S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4972
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             February 17, 2023
                                ___________
 
 Introduced  by  Sens.  GOUNARDES,  KENNEDY,  MANNION  --  read twice and
   ordered printed, and when printed to be committed to the Committee  on
   Civil Service and Pensions
 
 AN  ACT  to amend the retirement and social security law, in relation to
   the calculation of final average salary for certain 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. NOTWITHSTANDING SUBDIVISION A OF THIS SECTION,  MEMBERS  WHO  FIRST
 BECOME  MEMBERS  OF THE NEW YORK STATE AND LOCAL POLICE AND FIRE RETIRE-
 MENT SYSTEM ON OR AFTER APRIL FIRST, TWO THOUSAND TWELVE, AND WHO RETIRE
 FROM AN EMPLOYER WHICH, PRIOR  TO  APRIL  FIRST,  TWO  THOUSAND  TWELVE,
 ELECTED  BY  THE  ADOPTION,  FILING  AND APPROVAL OF A RESOLUTION IN THE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06417-02-3
              

 S. 4972                             2
 
 MANNER PROVIDED BY SECTION THREE  HUNDRED  THIRTY  OF  THIS  CHAPTER  TO
 PROVIDE  THAT  FINAL  AVERAGE SALARY SHALL MEAN THE REGULAR COMPENSATION
 EARNED FROM SUCH PARTICIPATING EMPLOYER BY A MEMBER  DURING  THE  TWELVE
 MONTHS OF ACTUAL SERVICE IMMEDIATELY PRECEDING THE DATE OF SUCH MEMBER'S
 RETIREMENT PURSUANT TO SUBDIVISION F OF SECTION FOUR HUNDRED FORTY-THREE
 OF  THIS CHAPTER, SHALL CONTINUE TO HAVE HIS OR HER FINAL AVERAGE SALARY
 COMPUTED WITH SUCH TWELVE MONTH FINAL AVERAGE SALARY UNLESS SUCH  MEMBER
 WOULD  OTHERWISE BE ENTITLED TO A GREATER BENEFIT UNDER SUBDIVISION A OF
 THIS SECTION, IN WHICH CASE SUCH GREATER BENEFIT SHALL BE PAYABLE.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This bill would change the calculation of final average  salary  (FAS)
 for  Tier  6  members  of  the  New York State and Local Police and Fire
 Retirement  System  (NYSLPFRS)  whose  employer  previously  elected  to
 provide  the  one-year  FAS  benefit  to  members of Tiers 2 and 5 under
 Retirement and Social Security Law Section 443-f. Currently,  a  Tier  6
 member's  FAS  is  defined as the average wages earned over five consec-
 utive years, with wages earned during any year limited to the average of
 the prior four years' wages increased by 10%. If this bill is enacted, a
 Tier 6 member's FAS will be defined as the earnings reported over the 12
 months preceding their date of retirement. Wages  exceeding  the  annual
 salary paid to the governor will continue to be excluded.
   If this bill is enacted during the 2023 legislative session, we antic-
 ipate  that  there  will be an increase of approximately $3.9 million in
 the annual contributions of the affected employers for the  fiscal  year
 ending March 31, 2024. In future years, this cost will vary as the bill-
 ing  rates and salary of the affected members change. As a percentage of
 payroll, we anticipate that the annual  contributions  of  the  affected
 employers will increase as follows:
           Plan                          Rate Increase
           Age-55                        1.6%
           25-Year                       1.9%
           25-Year w/ Additional 60ths   2.1%
           20-Year                       2.3%
           20-Year w/ Additional 60ths   2.4%
   In addition to the annual contributions discussed above, there will be
 an  immediate  past  service cost of approximately $23.4 million, calcu-
 lated as of February 1, 2024, which will be shared by the State  of  New
 York  and  all  the  participating  employers in the NYSLPFRS, including
 those participating employers whose employees do not benefit  from  this
 proposal.
   These  estimated costs are based on 1,817 affected members employed by
 various participating employers in the NYSLPFRS, with annual  salary  of
 approximately $152 million 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.
 S. 4972                             3
 
   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.
   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  February  3,  2023,  and intended for use only
 during the  2023  Legislative  Session,  is  Fiscal  Note  No.  2023-41,
 prepared  by  the  Actuary  for  the New York State and Local Retirement
 System.