STATE OF NEW YORK ________________________________________________________________________ 8220 IN SENATE December 19, 2016 ___________ Introduced by Sen. HOYLMAN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT relating to granting Tier I status to Cynthia Falletta in the Teachers' Retirement System of the City of New York with a membership date of June 1, 1972 The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Notwithstanding any inconsistent provision of law, Cynthia 2 Falletta, a member of the Teachers' Retirement System of the City of New 3 York (TRSNYC) with Tier IV status, who was employed by the City Univer- 4 sity of New York from June 1, 1972 until April 8, 1976 and from June 22, 5 1976 to October 28, 1976, and was a member of the Board of Education 6 Retirement System from December 12, 1990 until February 28, 1994 at 7 which point she became a member of the Teachers' Retirement System of 8 the City of New York, and who for reasons not ascribable to her own 9 negligence was retroactively enrolled as a Tier IV member, shall, upon 10 submission of an application filed with the Board of Trustees of TRSNYC 11 on or before the thirty-first day of December next succeeding the date 12 on which this act shall have become a law, be reclassified as a Tier I 13 member with June 1, 1972 as her date of membership and shall be entitled 14 to every right, benefit and privilege which would have been available to 15 her in accordance with Tier I status, and the City of New York shall be 16 responsible for all costs to provide the Tier I benefit to Cynthia 17 Falletta, provided, however that Cynthia Falletta shall be responsible 18 for contributing the required member contributions for Tier I member- 19 ship. 20 § 2. This act shall take effect immediately. FISCAL NOTE. -- Pursuant to Legislative Law, Section 50: PROVISIONS OF PROPOSED LEGISLATION: The proposed legislation would permit Cynthia Falletta, a retired Tier 4 member of the New York City Teachers' Retirement System (TRS), to elect, by filing an application with the Board of Trustees of TRS within the end of the calendar year in which the proposed legislation is passed, to be reclassified as a Tier 1 EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD13729-05-6S. 8220 2 member and have her retirement allowance recalculated and paid under Tier 1 (Plan A) benefit calculation provisions. The Effective Date of the proposed legislation would be the Date of Enactment. BACKGROUND - GENERAL: Ms. Falletta retired as a Tier 4 TRS member on October 18, 2012. She currently receives an annual retirement allowance of $48,243. If the proposed legislation is passed, Ms. Falletta would be reclassi- fied as a Tier 1 retired member and her retirement allowance would be recalculated as if she had joined a public retirement system within the state upon her commencement of part-time employment as a college assist- ant with the City University of New York in 1972. The additional cost to fund the increased retirement allowance associated with the proposed legislation would fall upon the City of New York. Because Tier 1 TRS members are generally permitted to take an actuari- al reduction of their retirement allowance to account for deficits in member contributions, for purposes of this fiscal note it is assumed that Ms. Falletta would not pay any owed member contributions resulting from the reclassification. Based on this assumption and application of other Tier 1 benefit calculation provisions, it is estimated that Ms. Falletta's annual retirement allowance would increase to $64,822. This annual increase would apply prospectively as well as retroactively to Ms. Falletta's October 18, 2012 date of retirement. FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: The estimated financial impact of this proposal has been calculated based on the difference between the actuarial present value of (1) the Tier 1 benefits Ms. Falletta would receive if this proposed legislation were enacted (retro- active to October 18, 2012 retirement date) and (2) the Tier 4 benefits that are currently being paid to Ms. Falletta. Based on the actuarial assumptions and methods described herein, the enactment of this proposed legislation would increase the Actuarial Present Value of Benefits (APVB) and the Unfunded Actuarial Accrued Liability (UAAL) of TRS by approximately $259,000 as of June 30, 2016. FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with Section 13-638.2(k-2) of the Administrative Code of the City of New York, the amortization schedule for new UAAL attributable to benefit changes is determined by the Actuary but is generally calculated over the remaining working lifetime of those impacted by the benefit changes. Since Ms. Falletta is retired and collecting a pension, the entire increase in UAAL of $259,000 based on the Actuary's actuarial assump- tions and methods in effect on June 30, 2015 would be recognized in the first year. CONTRIBUTION TIMING: If enacted during the 2016 Legislative, the retirement allowance payable to Ms. Falletta would likely first be reflected in the June 30, 2017 census data. In accordance with the One- Year Lag methodology used to determine employer contributions, the increase in employer contributions would first be reflected for Fiscal Year 2019. OTHER COSTS: This Fiscal Note does not measure administrative costs associated with implementing this proposed legislation. ACTUARIAL ASSUMPTIONS AND METHODS: Additional APVB, UAAL and employer contributions presented herein have been calculated based on the Actuary's actuarial assumptions and methods in effect for the Prelimi- nary June 30, 2015 (Lag) actuarial valuation used to determine the Preliminary Fiscal Year 2017 employer contributions of TRS.S. 8220 3 STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu- ary for, and independent of, the New York City Pension Funds and Retire- ment Systems. I am a Fellow of the Society of Actuaries, a Fellow of the Conference of Consulting Actuaries and a Member of the American Academy of Actuaries. I meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2016-39 dated October 5, 2016, was prepared by the Chief Actuary for the New York City Teachers' Retirement System. This estimate is intended for use only during the 2016 Legislative Session.