S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         5295
                              2015-2016 Regular Sessions
                                 I N  A S S E M B L Y
                                   February 17, 2015
                                      ___________
       Introduced  by M. of A. ABBATE, LENTOL, DenDEKKER, HIKIND -- Multi-Spon-
         sored by -- M. of A.  ARROYO, BENEDETTO, BROOK-KRASNY,  COLTON,  COOK,
         CRESPO,  CYMBROWITZ,  GOLDFEDER,  GUNTHER, HEVESI, MILLER, SIMANOWITZ,
         SIMON, SKOUFIS -- read once and referred to the Committee  on  Govern-
         mental Employees
       AN  ACT to amend the administrative code of the city of New York and the
         retirement and social security law,  in  relation  to  the  disability
         benefits of members of the New York city police pension fund
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Subdivisions a and b of section 13-254 of  the  administra-
    2  tive  code  of the city of New York, subdivision a as amended by chapter
    3  438 of the laws of 1986, are amended to read as follows:
    4    a. Once each year the board may,  and  upon  his  or  her  application
    5  shall, require any disability pensioner, under the minimum age or period
    6  for service retirement elected by him or her, OR ANY DISABILITY PENSION-
    7  ER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF
    8  THE  RETIREMENT  AND SOCIAL SECURITY LAW, AND WHO IS UNDER EARLY RETIRE-
    9  MENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF  THE  RETIREMENT  AND
   10  SOCIAL  SECURITY LAW FOR POLICE/FIRE MEMBERS to undergo medical examina-
   11  tion. Such examination shall be made at the place of residence  of  such
   12  beneficiary  or other place mutually agreed upon. Upon the completion of
   13  such examination the medical board shall report and certify to the board
   14  whether such beneficiary is or is not totally or partially incapacitated
   15  physically or mentally and whether he or she is or is not engaged in  or
   16  able to engage in a gainful occupation. If the board concurs in a report
   17  by  the medical board that such beneficiary is able to engage in a gain-
   18  ful occupation, he or she shall certify the name of such beneficiary  to
   19  the  appropriate  civil service commission, state or municipal, and such
   20  commission shall place his or her name as a preferred eligible  on  such
   21  appropriate lists of candidates as are prepared for appointment to posi-
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD07617-02-5
       A. 5295                             2
    1  tions for which he or she is stated to be qualified. Should such benefi-
    2  ciary be engaged in a gainful occupation, or should he or she be offered
    3  city-service  as  a  result of the placing of his or her name on a civil
    4  service list, such board shall reduce the amount of his or her disabili-
    5  ty  pension  and his or her pension-for-increased-take-home-pay, if any,
    6  to an amount which, when added to that then earned by  him  or  her,  or
    7  earnable  by him or her in city-service so offered him or her, shall not
    8  exceed the current maximum salary for the title next  higher  than  that
    9  held by him or her when he or she was retired. Should the earning capac-
   10  ity of such beneficiary be further altered, such board may further alter
   11  his  or  her pension and his or her pension-for-increased-take-home-pay,
   12  if any, to an amount which shall not exceed the rate of pension and  his
   13  or her pension-for-increased-take-home-pay, if any, upon which he or she
   14  was  originally  retired  but  which,  subject to such limitation, shall
   15  equal, when added to that earnable by him or her,  the  current  maximum
   16  salary for the title next higher than that held by him or her when he or
   17  she  was  retired. The provisions of this section shall be executed, any
   18  provision of the charter or the code to the contrary notwithstanding.
   19    b. Should any disability pensioner, under the minimum  age  or  period
   20  for service retirement elected by him or her, OR ANY DISABILITY PENSION-
   21  ER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF
   22  THE  RETIREMENT  AND SOCIAL SECURITY LAW, AND WHO IS UNDER EARLY RETIRE-
   23  MENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF  THE  RETIREMENT  AND
   24  SOCIAL  SECURITY  LAW  FOR  POLICE/FIRE MEMBERS, refuse to submit to one
   25  medical examination in any year by a physician or physicians  designated
   26  by  the medical board, his or her pension and his or her pension-for-in-
   27  creased-take-home-pay, if any, may be  discontinued  until  his  or  her
   28  withdrawal  of  such refusal. Should such refusal continue for one year,
   29  all his or her rights in and to such pension and his or her pension-for-
   30  increased-take-home-pay, if any, may be revoked by such board.
