What's happening
This bill requires New York State to pay past, present, and future pension contributions for former New York City Off-Track Betting Corporation employees.
Why it matters
Protects the retirement security of over 1,200 former NYC Off-Track Betting (OTB) employees and retirees. , ensuring their pension benefits are fully funded despite the corporation’s closure and unpaid contributions dating back to 2010.
Shifts a significant financial obligation—estimated at $270 million in present value as of 2020—from New York City and any other potential successors directly to the State. , which could impact state budgeting and resource allocation over at least 15 years.
Establishes a structured repayment plan for overdue pension liabilities. , requiring the state to pay off past-due amounts (with interest) in equal installments through 2034, as well as to assume responsibility for all future pension contributions for these retirees.
Sets a precedent for state intervention in the pension obligations of defunct public benefit corporations. , which may affect future cases where quasi-public agencies fail or are dissolved, potentially broadening state fiscal responsibilities.
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Fund OTB Retirees’ Pensions
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Print number 8945a
- Amend and recommit to rules
- Referred to rules
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Fund OTB Retiree Pensions
In Senate Committee · Rules · Sponsor J. Gary Pretlow
Full text
5 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
8945--A
IN SENATE
June 7, 2018
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when printed to be committed to the Committee on Rules -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to provide for the payment of the annual contributions owed and to be owed on behalf of the New York city off-track betting corporation to the New York city employees' retirement system
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Statement of legislative findings and intent. The legislature hereby finds that the state has a statutory and constitutional obligation to protect and fund the pension benefits of the former employees and retirees of the defunct New York city off-track betting corporation.
The New York city off-track betting corporation is a public benefit corporation created pursuant to state law and is a participating employer in the New York city employees' retirement system. The pension benefits of the corporation's former employees and retirees are protected from impairment under article V, section 7 of the state constitution.
In 2008, the state legislatively enhanced its role with respect to the New York city off-track betting corporation due to its financial difficulties, thus becoming its successor for purposes of assuming the statutory and constitutional obligation to make pension contributions. The corporation ceased operations in 2010 and has since failed to make annual contributions to the New York city employees' retirement system as required under the administrative code of the city of New York.
Sections 13-130 and 13-638.2 of the administrative code of the city of New York provide that the employer liabilities of a public benefit corporation that participates in the New York city employees' retirement system, such as the New York city off-track betting corporation, are to be paid by the corporation or a successor. On March 8, 2018, the board of trustees of the New York city employees' retirement system adopted a resolution recognizing the state as a successor to the New York city
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD16151-05-8
S. 8945--A 2
off-track betting corporation and a responsible obligor with respect to its required contributions.
As a successor to the New York city off-track betting corporation, and in the interest of properly funding the pension benefits of its former employees and retirees in compliance with the state constitution, the state will fulfill the past, present, and future obligations of the New York city off-track betting corporation to the New York city employees' retirement system as follows:
§ 2. Definitions. The following words and phrases as used in this act shall have the following meanings unless a different meaning is plainly required by context.
1. "Actuary" shall mean the actuary appointed by the board of trustees of the New York city employees' retirement system pursuant to section 13-121 of the administrative code of the city of New York.
2. "City fiscal year" shall mean a fiscal year of the city of New York as defined in section 226 of the New York city charter.
3. "Executive director" shall mean the executive director appointed by the board of trustees of the New York city employees' retirement system pursuant to paragraph 2 of subdivision a of section 13-103 of the administrative code of the city of New York.
4. "Interest" shall mean the rate per centum per annum of interest specified in paragraph 2 of subdivision b of section 13-638.2 of the administrative code of the city of New York.
5. "NYC administrative code" shall mean the administrative code of the city of New York.
6. "NYCERS" shall mean the New York city employees' retirement system, as established by chapter 427 of the laws of 1920.
7. "NYCOTB" shall mean the New York city off-track betting corporation, as established by chapter 144 of the laws of 1970 and continued pursuant to article 6 of the racing, pari-mutuel wagering and breeding law.
