Bill Text: NY S04913 | 2019-2020 | General Assembly | Amended
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 1-0)
Status: (Engrossed - Dead) 2020-03-11 - PRINT NUMBER 4913B [S04913 Detail]
Download: New_York-2019-S04913-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 4913--B 2019-2020 Regular Sessions IN SENATE March 29, 2019 ___________ Introduced by Sen. GOUNARDES -- 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 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee 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 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD10757-05-0S. 4913--B 2 1 corporation that participates in the New York city employees' retirement 2 system, such as the New York city off-track betting corporation, are to 3 be paid by the corporation or a successor. On March 8, 2018, the board 4 of trustees of the New York city employees' retirement system adopted a 5 resolution recognizing the state as a successor to the New York city 6 off-track betting corporation and a responsible obligor with respect to 7 its required contributions. 8 As a successor to the New York city off-track betting corporation, and 9 in the interest of properly funding the pension benefits of its former 10 employees and retirees in compliance with the state constitution, the 11 state will fulfill the past, present, and future obligations of the New 12 York city off-track betting corporation to the New York city employees' 13 retirement system as follows: 14 § 2. Definitions. The following words and phrases as used in this act 15 shall have the following meanings unless a different meaning is plainly 16 required by context. 17 1. "Actuary" shall mean the actuary appointed by the board of trustees 18 of the New York city employees' retirement system pursuant to section 19 13-121 of the administrative code of the city of New York. 20 2. "City fiscal year" shall mean a fiscal year of the city of New York 21 as defined in section 226 of the New York city charter. 22 3. "Executive director" shall mean the executive director appointed by 23 the board of trustees of the New York city employees' retirement system 24 pursuant to paragraph 2 of subdivision a of section 13-103 of the admin- 25 istrative code of the city of New York. 26 4. "Interest" shall mean the rate per centum per annum of interest 27 specified in paragraph 2 of subdivision b of section 13-638.2 of the 28 administrative code of the city of New York. 29 5. "NYC administrative code" shall mean the administrative code of the 30 city of New York. 31 6. "NYCERS" shall mean the New York city employees' retirement system, 32 as established by chapter 427 of the laws of 1920. 33 7. "NYCOTB" shall mean the New York city off-track betting corpo- 34 ration, as established by chapter 144 of the laws of 1970 and continued 35 pursuant to article 6 of the racing, pari-mutuel wagering and breeding 36 law. 37 8. "State fiscal year" shall mean a fiscal year of the state as 38 defined in section 3 of the state finance law. 39 § 3. Payment of the future annual contributions to be owed by NYCOTB 40 to NYCERS. Notwithstanding the provisions of any general or special 41 state law or local law to the contrary, in state fiscal year 2022 and in 42 each state fiscal year thereafter, the department of audit and control 43 shall take actions necessary to pay in full, subject to appropriation, 44 the annual contribution determined to be owed by NYCOTB to NYCERS under 45 the provisions of the NYC administrative code, including but not limited 46 to sections 13-127, 13-130, 13-133, and 13-638.2 thereof, for the corre- 47 sponding city fiscal year. On or prior to the date specified in section 48 13-133 of the NYC administrative code for the payment of annual contrib- 49 utions by NYCOTB, such moneys, to the extent of such appropriation, 50 shall be payable to NYCERS on the audit and warrant of the comptroller 51 of the state of New York on vouchers certified or approved by the execu- 52 tive director of NYCERS in the manner prescribed by law. Notwithstand- 53 ing the provisions of any general or special state law or local law to 54 the contrary, an annual contribution determined and paid under this 55 section shall not include any amount attributable to any annual contrib- 56 ution previously determined to be owed by NYCOTB to NYCERS for any cityS. 4913--B 3 1 fiscal year prior to the 2022 city fiscal year and not yet paid by 2 NYCOTB or the state. 3 § 4. Payment of overdue annual contributions owed by NYCOTB to NYCERS. 4 a. Notwithstanding the provisions of any general or special state law or 5 local law to the contrary, on or before January 2, 2021, the actuary 6 shall determine the sum of all annual contributions previously deter- 7 mined to be owed by NYCOTB to NYCERS for any city fiscal year prior to 8 the 2022 city fiscal year and not yet paid by NYCOTB, with interest. 