   31    S 2. Section 506 of the retirement and social security law is  amended
   32  by adding a new subdivision e to read as follows:
   33    E.  1.  NOTWITHSTANDING  ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
   34  GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR  RULE  OR
   35  REGULATION  TO  THE CONTRARY, SUBDIVISIONS A, B, C AND D OF THIS SECTION
   36  SHALL NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND  WHO
   37  ARE  SUBJECT  TO  THIS  ARTICLE.  A  MEMBER  OF THE NEW YORK CITY POLICE
   38  PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL  INSTEAD  BE  ELIGIBLE
   39  FOR  ORDINARY  DISABILITY RETIREMENT PURSUANT TO SECTIONS 13-216, 13-251
   40  AND 13-254 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK, AND SHALL
   41  RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
   42    (I) AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR  HER
   43  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
   44    (II)   A   PENSION   WHICH   IS   THE   ACTUARIAL  EQUIVALENT  OF  THE
   45  RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
   46  TLED, IF ANY; AND
   47    (III) A PENSION, WHICH, TOGETHER WITH  HIS  OR  HER  ANNUITY  AND  THE
   48  PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
   49  A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
   50  SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
   51  OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
   52  RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
   53  OR  (2)  ONE-THIRD  OF  HIS OR HER FINAL AVERAGE SALARY, IF THE YEARS OF
   54  CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
       A. 5295                             3
    1    2. THE PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION  FIVE  HUNDRED
    2  SEVEN  OF  THIS  ARTICLE  SHALL  APPLY TO DISABILITY BENEFITS UNDER THIS
    3  SUBDIVISION.
    4    S  3.  Clause 1 of subparagraph (a) of paragraph 2 of subdivision g of
    5  section 507 of the retirement and social security  law,  as  amended  by
    6  chapter 489 of the laws of 2008, is amended to read as follows:
    7    [(1)]  Notwithstanding the provisions of this chapter or of any gener-
    8  al, special or local law, charter, administrative code or rule or  regu-
    9  lation  to  the  contrary,  if  a member who participated in World Trade
   10  Center rescue, recovery or cleanup operations, as defined in section two
   11  of this chapter, and subsequently retired on a  service  retirement,  an
   12  ordinary  disability  retirement, AN ACCIDENTAL DISABILITY RETIREMENT, A
   13  VESTED RETIREMENT or a performance of  duty  disability  retirement  and
   14  subsequent to such retirement is determined by the comptroller or appli-
   15  cable  retirement  system  board  of trustees to have a qualifying World
   16  Trade Center condition, as defined in section two of this chapter,  upon
   17  such  determination  by  the comptroller OR APPLICABLE RETIREMENT SYSTEM
   18  BOARD OF TRUSTEES it shall be presumed that such disability was incurred
   19  in the performance and discharge of duty as the  natural  and  proximate
   20  result  of  an  accident  not caused by such member's own willful negli-
   21  gence, and that the member would have been physically or mentally  inca-
   22  pacitated for the performance and discharge of duty of the position from
   23  which he or she retired had the condition been known and fully developed
   24  at the time of the member's retirement, unless the contrary is proven by
   25  competent evidence.
