Bill Text: NY A07718 | 2019-2020 | General Assembly | Introduced
Bill Title: Provides for the payment of the annual contributions owed and to be owed on behalf of the New York city off-track betting corporation to the New York city employees' retirement system.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Introduced - Dead) 2020-01-08 - referred to governmental employees [A07718 Detail]
Download: New_York-2019-A07718-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7718 2019-2020 Regular Sessions IN ASSEMBLY May 17, 2019 ___________ Introduced by M. of A. PRETLOW -- read once and referred to the Commit- tee on Governmental Employees AN ACT to provide for the payment of the annual contributions owed and to be owed on behalf of the New York city off-track betting corpo- ration to the New York city employees' retirement system The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Statement of legislative findings and intent. The legisla- 2 ture hereby finds that the state has a statutory and constitutional 3 obligation to protect and fund the pension benefits of the former 4 employees and retirees of the defunct New York city off-track betting 5 corporation. 6 The New York city off-track betting corporation is a public benefit 7 corporation created pursuant to state law and is a participating employ- 8 er in the New York city employees' retirement system. The pension bene- 9 fits of the corporation's former employees and retirees are protected 10 from impairment under article V, section 7 of the state constitution. 11 In 2008, the state legislatively enhanced its role with respect to the 12 New York city off-track betting corporation due to its financial diffi- 13 culties, thus becoming its successor for purposes of assuming the statu- 14 tory and constitutional obligation to make pension contributions. The 15 corporation ceased operations in 2010 and has since failed to make annu- 16 al contributions to the New York city employees' retirement system as 17 required under the administrative code of the city of New York. 18 Sections 13-130 and 13-638.2 of the administrative code of the city of 19 New York provide that the employer liabilities of a public benefit 20 corporation that participates in the New York city employees' retirement 21 system, such as the New York city off-track betting corporation, are to 22 be paid by the corporation or a successor. On March 8, 2018, the board 23 of trustees of the New York city employees' retirement system adopted a 24 resolution recognizing the state as a successor to the New York city EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD10757-02-9A. 7718 2 1 off-track betting corporation and a responsible obligor with respect to 2 its required contributions. 3 As a successor to the New York city off-track betting corporation, and 4 in the interest of properly funding the pension benefits of its former 5 employees and retirees in compliance with the state constitution, the 6 state will fulfill the past, present, and future obligations of the New 7 York city off-track betting corporation to the New York city employees' 8 retirement system as follows: 9 § 2. Definitions. The following words and phrases as used in this act 10 shall have the following meanings unless a different meaning is plainly 11 required by context. 12 1. "Actuary" shall mean the actuary appointed by the board of trustees 13 of the New York city employees' retirement system pursuant to section 14 13-121 of the administrative code of the city of New York. 15 2. "City fiscal year" shall mean a fiscal year of the city of New York 16 as defined in section 226 of the New York city charter. 17 3. "Executive director" shall mean the executive director appointed by 18 the board of trustees of the New York city employees' retirement system 19 pursuant to paragraph 2 of subdivision a of section 13-103 of the admin- 20 istrative code of the city of New York. 21 4. "Interest" shall mean the rate per centum per annum of interest 22 specified in paragraph 2 of subdivision b of section 13-638.2 of the 23 administrative code of the city of New York. 24 5. "NYC administrative code" shall mean the administrative code of the 25 city of New York. 26 6. "NYCERS" shall mean the New York city employees' retirement system, 27 as established by chapter 427 of the laws of 1920. 