comprehensive  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2020,
 2021, and 2022 Annual Report to the  Comptroller  on  Actuarial  Assump-
 tions,  and  the  Codes, Rules and Regulations of the State of New York:
 Audit and Control.
   The Market Assets and GASB Disclosures are found in the March 31, 2022
 New York State and Local  Retirement  System  Financial  Statements  and
 Supplementary Information.
   I am a member of the American Academy of Actuaries and meet the Quali-
 fication Standards to render the actuarial opinion contained herein.
 A. 7131                             3
 
   This  fiscal note does not constitute a legal opinion on the viability
 of the proposed change nor is it intended to serve as a  substitute  for
 the professional judgment of an attorney.
   This estimate, dated May 8, 2023, and intended for use only during the
 2023  Legislative  Session, is Fiscal Note No. 2023-142, prepared by the
 Actuary for the New York State and Local Retirement System.