   26    S  4. Section 507 of the retirement and social security law is amended
   27  by adding a new subdivision j to read as follows:
   28    J. NOTWITHSTANDING ANY OTHER PROVISION  OF  THIS  CHAPTER  OR  OF  ANY
   29  GENERAL,  SPECIAL  OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
   30  REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E  AND  F  OF  THIS
   31  SECTION  SHALL  NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION
   32  FUND WHO ARE SUBJECT TO THIS ARTICLE. A MEMBER  OF  THE  NEW  YORK  CITY
   33  POLICE  PENSION  FUND  WHO  IS  SUBJECT TO THIS ARTICLE SHALL INSTEAD BE
   34  ELIGIBLE FOR  ACCIDENTAL  DISABILITY  RETIREMENT  PURSUANT  TO  SECTIONS
   35  13-215,  13-252 AND 13-254 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW
   36  YORK, AND SHALL RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
   37    1. AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS  OR  HER
   38  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
   39    2.  A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE RESERVE-FOR-IN-
   40  CREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTITLED,  IF  ANY;
   41  AND
   42    3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
   43  ADDITION  TO  THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS ONE AND
   44  TWO OF THIS SUBDIVISION.
   45    S 5. Section 510 of the retirement and social security law is  amended
   46  by adding a new subdivision i to read as follows:
   47    I. NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE OR THE ADMINIS-
   48  TRATIVE  CODE OF THE CITY OF NEW YORK, THE ANNUAL ESCALATION PROVIDED IN
   49  THIS SECTION SHALL NOT APPLY TO THE ORDINARY  OR  ACCIDENTAL  DISABILITY
   50  RETIREMENT  BENEFIT  OF MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND
   51  WHO RETIRE PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF
   52  THIS ARTICLE. THE ORDINARY OR ACCIDENTAL DISABILITY  RETIREMENT  BENEFIT
   53  OF  MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND WHO RETIRE PURSUANT
   54  TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTICLE  SHALL
   55  BE  ADJUSTED  FOR  COST-OF-LIVING  PURSUANT TO THE PROVISIONS OF SECTION
   56  13-696 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK.
       A. 5295                             4
    1    S 6. Subdivision f of section 511 of the retirement and social securi-
    2  ty law, as amended by chapter 18 of the laws of 2012, is amended to read
    3  as follows:
    4    f.  This  section  shall not apply to general members in the uniformed
    5  correction force of the New York city department  of  correction  or  to
    6  uniformed  personnel  in  institutions  under  the  jurisdiction  of the
    7  department of corrections and community supervision and security  hospi-
    8  tal treatment assistants, as those terms are defined in subdivision i of
    9  section  eighty-nine  of  this  chapter,  provided,  however,  that  the
   10  provisions of this section shall apply to  a  New  York  city  uniformed
   11  correction/sanitation  revised  plan member, AND THIS SECTION SHALL ALSO
   12  NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION  FUND  WHO  ARE
   13  SUBJECT  TO THIS ARTICLE WHO RETIRE ON ORDINARY OR ACCIDENTAL DISABILITY
   14  RETIREMENT PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF
   15  THIS ARTICLE.
   16    S 7. Section 512 of the retirement and social security law is  amended
   17  by adding a new subdivision e to read as follows:
   18    E. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
   19  ANY  OTHER  GENERAL SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF THE
   20  NEW YORK CITY POLICE PENSION FUND WHO RETIRE PURSUANT  TO  SECTION  FIVE
   21  HUNDRED  SIX  AND  FIVE  HUNDRED  SEVEN OF THIS ARTICLE A MEMBER'S FINAL
   22  AVERAGE SALARY SHALL MEAN THE SALARY EARNED BY SUCH  MEMBER  DURING  THE
   23  ONE-YEAR  PERIOD  IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF ANY FORM
   24  OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION
   25  OF RETIREMENT) OR ANY LUMP SUM PAYMENT FOR DEFERRED  COMPENSATION,  SICK
   26  LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT
   27  WORKED  (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR AUTHOR-
   28  IZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED
   29  DURING THE ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT EXCEEDS  THAT
   30  OF  THE  PREVIOUS  ONE-YEAR  PERIOD  BY MORE THAN TWENTY PER CENTUM, THE
   31  AMOUNT IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED FROM THE  COMPU-
   32  TATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVERAGE SALARY, ANY
   33  MONTH  OR  MONTHS  (NOT  IN  EXCESS  OF  THREE) WHICH WOULD OTHERWISE BE
   34  INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH  THE  MEMBER
   35  WAS  ON  AUTHORIZED  LEAVE OF ABSENCE WITHOUT PAY SHALL BE EXCLUDED FROM
   36  THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR AN EQUAL NUMBER
   37  OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU
   38  THEREOF.
   39    S 8. This act shall take effect on the sixtieth  day  after  it  shall
   40  have become a law.
         FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
         PROVISIONS  OF  PROPOSED  LEGISLATION: This proposed legislation would
       amend Retirement and Social Security Law  ("RSSL")  Sections  506,  507,
       510,  511  and 512 and amend Administrative Code of the City of New York
       ("ACNY") Section 13-254 to change, for members  of  the  New  York  City
       Police  Pension  Fund  ("POLICE") subject to Article 14 of the RSSL, the
       eligibility for and the calculation of  Ordinary  Disability  Retirement
       ("ODR") benefits and Accidental Disability Retirement ("ADR") benefits.
         For  purposes of this Fiscal Note, all POLICE members subject to Arti-
       cle 14 of the RSSL will be referred to as "Tier III POLICE Members."  Of
       those  Tier  III  POLICE  Members who have a date of membership prior to
       April 1, 2012, they will be referred to as  "Original  Tier  III  POLICE
       Members." Of those Tier III POLICE Members who have a date of membership
       on or after April 1, 2012, they will be referred to as "Revised Tier III
       POLICE Members."
       A. 5295                             5
         The  Effective  Date of the proposed legislation would be the 60th day
       after the date of enactment.
         IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
       ODR benefits for Tier III POLICE Members are based on:
         * Completing five or more years of service, and
         *  Becoming eligible for Primary Social Security Disability retirement
       benefits.
         Such ODR benefits are equal to the greater of:
         * 33 1/3% of Three-Year Final Average  Salary  ("FAS3")  for  Original
       Tier  III  POLICE Members or Five-Year Final Average Salary ("FAS5") for
       Revised Tier III POLICE Members, or
         * 2% of FAS3 (FAS5 for Revised Tier III POLICE Members) multiplied  by
       years of credited service (not in excess of 22 years),
         *  Reduced  by  50% of the Primary Social Security Disability benefits
       (determined under RSSL Section 511), and
         * Reduced by 100% of Workers' Compensation benefits (if any).
         It is the understanding of the Actuary that  POLICE  Members  are  not
       covered by Workers' Compensation.
         Under  the  proposed  legislation the eligibility requirements for ODR
       benefits for Tier III POLICE Members would be revised to be the same  as
       those  provided  in  ACNY  Sections 13-216, 13-251 and 13-254 (i.e., the
       provisions applicable to Tier I and Tier II POLICE members).
         In particular, completing five or more years of service would  not  be
       required in order to be eligible for ODR benefits. In other words, there
       would  not  any  requirement  for  any  minimum  length of service to be
       completed in order to be eligible for ODR benefits.
         Under the proposed legislation, if enacted, the ODR benefit  for  Tier
       III POLICE Members would be an allowance consisting of:
         * An actuarial equivalent annuity of accumulated member contributions,
       plus
         *  A  pension,  which together with the annuity, equal to 1/40 of One-
       Year Final Average Salary  ("FAS1")  multiplied  by  years  of  credited
       service, but not less than:
         *  1/2 of FAS1, if years of credited service are greater than or equal
       to 10 years, or
         * 1/3 of FAS1, if years of credited service are less than 10 years.
         Note: The proposed legislation also states that one component  of  the
       ODR  benefit  would be the actuarial equivalent annuity of an Increased-
       Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
       in this Fiscal Note analysis since it is the understanding of the  Actu-
       ary  that ITHP is not available to Tier III members generally and is not
       specifically defined in the proposed legislation.
