S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                         3966
                              2015-2016 Regular Sessions
                                   I N  S E N A T E
                                   February 24, 2015
                                      ___________
       Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
         printed to be committed to the Committee on Cities
       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  and  fire  department
         pension funds
         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 13-357 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  own  application
    5  shall,  require  any  disability pensioner, under the minimum period for
    6  service retirement elected by him or her, and who at the time of his  or
    7  her  retirement  for disability was an improved benefits plan member, OR
    8  ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
    9  FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW, AND WHO IS
   10  UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
   11  RETIREMENT AND SOCIAL SECURITY LAW FOR POLICE/FIRE  MEMBERS  to  undergo
   12  medical  examination.  Such  examination  shall  be made at the place of
   13  residence of such beneficiary or other place mutually agreed upon.  Upon
   14  the  completion  of  such examination the medical board shall report and
   15  certify to the board whether such beneficiary is or is  not  totally  or
   16  partially  incapacitated physically or mentally and whether he or she is
   17  or is not engaged in or able to engage in a gainful occupation.  If  the
   18  board  concur  in a report by the medical board that such beneficiary is
   19  able to engage in a gainful occupation, it shall  certify  the  name  of
   20  such  beneficiary  to the appropriate civil service commission, state or
   21  municipal, and such  commission  shall  place  his  or  her  name  as  a
   22  preferred  eligible  on  such  appropriate  lists  of  candidates as are
   23  prepared for appointment to positions for which he or she is  stated  to
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD05874-05-5
       S. 3966                             2
    1  be  qualified.  Should  such beneficiary be engaged in a gainful occupa-
    2  tion, or should he or she be offered city-service as  a  result  of  the
    3  placing  of  his  or  her name on a civil service list, such board shall
    4  reduce  the  amount  of  his  or  her  disability pension and his or her
    5  pension-providing-for-increased-take-home-pay,  if  any,  to  an  amount
    6  which,  when added to that then earned by him or her, or earnable by him
    7  or her in city-service so offered him  or  her,  shall  not  exceed  the
    8  current  maximum  salary for the title next higher than that held by him
    9  or her when he or she was retired. Should the earning capacity  of  such
   10  beneficiary  be further altered, such board may further alter his or her
   11  pension and his or her pension-providing-for-increased-take-home-pay, if
   12  any, to an amount which shall not exceed the rate of pension and his  or
   13  her pension-providing-for-increased-take-home-pay, if any, upon which he
   14  or  she  was  originally  retired but which, subject to such limitation,
   15  shall equal, when added to that earnable by  him  or  her,  the  current
   16  maximum  salary  for  the title next higher than that held by him or her
   17  when he or she was retired. The provisions  of  this  section  shall  be
   18  executed,  any  provision  of  the  charter  or the code to the contrary
   19  notwithstanding.
   20    b. Should any disability  pensioner,  under  the  minimum  period  for
   21  service  retirement elected by him or her, and who was an improved bene-
   22  fits plan member at the time of his or her retirement for disability, OR
   23  ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
   24  FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW AND WHO  IS
   25  UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
   26  RETIREMENT  AND  SOCIAL  SECURITY LAW FOR POLICE/FIRE MEMBERS, refuse to
   27  submit to one medical examination in any year by a physician  or  physi-
   28  cians designated by the medical board, his or her pension and his or her
   29  pension-providing-for-increased-take-home-pay, if any, may be discontin-
   30  ued  until  his  or  her withdrawal of such refusal. Should such refusal
   31  continue for one year, all his or her rights in and to such pension  and
   32  his or her pension-providing-for-increased-take-home-pay, if any, may be
   33  revoked by such board.
