Bill Text: NY S05898 | 2019-2020 | General Assembly | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Relates to providing a final average salary disability retirement benefit to certain participants in World Trade Center rescue, recovery, or cleanup operations.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Passed) 2019-09-11 - SIGNED CHAP.252 [S05898 Detail]

Download: New_York-2019-S05898-Amended.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                         5898--A

                               2019-2020 Regular Sessions

                    IN SENATE

                                      May 16, 2019
                                       ___________

        Introduced  by Sen. GAUGHRAN -- read twice and ordered printed, and when
          printed to be committed to the Committee on Civil Service and Pensions
          -- committee discharged, bill amended, ordered  reprinted  as  amended
          and recommitted to said committee

        AN  ACT  to amend the retirement and social security law, in relation to
          disability retirement benefits for certain participants in World Trade
          Center rescue, recovery, or cleanup operations

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1. Paragraph 4 of subdivision d of section 605 of the retire-
     2  ment and social security law is renumbered paragraph 5 and a  new  para-
     3  graph 4 is added to read as follows:
     4    4.  Notwithstanding any other law, rule or regulation to the contrary,
     5  any member who had an active membership when such member participated in
     6  World Trade Center rescue, recovery,  or  cleanup  operations,  as  such
     7  participation  is defined in section two of this chapter, who incurred a
     8  qualifying World Trade Center condition, as defined in  section  two  of
     9  this  chapter,  that is determined to have been incurred in the perform-
    10  ance and discharge of duty and is the natural and proximate result of an
    11  accident not caused by such member's own willful  negligence,  shall  be
    12  paid  a  performance  of  duty  disability retirement allowance equal to
    13  three-quarters of final average salary.   The payment  of  such  pension
    14  shall  be  subject to the provisions of section sixty-four of this chap-
    15  ter.
    16    § 2. Section 507 of the retirement and social security law is  amended
    17  by adding a new subdivision h-1 to read as follows:
    18    h-1.  Notwithstanding any other law, rule or regulation to the contra-
    19  ry, any member who had an active membership  when  such  member  partic-
    20  ipated in World Trade Center rescue, recovery, or cleanup operations, as
    21  such  participation  is  defined  in  section  two  of this chapter, who
    22  incurred a qualifying  World  Trade  Center  condition,  as  defined  in

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD08565-03-9
        S. 5898--A                          2