         In addition, the proposed legislation would NOT apply  the  Escalation
       available  under  RSSL  Section  510 to ODR benefits for Tier III POLICE
       Members. However, such ODR benefits would still be eligible for Cost-of-
       Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
         IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions for
       ADR benefits for Tier III POLICE Members are based on satisfying either:
         * Being eligible for Social Security  Disability  retirement  benefits
       and  having  become disabled due to an accident sustained in the line of
       duty, or
         * Being physically or mentally incapacitated as a result of  an  acci-
       dent  sustained  in  the  line  of duty as determined by the appropriate
       administrative authority assigned by POLICE.
       A. 5295                             6
         As a consequence of RSSL Section 507.e, a Tier III POLICE Member would
       not be eligible for ADR unless the member waived  the  benefits  of  any
       statutory presumptions (e.g., certain heart diseases).
         Such  ADR benefits are calculated using a formula of 50% multiplied by
       FAS3 for Original Tier III Police Members or FAS5 for Revised  Tier  III
       POLICE  Members  less  50% of Primary Social Security disability benefit
       (determined under RSSL Section 511) and less 100%  of  Workers'  Compen-
       sation benefits (if any).
         Note:  It  is the understanding of the Actuary that POLICE Members are
       not covered by Workers' Compensation.
         Under the proposed legislation the eligibility  requirements  for  ADR
       benefits  for Tier III POLICE Members would be revised to be the same as
       those provided in ACNY Sections 13-216, 13-252  and  13-254  (i.e.,  the
       provisions applicable to Tier I and Tier II POLICE Members).
         In  addition, it is the understanding of the Actuary that the proposed
       legislation, if enacted, would provide Tier III POLICE Members the abil-
       ity to be eligible for and to utilize the statutory presumptions  (e.g.,
       certain  heart  diseases) that qualify certain Tier I and Tier II POLICE
       Members for ADR.
         Under the proposed legislation, if enacted, the ADR benefit  for  Tier
       III  POLICE  Members  would  be  revised to equal a retirement allowance
       equal to the sum of:
         * An actuarial equivalent annuity of accumulated member contributions,
       plus
         * 75% multiplied by FAS1.
         Note: The proposed legislation also states that one component  of  the
       ADR  benefit  would be the actuarial equivalent annuity of an Increased-
       Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
       in this Fiscal Note analysis since it is the understanding of the  Actu-
       ary  that ITHP is not available to Tier III members generally and is not
       specifically defined in the proposed legislation.
         Also note, it is the understanding of the Actuary that  the  Tier  III
       POLICE  Members  impacted  by the proposed legislation would not receive
       any additional 1/60 of annual earnings after 20 years of service.
         In addition, the proposed legislation would NOT apply  the  Escalation
       available  under  RSSL  Section  510 to ADR benefits for Tier III POLICE
       Members. However, such ADR benefits would still be eligible for Cost-of-
       Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
         FINANCIAL IMPACT - CHANGES IN BENEFITS  -  ACTUARIAL  PRESENT  VALUES.
       Based on the census data and the actuarial assumptions and methods noted
       herein,  if  the Effective Date is on or before June 30, 2015, then this
       would change the Actuarial Present Value ("APV") of  benefits  ("APVB"),
       APV  of  member  contributions, the Unfunded Actuarial Accrued Liability
       ("UAAL") and APV of future employer contributions as of  June  30,  2013
       for Tier III POLICE Members.
         FINANCIAL  IMPACT  -  CHANGES  IN  PROJECTED  APV  OF  FUTURE EMPLOYER
       CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
       Fiscal Note, it is assumed that the  changes  in  APBV,  APV  of  member
       contributions,  UAAL  and  APV of future employer contributions would be
       reflected for the first time in the June 30, 2013 actuarial valuation of
       POLICE.
         Under the One-Year Lag  Methodology  ("OYLM"),  the  first  year  that
       changes  in  benefits  for Tier III POLICE Members could impact employer
       contributions to POLICE would be Fiscal Year 2015.