28 7. "NYCOTB" shall mean the New York city off-track betting corpo- 29 ration, as established by chapter 144 of the laws of 1970 and continued 30 pursuant to article 6 of the racing, pari-mutuel wagering and breeding 31 law. 32 8. "State fiscal year" shall mean a fiscal year of the state as 33 defined in section 3 of the state finance law. 34 § 3. Payment of the future annual contributions to be owed by NYCOTB 35 to NYCERS. Notwithstanding the provisions of any general or special 36 state law or local law to the contrary, in state fiscal year 2021 and in 37 each state fiscal year thereafter, the department of audit and control 38 shall take actions necessary to pay in full, subject to appropriation, 39 the annual contribution determined to be owed by NYCOTB to NYCERS under 40 the provisions of the NYC administrative code, including but not limited 41 to sections 13-127, 13-130, 13-133, and 13-638.2 thereof, for the corre- 42 sponding city fiscal year. On or prior to the date specified in section 43 13-133 of the NYC administrative code for the payment of annual contrib- 44 utions by NYCOTB, such moneys, to the extent of such appropriation, 45 shall be payable to NYCERS on the audit and warrant of the comptroller 46 of the state of New York on vouchers certified or approved by the execu- 47 tive director of NYCERS in the manner prescribed by law. Notwithstand- 48 ing the provisions of any general or special state law or local law to 49 the contrary, an annual contribution determined and paid under this 50 section shall not include any amount attributable to any annual contrib- 51 ution previously determined to be owed by NYCOTB to NYCERS for any city 52 fiscal year prior to the 2021 city fiscal year and not yet paid by 53 NYCOTB or the state. 54 § 4. Payment of overdue annual contributions owed by NYCOTB to NYCERS. 55 a. Notwithstanding the provisions of any general or special state law or 56 local law to the contrary, on or before January 2, 2020, the actuaryA. 7718 3 1 shall determine the sum of all annual contributions previously deter- 2 mined to be owed by NYCOTB to NYCERS for any city fiscal year prior to 3 the 2021 city fiscal year and not yet paid by NYCOTB, with interest. 4 Such interest, compounded annually, shall be computed on each such over- 5 due annual contribution from the date such contribution was required to 6 be paid pursuant to section 13-133 of the NYC administrative code 7 through January 1, 2020. This sum shall be known as the "amount to be 8 amortized". 9 b. Notwithstanding the provisions of any general or special state law 10 or local law to the contrary, on or before January 2, 2020, the actuary 11 shall further determine an amount that if paid in fifteen equal annual 12 installments beginning on January 1, 2021, would be sufficient to pay in 13 full the amount to be amortized with interest, compounded annually, 14 computed from January 2, 2020, to January 1, 2035. This amount shall be 15 known as the "annual amortization payment". Any annual amortization 16 payment subsequent to the initial annual amortization payment payable on 17 January 1, 2021, shall include the unpaid balance of any prior annual 18 amortization payment, with interest, compounded annually, computed from 19 the date such prior annual amortization payment was required to be paid 20 to the date that such subsequent annual authorization payment is 21 required to be paid. 22 c. Notwithstanding the provisions of any general or special state law 23 or local law to the contrary, in state fiscal year 2021 and in each 24 state fiscal year thereafter until the amount to be amortized, with 25 interest, is paid in full, the department of audit and control shall 26 take actions necessary to pay in full the annual amortization payment, 27 subject to appropriation. On or prior to January 1st of each such state 28 fiscal year, such moneys, to the extent of such appropriation shall be 29 payable to NYCERS on the audit and warrant of the comptroller of the 30 state of New York on vouchers certified or approved by the executive 31 director of NYCERS in the manner prescribed by law. 32 § 5. Deposit of moneys. NYCERS shall deposit all moneys received 33 pursuant to this act in the contingent reserve fund specified in section 34 13-127 of the NYC administrative code. 35 § 6. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: The proposed legislation provides a funding mech- anism, through unconsolidated provisions of law, for the State of New York (State), as a successor obligor, to appropriate funds to pay past, present, and future New York City Off-Track Betting Corporation (NYCOTB) employer contributions, with applicable interest, to the New York City Employees' Retirement System (NYCERS) on behalf of former and retired NYCOTB employees. Effective Date: Upon enactment. BACKGROUND: NYCOTB is a defunct public benefit corporation and is a participating employer in NYCERS. NYCOTB retirees currently receive full retirement benefits from NYCERS even though NYCOTB last made partial employer contributions to NYCERS in fiscal years 2010 and 2011 and completely ceased making employer contributions thereafter. Unpaid past and future annual employer contributions, with applicable interest, continue to accrue. FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: The proposed legis- lation would require the Actuary of the City of New York (Actuary) to calculate the cumulative owed past and current NYCOTB employer contrib- utions, with applicable interest, through and inclusive of fiscal year 2020 (the Amount to be Amortized), on or before January 2, 2020, andA. 7718 4 amortize such cumulative Amount in fifteen equal installments, with applicable interest, to be paid by the State Comptroller, subject to appropriation, commencing on or before January 1, 2021 and ending by January 1, 2035 (the Annual Amortization Payment). The proposed legis- lation would further require the calculation and, subject to State appropriation, annual payment of future annual NYCOTB employer contrib- utions in accordance with applicable provisions of the Administrative Code of the City of New York (ACCNY). FINANCIAL IMPACT - SUMMARY: Based on the actuarial assumptions and methods described herein, the enactment of this proposed legislation would, assuming full and timely payment, result in a potential total present value cost to the State of approximately $289.9 million as of January 1, 2021. Any amount appropriated and paid by the State to NYCERS would be applied as a credit to NYCOTB and relieve any potential addi- tional successor or any potential guarantor of such amounts paid. The following Table presents an estimate of the annual cost for Fiscal Years 2021 through 2025 as of January 1, 2021. Cost Attributable to Cost Attributable Employer Contribut- to Employer Contribut- ions for Fiscal Years ions for Fiscal Years Fiscal Year Prior to 2021* Subsequent to 2020** Total 2021 $16,933,668 $13,378,824 $30,312,492 2022 $16,933,668 $13,715,186 $30,648,854 2023 $16,933,668 $14,060,844 $30,994,512 2024 $16,933,668 $14,417,094 $31,350,762 2025 $16,933,668 $14,783,804 $31,717,472 * Equal to a 15-year amortization of $165,026,521 as of January 1, 2021. ** Estimates of future employer contributions for OTB based on the actu- arial assumptions and methods in effect for the June 30, 2018 (Lag) actuarial valuation, including an assumed investment return of 7.0% per annum. OTHER COSTS: Not measured in this Fiscal Note are the following: * The initial, additional administrative costs of NYCERS, other New York City agencies and the State to implement the proposed legislation. * The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. CENSUS DATA: The estimates presented herein are based on the census data used in the Preliminary June 30, 2018 (Lag) actuarial valuation of NYCERS to determine the Preliminary Fiscal Year 2020 employer contrib- utions. As of June 30, 2018, OTB had 1,187 retirees with an average age of approximately 74.5 years, 370 terminated vested members with an average age of approximately 52.7 years, and 81 active off payroll members with an average age of approximately 45.0 years. ACTUARIAL ASSUMPTIONS AND METHODS: The estimates of annual employer contributions presented herein have been calculated based on the actuar- ial assumptions and methods in effect for the June 30, 2018 (Lag) actu- arial valuations used to determine the Preliminary Fiscal Year 2020 employer contributions of NYCERS. RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend highly on the actuarial assumptions and methods used and are subject to change based on the realization of potential investment, demographic, contribution, and other risks. If actual experience deviates from actu-A. 7718 5 arial 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. STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu- ary for, and independent of, the New York City Retirement Systems and Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled Actuary under the Employee Retirement Income and Security Act of 1974, a Member of the American Academy of Actuaries, and a Fellow of the Confer- ence of Consulting 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 2019-03 dated March 21, 2019 was prepared by the Chief Actuary for the New York City Employees' Retirement System. This estimate is intended for use only during the 2019 Legislative Session.