   34    S  2. Section 506 of the retirement and social security law is amended
   35  by adding two new subdivisions e and f to read as follows:
   36    E. 1. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER  OR  OF  ANY
   37  GENERAL,  SPECIAL  OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
   38  REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C AND D OF  THIS  SECTION
   39  SHALL  NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND WHO
   40  ARE SUBJECT TO THIS ARTICLE. A  MEMBER  OF  THE  NEW  YORK  CITY  POLICE
   41  PENSION  FUND  WHO  IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGIBLE
   42  FOR ORDINARY DISABILITY  RETIREMENT  PURSUANT  TO  SECTIONS  13-251  AND
   43  13-254  OF  THE  ADMINISTRATIVE  CODE OF THE CITY OF NEW YORK, AND SHALL
   44  RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
   45    (I) AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR  HER
   46  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
   47  AND
   48    (II)   A   PENSION   WHICH   IS   THE   ACTUARIAL  EQUIVALENT  OF  THE
   49  RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
   50  TLED, IF ANY; AND
   51    (III) A PENSION, WHICH, TOGETHER WITH  HIS  OR  HER  ANNUITY  AND  THE
   52  PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
   53  A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
   54  SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
   55  OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
   56  RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
       S. 3966                             3
    1  OR  (2)  ONE-THIRD  OF  HIS OR HER FINAL AVERAGE SALARY, IF THE YEARS OF
    2  CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
    3    2.  THE  PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION FIVE HUNDRED
    4  SEVEN OF THIS ARTICLE SHALL APPLY  TO  DISABILITY  BENEFITS  UNDER  THIS
    5  SUBDIVISION.
    6    F.  1.  NOTWITHSTANDING  ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
    7  GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR  RULE  OR
    8  REGULATION  TO  THE CONTRARY, SUBDIVISIONS A, B, C AND D OF THIS SECTION
    9  SHALL NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION  FUND
   10  WHO  ARE  SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK FIRE DEPART-
   11  MENT PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGI-
   12  BLE FOR ORDINARY DISABILITY RETIREMENT PURSUANT TO SECTIONS  13-352  AND
   13  13-357  OF  THE  ADMINISTRATIVE  CODE OF THE CITY OF NEW YORK, AND SHALL
   14  RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
   15    (I) AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR  HER
   16  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
   17  AND
   18    (II)   A   PENSION   WHICH   IS   THE   ACTUARIAL  EQUIVALENT  OF  THE
   19  RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
   20  TLED, IF ANY, AND
   21    (III) A PENSION, WHICH TOGETHER  WITH  HIS  OR  HER  ANNUITY  AND  THE
   22  PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
   23  A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
   24  SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
   25  OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
   26  RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
   27  OR  (2)  ONE-THIRD  OF  HIS OR HER FINAL AVERAGE SALARY, IF THE YEARS OF
   28  CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
   29    2. THE PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION  FIVE  HUNDRED
   30  SEVEN  OF  THIS  ARTICLE  SHALL  APPLY TO DISABILITY BENEFITS UNDER THIS
   31  SUBDIVISION.
   32    S 3. Section 507 of the retirement and social security law is  amended
   33  by adding two new subdivisions j and k to read as follows:
   34    J.  NOTWITHSTANDING  ANY  OTHER  PROVISION  OF  THIS CHAPTER OR OF ANY
   35  GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR  RULE  OR
   36  REGULATION  TO  THE  CONTRARY,  SUBDIVISIONS A, B, C, D, E AND F OF THIS
   37  SECTION SHALL NOT APPLY TO MEMBERS OF THE NEW YORK CITY  POLICE  PENSION
   38  FUND  WHO  ARE  SUBJECT  TO  THIS ARTICLE. A MEMBER OF THE NEW YORK CITY
   39  POLICE PENSION FUND WHO IS SUBJECT TO  THIS  ARTICLE  SHALL  INSTEAD  BE
   40  ELIGIBLE  FOR  ACCIDENTAL  DISABILITY  RETIREMENT  PURSUANT  TO SECTIONS
   41  13-215, 13-252 AND 13-254 OF THE ADMINISTRATIVE CODE OF THE CITY OF  NEW
   42  YORK, AND SHALL RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
   43    1.  AN  ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
   44  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR  HER    RETIRE-
   45  MENT;
   46    2.  A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE RESERVE-FOR-IN-