         In accordance with ACNY Section 13.638.2(k-2), new  UAAL  attributable
       to  benefit changes are to be amortized as determined by the Actuary but
       A. 5295                             7
       generally over the remaining working lifetime of those impacted  by  the
       benefit  changes. As of June 30, 2013, the remaining working lifetime of
       the Tier III POLICE Members is approximately 18 years. Recognizing  that
       this  period  will  decrease  over time as the group of Tier III Members
       matures, the Actuary would  likely  choose  to  amortize  the  new  UAAL
       attributable  to  this  proposed  legislation  over a 15-year period (14
       payments under the OYLM Methodology).
         The following Table 1 presents an estimate of the increases due to the
       changes in ODR and ADR provisions for Tier III POLICE Members in the APV
       of future employer contributions and in employer contributions to POLICE
       for Fiscal Years 2015 through 2019 that would occur based on the  appli-
       cable actuarial assumptions and methods noted herein:
                                        Table 1
                         Estimated Financial Impact on POLICE
                           If Certain Revisions are Made to
                          Provisions for ODR and ADR Benefits
                             for Tier III POLICE Members*
                                     ($ Millions)
                               Increase in APV of        Increase in Employer
       Fiscal Year       Future Employer Contributions       Contributions
          2015                      $272.3                        $35.7
          2016                       378.7                         47.2
          2017                       469.6                         56.9
          2018                       552.8                         65.5
          2019                       622.9                         72.2
       *  Based on actuarial assumptions and methods set forth in the Actuarial
       Assumptions and Method Section. Also, based on  the  projection  assump-
       tions as described herein.
         ODR  and  ADR  benefits  are  NOT subject to Tier III Escalation (RSSL
       Section 510).
         The estimated increases in employer contributions shown in Table 1 are
       based upon the following projection assumptions:
         * Level workforce (i.e. new employees are hired to replace  those  who
       leave active status).
         * Projected salary increases consistent with those used in projections
       presented  to  the  New  York  City  Office  of  Management  and  Budget
       ("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
       nary Projections").
         * New entrant salaries consistent  with  those  used  in  the  Updated
       Preliminary Projections.
         These  "open group" projections include future new entrants introduced
       into the census data models to project the future workforces.
         As of each future actuarial valuation date, the current "closed group"
       actuarial assumptions and valuation methodology are used.
         Under this methodology only Plan participants  as  of  each  actuarial
       valuation  date  are  utilized  to  determine  APVs,  employer costs and
       employer contributions.
         FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
       Normal Costs can provide a useful basis to compare the value of alterna-
       tive benefit programs.
       A. 5295                             8
         For each member who enters POLICE, there is a theoretical  net  annual
       employer  cost  to  be  paid  for  such member while such member remains
       actively employed (i.e., the Employer Entry Age Normal Cost (referred to
       hereafter as "EEANC")).
         In  addition,  such  EEANC  may be expressed as a percentage of salary
       earned over a working lifetime and referred to as the Employer Entry Age
       Normal Rate (referred to hereafter as "EEANR").
         Under the proposed legislation and based on the actuarial  assumptions
       noted  herein,  the  EEANC and EEANR of Tier III POLICE Members would be
       greater than the EEANC and EEANR for comparable Tier III POLICE  Members
       entering  at  the  same attained age and gender under the current POLICE
       provisions.
         Table 2A shows a summary of the change in EEANC for Original Tier  III
       POLICE  Members  for  entry ages 25, 30 and 35 determined as of the most
       recent date of published EEANR calculations:
                                       Table 2A
                     Comparison of Employer Entry Age Normal Rates
                            Determined as of June 30, 2012*
                    To Implement Certain ODR and ADR Provisions for
                           Original Tier III POLICE Members
                              Under Proposed Legislation
                                          and
                                   Under Current Law
                              EEANR Under Proposed Legislation**
                        Entry Age 25         Entry Age 30         Entry Age 35
        Retirement
          System      Male     Female      Male     Female      Male     Female
       POLICE        23.91%    24.74%     25.15%    26.14%     27.27%    28.46%
                              EEANR Under Current Law
       POLICE        20.92%    21.75%     20.73%    21.71%     20.50%    21.63%
                              Increase in EEANR Due to Proposed Legislation
       POLICE        2.99%     2.99%      4.42%     4.43%      6.77%     6.83%
       * Based on salaries paid over entire working lifetime. EEANR do not vary
       significantly over time,  absent  benefit  and/or  actuarial  assumption
       changes.