     1  section two of this chapter, that is determined to have been incurred in
     2  the  performance  and discharge of duty and is the natural and proximate
     3  result of an accident not caused by such  member's  own  willful  negli-
     4  gence,  shall be paid a performance of duty disability retirement allow-
     5  ance equal to three-quarters of final average salary.   The  payment  of
     6  such pension shall be subject to the provisions of section sixty-four of
     7  this chapter.
     8    §  3.  This  act shall take effect immediately and apply to all active
     9  members who are determined to have incurred  a  qualifying  World  Trade
    10  Center  condition  in  the performance and discharge of duty that is the
    11  natural and proximate result of an accident not caused by such  member's
    12  own willful negligence prior to the effective date of this act.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          This  bill  would  amend  the  benefits  of  certain members of public
        retirement systems who are subject to the provisions of  Article  14  or
        Article  15  of  the Retirement and Social Security Law who contract any
        form of disease or disability related to exposure  to  any  elements  in
        connection with the World Trade Center rescue, recovery or cleanup oper-
        ations.  The  annual  accidental  disability  benefit  would be 75% of a
        member's final average salary less workers compensation, regardless of a
        member's plan coverage.  Currently, eligible members receive  the  acci-
        dental  disability  benefit  specified  in the plan under which they are
        covered, which for most Article 14 and 15 members is 1/3 of final  aver-
        age  salary.  This  improved  benefit  would  be payable only to current
        members or their beneficiaries.   Current retirees and  their  benefici-
        aries would not be affected by this bill.
          If  this  bill is enacted, the cost of the revised benefit will depend
        upon the applicant's age, service, salary, plan, and benefit type other-
        wise payable, but is expected to cost up to 4 times final average salary
        per individual.
          Insofar as this bill would affect the New York State and Local Employ-
        ees' Retirement System, there are currently 610 active members,  with  a
        combined salary of $6.4 million, who have filed an Application for World
        Trade  Center  Notice  who could potentially receive benefits under this
        bill.
          A precise cost for future years cannot be  determined  at  this  time.
        However,  pursuant  to  Section 25 of the Retirement and Social Security
        Law, any increased cost would be borne entirely by the State of New York
        and would require an itemized appropriation sufficient to pay  the  cost
        of  the  provision.  Every year a cost will be determined (and billed to
        the State) based on those benefiting from this provision.
          Summary of relevant resources:
          The membership data used in  measuring  the  impact  of  the  proposed
        change  was  the same as that used in the March 31, 2018 actuarial valu-
        ation.  Distributions and other statistics can  be  found  in  the  2018
        Report  of  the  Actuary  and  the  2018  Comprehensive Annual Financial
        Report.
          The actuarial assumptions and methods used are described in the  2015,
        2016,  2017  and  2018  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, 2018
        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.
        S. 5898--A                          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 April 18, 2019, and intended for use only during
        the 2019 Legislative Session, is Fiscal Note No. 2019-102,  prepared  by
        the Actuary for the New York State and Local Retirement System.
          This  bill  would  amend  Sections  507  and 605 of the Retirement and
        Social Security Law to allow any member of the New York State  Teachers'
        Retirement  System who had an active membership when such member partic-
        ipated in the World Trade Center rescue, recovery, or cleanup operations
        and who incurred a qualifying World Trade Center condition determined to
        have been incurred in the performance and discharge of duty to receive a
        performance of duty disability retirement benefit equal to 75% of  final
        average  salary.  Currently an active member would receive an accidental
        disability retirement benefit which  is  generally  one-third  of  final
        average  salary.  Members  who  become  disabled or die as a result of a
        qualifying World Trade Center condition are assumed to have become disa-
        bled or died as a result of an accidental or  on-the-job  disability  or
        death.  This  bill would take effect immediately and apply to all active
        members who are determined to have incurred  a  qualifying  World  Trade
        Center  condition  in the performance and discharge of duty prior to the
        effective date of this act.
          The cost, or additional present value of benefits, is estimated to be,
        on average, $320,000 for each member who receives  this  performance  of
        duty  disability  retirement benefit. Although the potential increase in
        an affected member's benefit is estimated to be  large,  the  additional
        annual  cost to the employers of members of the New York State Teachers'
        Retirement System is estimated to be negligible if this bill is  enacted
        because  it  is anticipated there would be few applications received for
        this performance of duty disability retirement benefit from our  member-
        ship.
          Member  data  is  from  the  System's  most recent actuarial valuation
        files, consisting of data provided by the employers  to  the  Retirement
        System.   Data distributions and statistics can be found in the System's
        Comprehensive Annual Financial  Report  (CAFR).  System  assets  are  as
        reported  in the System's financial statements, and can also be found in
        the CAFR. Actuarial assumptions and methods are provided in the System's
        Actuarial Valuation Report.
          The source of this estimate is Fiscal Note 2019-26 dated May 10,  2019
        prepared  by  the  Actuary  of  the  New York State Teachers' Retirement
        System and is intended for use only during the 2019 Legislative Session.
        I, Richard A. Young, am the Actuary for the  New  York  State  Teachers'
        Retirement  System.  I  am a member of the American Academy of Actuaries
        and I meet the Qualification Standards of the American Academy of  Actu-
        aries to render the actuarial opinion contained herein.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY  OF  BILL: With respect to the New York City Pension Funds and
        Retirement  Systems  (NYCRS),  the  proposed  legislation  would   amend
        provisions  of the Retirement and Social Security Law (RSSL) to grant to
        active NYCRS members, who are subject to RSSL  Articles  14  or  15  and
        incur  a World Trade Center (WTC) Qualifying Condition, a performance of
        duty disability retirement equivalent to 75% of the member's Final Aver-
        age Salary (FAS).
          Effective Date: Upon Enactment.
        S. 5898--A                          4