8. "State fiscal year" shall mean a fiscal year of the state as defined in section 3 of the state finance law.
§ 3. Payment of the future annual contributions to be owed by NYCOTB to NYCERS. Notwithstanding the provisions of any general or special state law or local law to the contrary, in state fiscal year 2020 and in each state fiscal year thereafter, the department of audit and control shall take actions necessary to pay in full, subject to appropriation, the annual contribution determined to be owed by NYCOTB to NYCERS under the provisions of the NYC administrative code, including but not limited to sections 13-127, 13-130, 13-133, and 13-638.2 thereof, for the corresponding city fiscal year. On or prior to the date specified in section 13-133 of the NYC administrative code for the payment of annual contributions by NYCOTB, such moneys, to the extent of such appropriation, shall be payable to NYCERS on the audit and warrant of the comptroller of the state of New York on vouchers certified or approved by the executive director of NYCERS in the manner prescribed by law. Notwithstanding the provisions of any general or special state law or local law to the contrary, an annual contribution determined and paid under this section shall not include any amount attributable to any annual contribution previously determined to be owed by NYCOTB to NYCERS for any city fiscal year prior to the 2020 city fiscal year and not yet paid by NYCOTB or the state.
§ 4. Payment of overdue annual contributions owed by NYCOTB to NYCERS. a. Notwithstanding the provisions of any general or special state law or local law to the contrary, on or before January 2, 2019, the actuary
S. 8945--A 3
shall determine the sum of all annual contributions previously determined to be owed by NYCOTB to NYCERS for any city fiscal year prior to the 2020 city fiscal year and not yet paid by NYCOTB, with interest. Such interest, compounded annually, shall be computed on each such overdue annual contribution from the date such contribution was required to be paid pursuant to section 13-133 of the NYC administrative code through January 1, 2019. This sum shall be known as the "amount to be amortized".
b. Notwithstanding the provisions of any general or special state law or local law to the contrary, on or before January 2, 2019, the actuary shall further determine an amount that if paid in fifteen equal annual installments beginning on January 1, 2020, would be sufficient to pay in full the amount to be amortized with interest, compounded annually, computed from January 2, 2019, to January 1, 2034. This amount shall be known as the "annual amortization payment". Any annual amortization payment subsequent to the initial annual amortization payment payable on January 1, 2020, shall include the unpaid balance of any prior annual amortization payment, with interest, compounded annually, computed from the date such prior annual amortization payment was required to be paid to the date that such subsequent annual authorization payment is required to be paid.
c. Notwithstanding the provisions of any general or special state law or local law to the contrary, in state fiscal year 2020 and in each state fiscal year thereafter until the amount to be amortized, with interest, is paid in full, the department of audit and control shall take actions necessary to pay in full the annual amortization payment, subject to appropriation. On or prior to January 1st of each such state fiscal year, such moneys, to the extent of such appropriation shall be payable to NYCERS on the audit and warrant of the comptroller of the state of New York on vouchers certified or approved by the executive director of NYCERS in the manner prescribed by law.
§ 5. Deposit of moneys. NYCERS shall deposit all moneys received pursuant to this act in the contingent reserve fund specified in section 13-127 of the NYC administrative code.
§ 6. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: The proposed legislation provides a funding mech-
anism, through unconsolidated provisions of law, for the State of New
York (State), as a successor obligor, to appropriate funds to pay past,
present, and future New York City Off-Track Betting Corporation (NYCOTB)
employer contributions, with applicable interest, to the New York City
Employees' Retirement System (NYCERS) on behalf of former and retired
NYCOTB employees.
Effective Date: Upon enactment.
BACKGROUND: NYCOTB is a defunct public benefit corporation and is a
participating employer in NYCERS. NYCOTB retirees currently receive full
retirement benefits from NYCERS even though NYCOTB last made partial
employer contributions to NYCERS in fiscal years 2010 and 2011 and
completely ceased making employer contributions thereafter. Unpaid past
and future annual employer contributions, with applicable interest,
continue to accrue.