       **  EEANR  determined under the terms of the revised ODR and ADR benefit
       provisions based on the Actuarial Assumptions and Methods as noted here-
       in including changes in assumptions for ADR. ODR and  ADR  benefits  are
       NOT subject to Tier III Escalation (RSSL Section 510).
         Table  2B  shows a summary of the change in EEANC for Revised Tier III
       POLICE Members for entry ages 25, 30 and 35 determined as  of  the  most
       recent date of published EEANR calculations:
                                       Table 2B
       A. 5295                             9
                     Comparison of Employer Entry Age Normal Rates
                            Determined as of June 30, 2012*
                    To implement Certain ODR and ADR Provisions for
                            Revised Tier III POLICE Members
                              Under Proposed Legislation
                                          and
                                   Under Current Law
                              EEANR Under Proposed Legislation**
                        Entry Age 25         Entry Age 30         Entry Age 35
        Retirement
          System      Male     Female      Male     Female      Male     Female
       POLICE        23.36%    24.17%     24.68%    25.64%     26.90%    28.07%
                              EEANR Under Current Law
       POLICE        19.91%    20.71%     19.66%    20.59%     19.38%    20.46%
                              Increase in EEANR Due to Proposed Legislation
       POLICE        3.45%     3.46%      5.02%     5.05%      7.52%     7.61%
       * Based on salaries paid over entire working lifetime. EEANR do not vary
       significantly  over  time,  absent  benefit  and/or actuarial assumption
       changes.
       ** EEANR determined under the terms of the revised ODR and  ADR  benefit
       provisions based on the Actuarial Assumptions and Methods as noted here-
       in  including  changes  in assumptions for ADR. ODR and ADR benefits are
       NOT subject to Tier III Escalation (RSSL Section 510).
         OTHER COSTS: Not measured in this Fiscal Note are the following:
         * The initial, additional administrative costs of POLICE and other New
       York City agencies to implement the proposed legislation.
         * The potential  impact  if  this  proposed  legislation  were  to  be
       extended to other public safety employees (e.g., firefighters).
         *  The  impact  of  this  proposed legislation on Other Postemployment
       Benefit ("OPEB") costs.
         CENSUS DATA: The  starting  census  data  used  for  the  calculations
       presented  herein  are  the  census data used in the Updated Preliminary
       June 30, 2013 (Lag) actuarial valuation of POLICE used under the OYLM to
       determine the Updated Preliminary Fiscal  Year  2015  employer  contrib-
       utions.
         The census data used for the estimates of additional employer contrib-
       utions  presented  herein  are based on average salaries of new entrants
       utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial  valu-
       ations  used  to determine Updated Preliminary Fiscal Year 2015 employer
       contributions of POLICE.
         The 3,601 Original Tier III POLICE Members as of June 30, 2013 had  an
       average  age  of  approximately 28, average service of approximately 2.2
       years and an average salary of approximately $63,000.
         The 1,916 Revised Tier III POLICE Members as of June 30, 2013  had  an
       average  age  of  approximately 27, average service of approximately 0.6
       years and an average salary of approximately $55,000.
       A. 5295                            10
         Overall, the 5,517 Tier III POLICE Members as of June 30, 2013 had  an
       average  age  of  approximately 28, average service of approximately 1.7
       years, and an average salary of approximately $60,000.
         ACTUARIAL  ASSUMPTIONS  AND  METHODS: The additional employer contrib-
       utions presented herein have been  calculated  based  on  the  actuarial
       assumptions  and methods in effect for the June 30, 2013 (Lag) actuarial
       valuations used  to  determine  Updated  Preliminary  Fiscal  Year  2015
       employer  contributions of POLICE and adjusted for revised ADR eligibil-
       ity provisions.
