Recalculate Grossman's Retirement Benefits

Section 1. Notwithstanding any provision of law to the contrary, Jonathan Grossman, who joined the New York city teachers' retirement system as a Tier I member on January 1, 1972, who retired from such system on September 28, 2010, and who for reasons not ascribable to his own negligence had his retirement benefits calculated without the inclusion of a lump sum payment for accumulated vacation, shall have his retirement benefits recalculated with such lump sum payments, including interest accruing from the date of retirement, if he shall file an application therefor with the state comptroller on or before one year of the effective date of this act.

§ 2. All past service costs of implementing the provisions of this act shall be borne by the city of New York.

§ 3. This act shall take effect immediately.

FISCAL NOTE.--Pursuant to Legislative Law, Section 50:

SUMMARY OF BILL: The proposed legislation would provide to Jonathan

Grossman, a retired Tier 1 member of the New York City Teacher's Retire-

ment System (TRS), an election, by filing an application with the State

Comptroller within one year of the effective date on which the proposed

legislation is passed, to have his retirement benefits recalculated to

include his lump sum payment for accumulated vacation in the calculation

of his final average salary.

Effective Date: Upon enactment.

BACKGROUND: Mr. Grossman retired as a Tier 1 TRS member on September

28, 2010. He currently receives an annual retirement allowance of

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD01047-02-9

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$102,127 per year under the 50% Joint and Survivor with Pop-Up payment

option.

If the proposed legislation is passed, Mr. Grossman's retirement

allowance would be recalculated to include in his final average salary a

lump sum payment he received for unused vacation time, which is a bene-

fit that is generally not afforded TRS retirees. The additional cost,

less any required member contributions paid by Mr. Grossman, 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 Mr. Grossman would not pay any owed member contributions resulting

from the recalculation. Based on this assumption and application of

other Tier 1 benefit calculation provisions, it is estimated that Mr.

Grossman's annual retirement allowance would increase to $113,146. This

annual increase would apply prospectively as well as retroactively, less

any payments previously made, to Mr. Grossman's September 28, 2010 date

of retirement.

FINANCIAL IMPACT - PRESENT VALUES: The estimated financial impact of

this proposal has been calculated based on the difference between the

present value of (1) the benefits Mr. Grossman would receive if this

proposed legislation were enacted (retroactive to his September 28, 2010

retirement date) and (2) the benefits that are currently and have been

paid to Mr. Grossman.

Based on the actuarial assumptions and methods described herein, the

enactment of this proposed legislation would increase the Present Value

of Future Benefits (PVFB) and the Unfunded Accrued Liability (UAL) of

TRS by approximately $234,000 as of June 30, 2019.

FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with

Administrative Code of the City of New York (ACCNY) Section

13-638.2(k-2), new UAL attributable to benefit changes are to be amor-

tized as determined by the Actuary but generally over the remaining

working lifetime of those impacted by the benefit changes.

For purposes of this Fiscal Note, since Mr. Grossman is retired and

collecting a pension, and therefore has no remaining working lifetime,

the entire increase in UAL (or PVFB) would be recognized immediately.

OTHER COSTS: Not measured in this Fiscal Note are the following:

* The initial, additional administrative costs of TRS and other New

York City agencies to implement the proposed legislation.

CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is

assumed that the changes in the PVFB and annual employer contributions

would be reflected for the first time in the June 30, 2019 actuarial

valuation of TRS. In accordance with the One-Year Lag Methodology (OYLM)

used to determine employer contributions, the increase in employer

contributions would be reflected in Fiscal Year 2021.

CENSUS DATA: As of June 30, 2018, Mr. Grossman was approximately age

71, and receiving a pension of $102,127 per year under the 50% Joint and

Survivor with Pop-Up payment option.

ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and annual

employer contributions presented herein have been calculated based on

the actuarial assumptions and methods adopted by the Board of Trustees

on February 28, 2019 that will be used to determine the Final Fiscal

Year 2019 employer contributions of TRS. Please note these assumptions

and methods are subject to change as this valuation is not considered

final until the end of Fiscal Year 2019.

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RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend

highly on the actuarial assumptions and methods used and are subject to

change based on the realization of potential investment, demographic,

contribution, and other risks. If actual experience deviates from actu-

arial assumptions, the actual costs could differ from those presented

herein. Costs are also dependent on the actuarial methods used, and

therefore different actuarial methods could produce different results.

Quantifying these risks is beyond the scope of this Fiscal Note.

STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-

ary for, and independent of, the New York City Retirement Systems and

Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled

Actuary under the Employee Retirement Income and Security Act of 1974, a

Member of the American Academy of Actuaries, and a Fellow of the Confer-

ence of Consulting Actuaries. I meet the Qualification Standards of the

American Academy of Actuaries to render the actuarial opinion contained

herein. To the best of my knowledge, the results contained herein have

been prepared in accordance with generally accepted actuarial principles

and procedures and with the Actuarial Standards of Practice issued by

the Actuarial Standards Board.

FISCAL NOTE IDENTIFICATION: This Fiscal Note 2019-02 dated March 11,

2019 was prepared by the Chief Actuary for the New York City Teachers'

Retirement System. This estimate is intended for use only during the

2019 Legislative Session.