   47  CREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTITLED,  IF  ANY;
   48  AND
   49    3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
   50  ADDITION  TO  THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS ONE AND
   51  TWO OF THIS SUBDIVISION.
   52    K. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR ANY GENERAL,
   53  SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR REGULATION
   54  TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E, AND F OF THIS SECTION SHALL
   55  NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT  PENSION  FUND  WHO
   56  ARE  SUBJECT  TO  THIS ARTICLE. A MEMBER OF THE NEW YORK FIRE DEPARTMENT
       S. 3966                             4
    1  PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL  INSTEAD  BE  ELIGIBLE
    2  FOR  ACCIDENTAL  DISABILITY  RETIREMENT  PURSUANT  TO  SECTIONS  13-353,
    3  13-354, AND 13-357 OF THE ADMINISTRATIVE CODE OF THE CITY  OF  NEW  YORK
    4  AND  ANY  ACCIDENTAL DISABILITY RETIREMENT BENEFITS FOUND IN THE GENERAL
    5  MUNICIPAL LAW AND SHALL  RECEIVE  A  RETIREMENT  ALLOWANCE  WHICH  SHALL
    6  CONSIST OF:
    7    1.  AN  ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
    8  ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
    9  AND
   10    2. A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE  RESERVE-FOR-IN-
   11  CREASED-TAKE-HOME-PAY  TO  WHICH HE OR SHE MAY THEN BE ENTITLED, IF ANY;
   12  AND
   13    3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
   14  ADDITION TO THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS  ONE  AND
   15  TWO OF THIS SUBDIVISION.
   16    S  4. Section 510 of the retirement and social security law is amended
   17  by adding a new subdivision i to read as follows:
   18    I. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS ARTICLE OR THE  ADMIN-
   19  ISTRATIVE  CODE  OF THE CITY OF NEW YORK, THE ANNUAL ESCALATION PROVIDED
   20  IN THIS SECTION SHALL NOT APPLY TO THE ORDINARY OR ACCIDENTAL DISABILITY
   21  RETIREMENT BENEFIT OF MEMBERS OF THE NEW YORK CITY POLICE  PENSION  FUND
   22  OR  MEMBERS  OF  THE  NEW  YORK  FIRE DEPARTMENT PENSION FUND WHO RETIRE
   23  PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTI-
   24  CLE. THE ORDINARY OR ACCIDENTAL DISABILITY RETIREMENT BENEFIT OF MEMBERS
   25  OF THE NEW YORK FIRE DEPARTMENT PENSION  FUND  WHO  RETIRE  PURSUANT  TO
   26  SECTION  FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTICLE SHALL BE
   27  ADJUSTED FOR COST-OF-LIVING PURSUANT TO THE PROVISIONS OF SECTION 13-696
   28  OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK.
   29    S 5. Subdivision f of section 511 of the retirement and social securi-
   30  ty law, as amended by chapter 18 of the laws of 2012, is amended to read
   31  as follows:
   32    f. This section shall not apply to general members  in  the  uniformed
   33  correction  force  of  the  New York city department of correction or to
   34  uniformed personnel  in  institutions  under  the  jurisdiction  of  the
   35  department  of corrections and community supervision and security hospi-
   36  tal treatment assistants, as those terms are defined in subdivision i of
   37  section  eighty-nine  of  this  chapter,  provided,  however,  that  the
   38  provisions  of  this  section  shall  apply to a New York city uniformed
   39  correction/sanitation revised plan member, AND THIS SECTION  SHALL  ALSO
   40  NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND OR THE NEW
   41  YORK  FIRE  DEPARTMENT  PENSION FUND WHO ARE SUBJECT TO THIS ARTICLE WHO
   42  RETIRE ON ORDINARY  OR  ACCIDENTAL  DISABILITY  RETIREMENT  PURSUANT  TO
   43  SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTICLE.
   44    S  6. Section 512 of the retirement and social security law is amended
   45  by adding two new subdivisions e and f to read as follows:
   46    E. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
   47  ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF  THE
   48  NEW  YORK  CITY POLICE PENSION FUND WHO RETIRE PURSUANT TO SECTIONS FIVE
   49  HUNDRED SIX AND FIVE HUNDRED SEVEN OF  THIS  ARTICLE  A  MEMBER'S  FINAL
   50  AVERAGE  SALARY  SHALL  MEAN THE SALARY EARNED BY SUCH MEMBER DURING THE
   51  ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF  ANY  FORM
   52  OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION
   53  OF  RETIREMENT)  OR ANY LUMP SUM PAYMENT FOR DEFERRED COMPENSATION, SICK
   54  LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT
   55  WORKED (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR  AUTHOR-
   56  IZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED
       S. 3966                             5
    1  DURING  THE ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT EXCEEDS THAT
    2  OF THE PREVIOUS ONE-YEAR PERIOD BY MORE  THAN  TWENTY  PER  CENTUM,  THE
    3  AMOUNT  IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED FROM THE COMPU-
    4  TATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVERAGE SALARY, ANY
    5  MONTH  OR  MONTHS  (NOT  IN  EXCESS  OF  THREE) WHICH WOULD OTHERWISE BE
    6  INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH  THE  MEMBER
    7  WAS  ON  AUTHORIZED  LEAVE OF ABSENCE WITHOUT PAY SHALL BE EXCLUDED FROM
    8  THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR AN EQUAL NUMBER
    9  OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU
   10  THEREOF.
   11    F. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
   12  ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF  THE
   13  NEW  YORK  FIRE  DEPARTMENT PENSION FUND WHO RETIRE PURSUANT TO SECTIONS
   14  FIVE HUNDRED SIX AND FIVE HUNDRED SEVEN OF THIS ARTICLE A MEMBER'S FINAL
   15  AVERAGE SALARY SHALL MEAN THE SALARY EARNED BY SUCH  MEMBER  DURING  THE
   16  ONE-YEAR  PERIOD  IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF ANY FORM
   17  OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION
   18  OF RETIREMENT), OR ANY LUMP SUM PAYMENT FOR DEFERRED COMPENSATION,  SICK
   19  LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT
   20  WORKED  (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR AUTHOR-
   21  IZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED
   22  DURING THE ONE YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT EXCEEDS  THAT
   23  OF  THE  PREVIOUS  ONE-YEAR  PERIOD  BY  MORE THAN TWENTY PER CENTUM THE
   24  AMOUNT IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED FROM THE  COMPU-
   25  TATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVERAGE SALARY, ANY
   26  MONTH  OR  MONTHS  (NOT  IN  EXCESS  OF  THREE) WHICH WOULD OTHERWISE BE
   27  INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH  THE  MEMBER
   28  WAS  ON  AUTHORIZED  LEAVE OF ABSENCE WITHOUT PAY SHALL BE EXCLUDED FROM
   29  THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR AN EQUAL NUMBER
   30  OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU
   31  THEREOF.
   32    S 7. Paragraph (b) of subdivision 1 of section 13-353.1 of the  admin-
   33  istrative code of the city of New York is relettered paragraph (c) and a
   34  new paragraph (b) is added to read as follows:
   35    (B)  IN  ORDER TO BE ELIGIBLE FOR THE PRESUMPTION PROVIDED UNDER PARA-
   36  GRAPH (A) OF THIS SUBDIVISION,  A  MEMBER  MUST  HAVE  (I)  SUCCESSFULLY
   37  PASSED A PHYSICAL EXAMINATION FOR ENTRY INTO PUBLIC SERVICE WHICH FAILED
   38  TO DISCLOSE EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH
   39  THAT  FORMED THE BASIS FOR THE DISABILITY, OR (II) AUTHORIZED RELEASE OF
   40  ALL RELEVANT MEDICAL RECORDS, IF THE MEMBER DID NOT UNDERGO  A  PHYSICAL
   41  EXAMINATION  FOR  ENTRY INTO PUBLIC SERVICE, AND THERE IS NO EVIDENCE OF
   42  THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED  THE  BASIS
   43  FOR THE DISABILITY IN SUCH MEDICAL RECORDS PRIOR TO SEPTEMBER 11, 2001.
   44    S  8.  This  act  shall take effect on the sixtieth day after it shall
   45  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
       S. 3966                             6
       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."
