S T A T E   O F   N E W   Y O R K
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                                  6526--A
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              April 25, 2023
                                ___________
 
 Introduced  by Sens. JACKSON, CHU -- read twice and ordered printed, and
   when printed to be committed to the Committee  on  Civil  Service  and
   Pensions -- recommitted to the Committee on Civil Service and Pensions
   in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill
   amended,  ordered reprinted as amended and recommitted to said commit-
   tee
 
 AN ACT to amend the retirement and social security law, in  relation  to
   setting the increase to the overtime ceiling as a fixed percentage
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph (c) of subdivision  24  of  section  501  of  the
 retirement  and  social  security  law, as amended by chapter 368 of the
 laws of 2017, is amended to read as follows:
   (c) [(i)] The "overtime ceiling" shall mean fifteen  thousand  dollars
 per  annum on January first, two thousand ten, and shall be increased by
 three percent each year thereafter, provided, however, that [for]:
   (I) FOR members who first become members of the  New  York  state  and
 local employees' retirement system on or after April first, two thousand
 twelve, "overtime ceiling" shall mean fifteen thousand dollars per annum
 on  April  first,  two thousand twelve, and shall be increased each year
 thereafter by a percentage to be determined annually by reference to the
 consumer price index (all urban consumers, CPI-U, U.S. city average, all
 items, 1982-84=100), published by the  United  States  bureau  of  labor
 statistics,  for  each  applicable  calendar year. Said percentage shall
 equal the annual inflation  as  determined  from  the  increase  in  the
 consumer price index in the one year period ending on the December thir-
 ty-first  preceding  the  overtime  ceiling  adjustment effective on the
 ensuing April first.
   (ii) Commencing January first, two thousand eighteen,  and  each  year
 thereafter,  the  overtime  ceiling  percentage shall be increased by an
 amount equal to the annual inflation as determined from the increase  in
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03497-09-4
              

 S. 6526--A                          2
 
 the  consumer price index in the one year period ending on the September
 thirtieth prior to the overtime  ceiling  adjustment  effective  on  the
 ensuing January first.
   (III)  COMMENCING  JANUARY  FIRST,  TWO THOUSAND TWENTY-FIVE, AND EACH
 YEAR THEREAFTER, FOR MEMBERS WHO FIRST BECOME MEMBERS OF  THE  NEW  YORK
 STATE  AND  LOCAL  EMPLOYEES' RETIREMENT SYSTEM ON OR AFTER APRIL FIRST,
 TWO THOUSAND TWELVE, THE OVERTIME CEILING PERCENTAGE INCREASE  SHALL  BE
 EQUAL  TO THE GREATER OF: (A) THREE PERCENT, OR (B) THE ANNUAL INFLATION
 AS DETERMINED FROM THE INCREASE IN THE CONSUMER PRICE INDEX IN  THE  ONE
 YEAR  PERIOD  ENDING  ON  THE  SEPTEMBER THIRTIETH PRIOR TO THE OVERTIME
 CEILING ADJUSTMENT EFFECTIVE ON THE ENSUING JANUARY FIRST.
   § 2. Paragraph (c) of subdivision l of section 601 of  the  retirement
 and  social security law, as amended by chapter 368 of the laws of 2017,
 is amended to read as follows:
   (c) The "overtime ceiling" shall mean  fifteen  thousand  dollars  per
 annum  on  January  first,  two  thousand ten, and shall be increased by
 three [per cent] PERCENT each year thereafter, provided, however, that:
   (i) [for] FOR members who first become members of a public  retirement
 system of the state on or after April first, two thousand twelve, "over-
 time  ceiling"  shall  mean  fifteen thousand dollars per annum on April
 first, two thousand twelve, and shall be increased each year  thereafter
 by  a  percentage to be determined annually by reference to the consumer
 price index (all urban consumers, CPI-U, U.S. city average,  all  items,
 1982-84=100), published by the United States bureau of labor statistics,
 for each applicable calendar year. Said percentage shall equal the annu-
 al inflation as determined from the increase in the consumer price index
 in the one year period ending on the December thirty-first preceding the
 overtime ceiling adjustment effective on the ensuing April first.
   (ii)  Commencing  January  first, two thousand eighteen, and each year
 thereafter, the overtime ceiling percentage shall  be  increased  by  an
 amount  equal to the annual inflation as determined from the increase in
 the consumer price index in the one year period ending on the  September
 thirtieth  prior  to  the  overtime  ceiling adjustment effective on the
 ensuing January first.
   (III) COMMENCING JANUARY FIRST, TWO  THOUSAND  TWENTY-FIVE,  AND  EACH
 YEAR  THEREAFTER,  FOR  MEMBERS WHO FIRST BECOME MEMBERS OF THE NEW YORK
 STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM ON OR  AFTER  APRIL  FIRST,
 TWO  THOUSAND  TWELVE, THE OVERTIME CEILING PERCENTAGE INCREASE SHALL BE
 EQUAL TO THE GREATER OF: (A) THREE PERCENT, OR (B) THE ANNUAL  INFLATION
 AS  DETERMINED  FROM THE INCREASE IN THE CONSUMER PRICE INDEX IN THE ONE
 YEAR PERIOD ENDING ON THE SEPTEMBER  THIRTIETH  PRIOR  TO  THE  OVERTIME
 CEILING ADJUSTMENT EFFECTIVE ON THE ENSUING JANUARY FIRST.
   § 3. Notwithstanding any provision of law to the contrary, none of the
 provisions of this act shall be subject to the appropriation requirement
 of section twenty-five of the retirement and social security law.
   § 4. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill  would  change the overtime ceiling percentage increase for
 Tier 6 members in the New York State  and  Local  Employees'  Retirement
 System  (NYSLERS)  to  the  greater  of  three  percent  or  the  annual
 inflation, beginning January 1, 2025. Under current law, the ceiling was
 set at $15,000 at the inception of Tier 6 and is increased  annually  by
 the inflation rate.
   The provisions of Section 25 of the Retirement and Social Security Law
 shall not apply.
 S. 6526--A                          3
 