          IMPACT ON BENEFITS PAYABLE: Under the proposed legislation, the  bene-
        fits  for  active  members  of NYCRS who retire after the effective date
        with a WTC Qualifying Condition would equal a retirement allowance of:
          * 75% multiplied by FAS,
          Reduced by:
          * 100% of Workers' Compensation benefits (if any) payable (as required
        by RSSL Section 64).
          Please  note  that,  generally,  uniformed  WTC retirees are currently
        entitled to a 75% of FAS benefit (i.e. members  of  the  New  York  City
        Police  Pension  Fund  (POLICE),  the  New  York  City Fire Pension Fund
        (FIRE), and Sanitation, Correction, EMT, and Deputy Sheriff  members  of
        the New York City Employees' Retirement System (NYCERS)). Therefore, the
        application  of  the  proposed  legislation  would  likely be limited to
        active Tier 3 and 4 civilian members of NYCERS, the Teachers' Retirement
        System of the City of New York (NYCTRS), and the New York City Board  of
        Education Retirement System (BERS).
          Although  certain  NYCERS  members are ineligible for Workers' Compen-
        sation benefits and therefore would not have their benefit subject to an
        offset, for purposes of this Fiscal Note, it is assumed that  the  Work-
        ers'  Compensation  offset  provisions  cited in Sections 1 and 2 of the
        proposed legislation would not  apply  to  NYCRS  members  because  such
        members  are not paid retirement benefits under RSSL Article 2, which is
        a requirement for the application of the offset provision  contained  in
        RSSL Section 64.
          FINANCIAL IMPACT - OVERVIEW: Although there are currently approximate-
        ly  8,000  submitted  WTC  Notice  of Participation Forms for applicable
        active members of NYCERS, TRS, and BERS, the number of members from this
        group, and any additional eligible members who could potentially benefit
        from this proposed legislation in the future cannot  be  readily  deter-
        mined.  Therefore, the estimated financial impact has been calculated on
        a per event basis equal to the increase in the Present Value  of  Future
        Benefits  (PVFB)  for an average member who is approved for WTC benefits
        and who is assumed to benefit from the proposed legislation.  In  deter-
        mining  the  increase in the PVFB for members who are assumed to benefit
        from the proposed legislation, it has  been  assumed  that  50%  of  the
        members  who  would  retire with a WTC benefit were those who would have
        retired under an Ordinary Disability Retirement (ODR) benefit  and  that
        the  remaining  50%  of members who would retire with a WTC benefit were
        those who would have continued working if the proposed legislation  were
        not passed.
          With  respect  to  an  individual  member, the additional cost of this
        proposed legislation could vary greatly depending on the member's length
        of service, age, and salary history.
          FINANCIAL IMPACT - PRESENT VALUES: Based on the census  data  and  the
        actuarial  assumptions  and  methods  described herein, the enactment of
        this proposed legislation  would  increase  the  PVFB  by  approximately
        $240,000, on average, for each occurrence of WTC benefits provided under
        this proposed legislation.
          FINANCIAL  IMPACT  -  ANNUAL EMPLOYER CONTRIBUTIONS: Enactment of this
        proposed legislation would increase employer contributions,  where  such
        amount  would  depend on the number of members affected as well as other
        characteristics including the age, years of service, and salary  history
        of each member.
          As  there  is  insufficient  data  currently available to estimate the
        number of members who might be approved for WTC benefits, the  financial
        impact  would  be recognized at the time of event. Consequently, changes
        S. 5898--A                          5

        in employer contributions have been estimated assuming that the increase
        in the PVFB will be financed over a time period comparable to that  used
        for  actuarial losses under the Entry Age Normal cost method. Using this
        approach,  the  additional PVFB would be amortized over a closed 15-year
        period (14 payments under the  One-Year  Lag  Methodology)  using  level
        dollar payments.
          Based  on the Actuary's actuarial assumptions and methods in effect as
        of June 30, 2018, the enactment of this proposed  legislation  is  esti-
        mated to increase annual employer contributions by approximately $28,000
        for  each  WTC  benefit  provided  under this proposed legislation. With
        respect to the timing, increases in employer contributions would  depend
        upon  when  members  would  retire  but,  generally,  increased employer
        contributions will first occur the second fiscal year following approval
        of the WTC benefit.
          For example, if 10 members who would benefit from the proposed  legis-
        lation  are approved for WTC benefits in the fiscal year ending June 30,
        2019, then employer contributions could increase by about  $280,000  per
        year starting in fiscal year 2021.
          OTHER COSTS: Not measured in this Fiscal Note are the following:
          *  The initial, additional administrative costs of the NYCRS to imple-
        ment the proposed legislation.
          * The impact of this  proposed  legislation  on  Other  Postemployment
        Benefit (OPEB) costs.
          CENSUS  DATA:  A  large  majority of the active NYCRS members who have
        submitted WTC  notices  and  who  could  potentially  benefit  from  the
        proposed  legislation  are  members  of NYCERS. Therefore, 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 contributions.
          The approximate 8,000 active members who have submitted WTC Notice  of
        Participation  Forms are a subset of the 61,985 active members in NYCERS
        as of June 30, 2018 whose date of appointment is prior to September  11,
        2001 and are not currently entitled to a WTC benefit equal to 75% of FAS
        and, therefore, could potentially benefit from the proposed legislation.
        These  61,985  active  members  had an average age of approximately 55.9
        years, average service of approximately 22.0 years, and an average sala-
        ry of approximately $81,900. This  group  consisted  of  61,966  Tier  4
        members and 19 Tier 6 members.
          ACTUARIAL  ASSUMPTIONS AND METHODS: The changes in the PVFB and annual
        employer contributions presented herein have been  calculated  based  on
        the  actuarial  assumptions  and methods in effect for the June 30, 2018
        (Lag) actuarial 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-
        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-
        S. 5898--A                          6

        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  2019-30  dated  June  7,
        2019  was prepared by the Chief Actuary for the New York City Employees'
        Retirement System, the New York City Teachers'  Retirement  System,  and
        the New York City Board of Education Retirement System. This estimate is
        intended for use only during the 2019 Legislative Session.