         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
       S. 3966                             7
         *  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.
         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 ("APBV"),
       APV of members 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.
       S. 3966                             8
         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
       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 one 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
       applicable 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.
       S. 3966                             9
         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
       alternative benefit programs.
         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 ("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).
       S. 3966                            10
         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
                     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.
       S. 3966                            11
         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.
         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
       S. 3966                            12
         *  Total active members including 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
       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 Actuary Chief Actuary of the New York
       City Retirement Systems.
         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  13-357  to  change,  for members of the New York Fire
       Department Pension Fund ("FIRE") 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.
         Unless otherwise noted, for purposes of this Fiscal Note the term Tier
       III FIRE members refers to members  of  the  New  York  Fire  Department
       Pension  Fund ("FIRE") who have a date of membership on or after July 1,
       2009. Note: Although referred to herein as Tier III members,  it  should
       be  noted that members who join FIRE on or after April 1, 2012 are often
       referred to as Tier VI members or Revised Tier III members.  Also  Note:
       There  is  only one Tier III member of FIRE who has a date of membership
       on or after July 1, 2009 and prior to April 1, 2012.
         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 FIRE 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 Five-Year Final Average Salary ("FAS"), or
       S. 3966                            13
         * 2% of FAS 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  FIRE  Members  are  not
       covered by Workers' Compensation.
         Under  the  proposed  legislation the eligibility requirements for ODR
       benefits for Tier III FIRE Members would be revised to be  the  same  as
       those  provided  in  ACNY  Sections 13-316, 13-352 and 13-357 (i.e., the
       provisions applicable to Tier I and Tier II FIRE 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 FIRE 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  FIRE
       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 FIRE 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 FIRE.
         As  a  consequence of RSSL Section 507.e, a Tier III FIRE 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
       FAS less 50% of Primary Social Security disability  benefit  (determined
       under  RSSL Section 511) and less 100% of Workers' Compensation benefits
       (if any).
         Note: It is the understanding of the Actuary that FIRE Members are not
       covered by Workers' Compensation.
         Under the proposed legislation the eligibility  requirements  for  ADR
       benefits  for  Tier  III FIRE Members would be revised to be the same as
       those provided in ACNY Sections 13-316, 13-353  and  13-357  (i.e.,  the
       provisions applicable to Tier I and Tier II FIRE Members).
       S. 3966                            14
         In  addition, it is the understanding of the Actuary that the proposed
       legislation, if enacted, would provide that Tier III FIRE Members  could
       be  eligible  for  and utilize the statutory presumptions (e.g., certain
       heart diseases) that qualify certain Tier I and Tier II Fire Members for
       ADR.
         Under  the  proposed legislation, if enacted, the ADR benefit for Tier
       III FIRE 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
       FIRE 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  FIRE
       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 FIRE 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 APVB, 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
       FIRE.
         Under  the  One-Year  Lag  Methodology  ("OYLM"),  the first year that
       changes in benefits for Tier III  FIRE  Members  could  impact  employer
       contributions to FIRE 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
       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  FIRE Members is approximately 24 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  to  20-year
       period (between 14 and 19 payments under the OLYM Methodology). However,
       since  virtually all of the Tier III FIRE members that would be impacted
       by the benefit changes are new entrants, the resulting UAAL would be  de
       minimis and therefore the amortization period used for the UAAL has very
       little impact on the final results.