IMPACT ON EMPLOYER CONTRIBUTIONS: The proposed legislation would
require the Actuary of the City of New York (Actuary) to calculate the
cumulative owed past and current NYCOTB employer contributions, with
applicable interest, through and inclusive of fiscal year 2019 (the
Amount to be Amortized), on or before January 2, 2019, and amortize such
S. 8945--A 4
cumulative Amount in fifteen equal installments, with applicable inter-
est, to be paid by the State Comptroller, subject to appropriation,
commencing on or before January 1, 2020 and ending by January 1, 2034
(the Annual Amortization Payment). The proposed legislation would
further require the calculation and, subject to State appropriation,
annual payment of future annual NYCOTB employer contributions in accord-
ance with applicable provisions of the Administrative Code of the City
of New York (ACCNY).
FINANCIAL IMPACT: Based on the actuarial assumptions and methods
described herein, the enactment of this proposed legislation would,
assuming full and timely payment, result in a potential total present
value cost to the State of approximately $270.1 million as of January 1,
2020. Any amount appropriated and paid by the State to NYCERS would be
applied as a credit to NYCOTB, and relieve any potential additional
successor, and any potential guarantor, including the City of New York,
of such amounts paid.
The following Table presents an estimate of the annual cost for Fiscal
Years 2020 through 2024 as of January 1, 2020.
Cost Attributable Cost Attributable to
to Employer Employer Contributions
Fiscal Contributions for Fiscal for Fiscal Years
Year Years Prior to 2020* Subsequent to 2019** Total
2020 $14,479,143 $13,021,623 $27,500,766
2021 $14,479,143 $13,346,228 $27,825,371
2022 $14,479,143 $13,679,859 $28,159,002
2023 $14,479,143 $14,023,465 $28,502,608
2024 $14,479,143 $14,376,862 $28,856,005
* Equal to a 15-year amortization of $141,106,026 as of January 1,
2020.
** Estimates of future employer contributions for OTB based on the
actuarial assumptions and methods in effect for the June 30, 2017 (Lag)
actuarial valuation, including an assumed investment return of 7.0% per
annum.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2017 (Lag) actuarial valuation of
NYCERS to determine the Preliminary Fiscal Year 2019 employer contrib-
utions.
As of June 30, 2017, OTB had 1,211 retirees with an average age of
approximately 74.7 years, 285 terminated vested members with an average
age of approximately 52.1 years, and 4 inactive members with an average
age of approximately 61.3 years.
ACTUARIAL ASSUMPTIONS AND METHODS: The estimates of annual future
employer contributions presented herein have been calculated based on
the actuarial assumptions and methods in effect for the June 30, 2017
(Lag) actuarial valuations used to determine the Preliminary Fiscal Year
2019 employer contributions of NYCERS. Please note these assumptions and
methods are subject to change as this valuation is not considered final
until the end of Fiscal Year 2019.
STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
ary for, and independent of, the New York City Retirement Systems and
Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled
Actuary under the Employee Retirement Income and Security Act of 1974
(ERISA), a Member of the American Academy of Actuaries, and a Fellow of
S. 8945--A 5
the Conference of Consulting Actuaries. I meet the Qualification Stand-
ards of the American Academy of Actuaries to render the actuarial opin-
ion contained herein. To the best of my knowledge, the results contained
herein have been prepared in accordance with generally accepted actuari-
al principles and procedures and with the Actuarial Standards of Prac-
tice issued by the Actuarial Standards Board.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-33 dated June 11,
2018 was prepared by the Chief Actuary for the New York City Employees'
Retirement System. This estimate is intended for use only during the
2018 Legislative Session.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to provide for the payment of the annual contributions owed and to be owed on behalf of the New York city off- track betting corporation to the New York city employees' retirement system
Purpose or general idea of bill
To acknowledge that the state is the successor to the New York city off-track betting corporation ("NYCOTB") for purposes of its pension obligations and to provide for the state's payment of all past, present, and future liabilities of NYCOTB to the New York city employees' retire- ment system ("NYCERS").