         The probabilities of accidental disability used for  Tier  III  POLICE
       Members  in  the  event statutory presumptions were to apply equal those
       currently used for Tier I and Tier II POLICE Members.
         The actuarial valuation methodology does not include a calculation  of
       the  value  of an offset for Workers' Compensation benefits as it is the
       understanding of the Actuary that POLICE Members are not covered by such
       benefits.
         To the extent that the enactment of this  proposed  legislation  would
       cause a greater (lesser) number of Tier III POLICE Members to be reclas-
       sified  from Ordinary Disability to Accidental Disability Retirement, or
       to the extent that Tier III POLICE Members who would not otherwise  ever
       choose to apply and then receive an Ordinary Disability Retirement bene-
       fit  or an Accidental Disability Retirement benefit, then the additional
       APVB and employer contributions shown herein would be greater (lesser).
         Employer contributions under current methodology have  been  estimated
       assuming  the  additional  APVB  would be financed through future normal
       contributions including an amortization of the new UAAL attributable  to
       this  proposed  legislation over a 15-year period (14 payments under the
       OYLM Methodology).
         New entrants into Tier III POLICE Members were  projected  to  replace
       the POLICE members expected to leave the active population to maintain a
       steady-state population.
         The following Table 3 presents the total number of active employees of
       POLICE  used  in  the  projections, assuming a level work force, and the
       cumulative number (i.e., net of withdrawals) of Revised Tier III Members
       as of each June 30 from 2013 through 2017.
                                        Table 3
                    Surviving Actives from Census on June 30, 2013
                                          and
               Cumulative New Revised Tier III POLICE Members from 2013
                                Used in the Projections*
                                     Original        Revised
       June 30        Tier I&II      Tier III       Tier III        Total
        2013           29,258         3,601           1,916         34,775
        2014           26,784         3,500           4,491         34,775
        2015           24,565         3,406           6,804         34,775
        2016           22,571         3,314           8,890         34,775
        2017           20,937         3,225          10,613         34,775
       *  Total active members included in the projections assume a level  work
       force  based on the June 30, 2013 (Lag) actuarial valuation census data.
       Assumes presumptions apply to Tier III POLICE members.
         For purposes of estimating the impact of the Tier III  Escalation  for
       retired  Tier III POLICE Members, consistent with an underlying Consumer
       A. 5295                            11
       Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
       of 2.5% per year has been assumed.
         This  compares  with  the current Chapter 125 of the Laws of 2000 COLA
       assumption of 1.5% per year (i.e., 50% of CPI adjusted to recognize 1.0%
       minimum and 3.0% maximum) on the first $18,000 of benefit.
         For Variable Supplements Fund ("VSF") benefits, it  has  been  assumed
       that  retroactive  lump  sum  payments of VSF ("DROP payments") would be
       payable from the completion of 20 years of service.
         ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to  deter-
       mine  the financial impact of the proposed legislation discussed in this
       Fiscal Note are those appropriate for budgetary models  and  determining
       annual employer contributions to POLICE.
         However, the economic assumptions (current and proposed) that are used
       for  determining  employer  contributions  do not develop risk-adjusted,
       economic values of benefits.  Such  risk-adjusted,  economic  values  of
       benefits  would  likely differ significantly from those developed by the
       budgetary models.
         STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Acting
       Chief Actuary for the New York City Retirement Systems. I am a Fellow of
       the Society of Actuaries and a Member of the American Academy of Actuar-
       ies.  I meet the Qualification Standards  of  the  American  Academy  of
       Actuaries to render the actuarial opinion contained herein.
         FISCAL  NOTE  IDENTIFICATION:  This  estimate is intended for use only
       during the 2015 Legislative Session. It is Fiscal  Note  2015-02,  dated
       January  30,  2015  prepared by the Acting Chief Actuary of the New York
       City Retirement Systems.