   Insofar as this bill affects the NYSLERS, the increased costs would be
 shared by the State of New York and the local participating employers in
 the  NYSLERS.  If  this  bill  were  enacted during the 2024 Legislative
 Session, the increase in the present value of benefits would be approxi-
 mately $263 million.
             NYSLERS        Increase in present    Increase in required
                              value benefits          contributions
             Tiers 1 - 5           $0                  $49 million
                  Tier 6       $263 million           $214 million
                   Total       $263 million           $263 million
   In  the NYSLERS, this benefit improvement will be funded by increasing
 the billing rates charged  annually  to  cover  both  retrospective  and
 prospective  benefit  increases. The annual contribution required of all
 participating employers in  NYSLERS  is  0.1%  of  billable  salary,  or
 approximately $13 million to the State of New York and approximately $19
 million to the local participating employers. This PERMANENT 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 265,533 affected  Tier  6  members,
 with annual salary of approximately $12 billion as of March 31, 2023.
   To  develop  the costs above, our models included a Monte Carlo method
 of 5,000 simulations, each consisting of thirty-year CPI-U  projections.
 In every one of the 5,000 simulations, in at least one year of the thir-
 ty-year  period, the proposed legislation caused a higher overtime ceil-
 ing based on the 3% inflation  floor,  compared  to  current  law.  This
 occurred in approximately 64% of the 150,000 trial years.
   Summary of relevant resources:
   Membership  data as of March 31, 2023 was used in measuring the impact
 of the proposed change, the same data used in the April 1, 2023 actuari-
 al valuation. Distributions and other statistics can  be  found  in  the
 2023  Report  of the Actuary and the 2023 Annual Comprehensive Financial
 Report.
   The actuarial assumptions and methods used are described in  the  2023
 Annual  Report  to  the  Comptroller  on  Actuarial Assumptions, 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, 2023
 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 March 8, 2024, and intended for use  only  during
 the  2024  Legislative Session, is Fiscal Note No. 2024-104, prepared by
 the Actuary for the New York State and Local Retirement System.