Summary of specific provisions
This bill would create a statutory mechanism for the payment by the state of the past, present, and future liabilities of NYCOTB to NYCERS, in recognition of the fact, as determined by the board of trustees of NYCERS, that the state is the successor to NYCOTB for this purpose.
Read the full memo (783 words)
With respect to NYCOTB's future annual contributions to NYCERS, as calculated pursuant to the administrative code of the city of New York, the bill requires the state to pay these contributions, subject to appropriations, beginning in state fiscal year 2020. The bill provides that funds appropriated for this purpose will be payable to NYCERS upon receipt by the state comptroller of appropriate vouchers from the execu- tive director of NYCERS on or before the date that annual contributions from NYCOTB are due under the administrative code of the city of New York.
With respect to NYCOTB's overdue annual contributions to NYCERS, the bill provides for their amortization, with interest, over fifteen annual installments beginning on January 1, 2020, and requires the state pay these installments, subject to appropriations. The bill provides that funds appropriated for this purpose will be payable to NYCERS upon receipt by the state comptroller of appropriate vouchers from the execu- tive director of NYCERS.
Finally, the bill confirms that any payments made by the state on behalf of NYCOTB will be deposited by NYCERS in its contingent reserve fund, like all other contributions received from responsible obligors.
Justification
This bill satisfies the state's statutory and constitutional obligation to protect and fund the benefits of the former employees and retirees of the defunct NYCOTB.
NYCOTB is a state-created public benefit corporation. State law mandated NYCOTB to make certain distributions from its gross revenues to various parties, including racing-industry stakeholders and the state. This structure ultimately deprived NYCOTB of sufficient revenue to function as a going concern. As NYCOTB's financial difficulties mounted, the state legislatively enhanced its role with respect to the corporation pursuant to chapter 115 of the laws of 2008. Thereafter, state appoint- ees oversaw the cessation of NYCOTB's operations and the distribution of its assets. NYCOTB has no assets remaining and has not paid its annual contribution to NYCERS in full since city fiscal year 2009.
Sections 13-130 and 13-638.2 of the administrative code of the city of New York provide that the contributions to NYCERS of a participating public benefit corporation are to be paid by its successor in the event of non-payment. In light of the aforementioned facts, on March 8, 2018, the board of trustees of NYCERS adopted a resolution recognizing the state as a successor to NYCOTB and a responsible obligor with respect to its required contributions.
The state's obligation to NYCERS also has a constitutional dimension, as the pension benefits of NYCOTB's former employees and retirees are protected from impairment under article V, section 7 of the state constitution. The state's proper funding of these pension benefits is a critical component of that constitutional guarantee.
This bill discharges the state's obligation to NYCERS in a prudent manner that appropriately considers the state's fiscal interests. The bill provides the state with ample time to incorporate this obligation into its future budgets, and it divides the overdue contributions of NYCOTB into fifteen installments. If this bill is enacted and imple- mented, the state will not only make NYCERS whole; it will make good on its commitment to NYCOTB's retirees and former employees.
Prior legislative history
New bill.
Fiscal implications
NYCOTB's overdue contributions, including interest to December 31, 2018, total $119,168,554. NYCOTB's annual contribution for city fiscal year 2019 has been preliminarily calculated to be $12,706,237. Because this bill does not contemplate payments until state fiscal year 2020, NYCOTB's annual contribution for city fiscal year 2019, plus interest, will become part of the overdue contributions to be amortized beginning on January 1, 2020. NYCOTB's future annual contributions are projected to range from $12 million to $17 million, exclusive of interest, each year until city fiscal year 2032. Thereafter, NYCOTB's annual contrib- utions are projected to decrease significantly.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.