         The following Table 1 presents an estimate of the increases due to the
       changes  in  ODR and ADR provisions for Tier III FIRE Members in the APV
       of future employer contributions and in employer contributions  to  FIRE
       S. 3966                            15
       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 FIRE
                           If Certain Revisions are Made to
                          Provisions for ODR and ADR Benefits
                              for Tier III FIRE Members*
                                     ($ Millions)
                                 Increase in APV of         Increase in Employer
       Fiscal Year         Future Employer Contributions        Contributions
          2015                         $15.7                         $1.9
          2016                          67.7                          8.0
          2017                         119.6                         13.4
          2018                         172.7                         18.3
          2019                         227.0                         23.0
       * Based on actuarial assumptions and methods set forth in the Actuarial
       Assumptions and Method section. Also, based on the projection assumptions
       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  ("Preliminary
       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  determined  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.
         For  each  member  who  enters FIRE, 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 ("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 ("EEANR").
         Under the proposed legislation and based on the actuarial  assumptions
       noted  herein,  the  EEANC  and  EEANR of Tier III FIRE Members would be
       greater than the EEANC and EEANR for comparable Tier  III  FIRE  Members
       entering  at  the  same  attained  age and gender under the current FIRE
       provisions.
       S. 3966                            16
         Table 2 shows a summary of the change  in  EEANR  for  Tier  III  FIRE
       Members  who  have  a  date  of membership on or after April 1, 2012 for
       entry ages 25, 30 and 35 with a starting salary of  $45,000,  determined
       as of the most recent date of published EEANR calculations:
                                        Table 2
                     Comparison of Employer Entry Age Normal Rates
                            Determined as of June 30, 2012*
                    To Implement Certain ODR and ADR Provisions for
        Tier III FIRE Members with a Membership Date on or After April 1, 2012
                              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
       FIRE            21.92%   22.50%     27.31%   28.01%     34.55%   35.31%
                                EEANR Under Current Law
       FIRE            15.94%   16.51%     18.99%   19.68%     21.78%   22.51%
                     Increase In EEANR Due to Proposed Legislation
       FIRE            5.98%    5.99%      8.32%    8.33%      12.77%   12.80%
         * Based on salaries paid over entire working lifetime. EEANR do not var
       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 herein
       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 FIRE 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.
         *  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 FIRE used  to  determine  the
       Updated Preliminary Fiscal Year 2015 employer contributions.
         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 FIRE.
         The 169 Tier III FIRE Members as of June 30, 2013 (including  the  one
       Tier III member who has a date of membership prior to April 1, 2012) had
       S. 3966                            17
       an average age of approximately 27, average service of approximately 0.5
       years and an average salary of approximately $48,200.
         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 FIRE and adjusted for revised ADR eligibility
       provisions.
         The probabilities of accidental disability  used  for  Tier  III  FIRE
       Members  in  the  event statutory presumptions were to apply equal those
       currently used for Tier I and Tier II FIRE 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 FIRE 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 FIRE Members to be reclassi-
       fied from Ordinary Disability to Accidental Disability Retirement, or to
       the extent that Tier III FIRE  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 FIRE Members were projected to replace  the
       FIRE  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
       FIRE used in the projections, assuming a level work force, and the cumu-
       lative number (i.e., net of withdrawals) of 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 Tier III FIRE Members from 2013
                               Used in the Projections*
       June 30        Tier I & II         Tier III           Total
       2013           10,013              169                10,182
       2014           9,486               696                10,182
       2015           8,988               1,194              10,182
       2016           8,509               1,673              10,182
       2017           8,055               2,127              10,182
         * 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 FIRE members.
         For purposes of estimating the impact of the Tier III  Escalation  for
       retired  Tier  III  FIRE Members, consistent with an underlying Consumer
       Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
       of 2.5% per year has been assumed.
       S. 3966                            18
         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 FIRE.
         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 Actu-
       aries 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  2015-03,  dated
       January  30,  2015  prepared by the Acting Chief Actuary of the New York
       Fire Department Pension Fund.