9 Such interest, compounded annually, shall be computed on each such over- 10 due annual contribution from the date such contribution was required to 11 be paid pursuant to section 13-133 of the NYC administrative code 12 through January 1, 2021. This sum shall be known as the "amount to be 13 amortized". 14 b. Notwithstanding the provisions of any general or special state law 15 or local law to the contrary, on or before January 2, 2021, the actuary 16 shall further determine an amount that if paid in fifteen equal annual 17 installments beginning on January 1, 2022, would be sufficient to pay in 18 full the amount to be amortized with interest, compounded annually, 19 computed from January 2, 2021, to January 1, 2036. This amount shall be 20 known as the "annual amortization payment". Any annual amortization 21 payment subsequent to the initial annual amortization payment payable on 22 January 1, 2022, shall include the unpaid balance of any prior annual 23 amortization payment, with interest, compounded annually, computed from 24 the date such prior annual amortization payment was required to be paid 25 to the date that such subsequent annual authorization payment is 26 required to be paid. 27 c. Notwithstanding the provisions of any general or special state law 28 or local law to the contrary, in state fiscal year 2022 and in each 29 state fiscal year thereafter until the amount to be amortized, with 30 interest, is paid in full, the department of audit and control shall 31 take actions necessary to pay in full the annual amortization payment, 32 subject to appropriation. On or prior to January 1st of each such state 33 fiscal year, such moneys, to the extent of such appropriation shall be 34 payable to NYCERS on the audit and warrant of the comptroller of the 35 state of New York on vouchers certified or approved by the executive 36 director of NYCERS in the manner prescribed by law. 37 § 5. Deposit of moneys. NYCERS shall deposit all moneys received 38 pursuant to this act in the contingent reserve fund specified in section 39 13-127 of the NYC administrative code. 40 § 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.S. 4913--B 4 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 2021 (the Amount to be Amortized), on or before January 2, 2021, and 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, 2022 and ending by January 1, 2036 (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 $290.7 million as of January 1, 2022. Any amount appropriated and paid by the State to NYCERS would be applied as an NYCOTB employer contribution and relieve any potential additional successor or guarantor of paying such amounts. The following Table presents an estimate of the annual cost, as of January 1, 2022, for Fiscal Years 2022 through 2026. Fiscal Cost Attributable to Cost Attributable to Year Employer Contributions Employer Contributions Total for Fiscal Years for Fiscal Years Prior to 2022* Subsequent to 2021** 2022 $19,377,800 $11,827,215 $31,205,015 2023 $19,377,800 $12,171,170 $31,548,970 2024 $19,377,800 $12,526,059 $31,903,859 2025 $19,377,800 $12,891,594 $32,269,394 2026 $19,377,800 $13,268,096 $32,645,896 * Equal to a 15-year amortization of $188,845,726 as of January 1, 2022. ** Estimates of future employer contributions for NYCOTB based on the actuarial assumptions and methods in effect for the June 30, 2019 (Lag) actuarial valuation, including an assumed investment return of 7.0% per annum. CENSUS DATA: The estimates presented herein are based on the census data used in the Preliminary June 30, 2019 (Lag) actuarial valuation of NYCERS to determine the Preliminary Fiscal Year 2021 employer contrib- utions. As of June 30, 2019 NYCOTB had 1,152 retirees with an average age of approximately 74.9 years, 329 terminated vested members with an average age of approximately 53.6 years, and 99 active off payroll members with an average age of approximately 46.8 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, 2019 (Lag) actu- arial valuations used to determine the Preliminary Fiscal Year 2021 employer contributions of NYCERS. 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 NYCERS and other exogenous factors such as investment, contribution, and other risks. If actualS. 4913--B 5 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: o The initial, additional administrative costs of NYCERS, other New York City agencies and the State to implement the proposed legislation. o The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. 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 2020-12 dated March 10, 2020 was prepared by the Chief Actuary for the New York City Employees' Retirement System. This estimate is intended for use only during the 2020 Legislative Session.
