Grants retroactive retiree status to former New York City public-school teacher Israel Baum.
TITLE OF BILL: An act relating to granting retroactive retiree status to former New York city public-school teacher Israel Baum
The purpose of the bill is to enable the widow and children of Israel Baum to receive the pension benefits to which they would otherwise be entitled had Israel Baum formally completed his retirement before his untimely passing.
SUMMARY OF PROVISIONS:
The bill deems Israel Baum to have retired as of the date of his death and thus makes the New York City Board of Education responsible for providing pension benefits to his family.
Israel Baum worked tirelessly for the New York City Board of Education for 35 years, serving most of those years as a beloved physics teacher in James Madison High School in Brooklyn, was deeply dedicated to the Board of Education and to his students, and routinely stayed many hours after the school day to ensure that his students received the very best lessons he could offer. Because of his many years of service, he was eligible to retire with full pension benefits. He planned to retire in 2009, attended the Board's seminar for retiring teachers, submitted a tentative retirement date, and met with Board of Education officials to plan his retirement. However, before he could complete his formal retirement, he died suddenly of a heart attack on September 20, 2009. Since he did not finalize his formal retirement, his widow and children are not able to receive the pension benefits that he worked tirelessly for over three decades to provide for them, and to which they would otherwise be entitled. In the interests of fairness and equity, and in recognition of Israel Baum's years of public service, this bill would enable his family to receive pension benefits.
There will be no cost to the state for this legislation, The costs to New York City are presented in the attached Fiscal Note.
This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 7834 IN SENATE June 13, 2014 ___________Introduced by Sen. FELDER -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions AN ACT relating to granting retroactive retiree status to former New York city public-school teacher Israel Baum THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Notwithstanding any provision of law to the contrary, Isra- el Baum, a member of the New York city teachers' retirement system having Tier III status, who was employed as a teacher by the New York City Board of Education from February 1, 1974 until his death on Septem- ber 20, 2009, and who became a member of the New York city teachers' retirement system on October 1, 1977, and who, for reasons not ascriba- ble to his own negligence, was not able to complete the retirement proc- ess before his untimely death, shall be deemed to have officially retired from the New York City Board of Education on September 20, 2009, if, on or before December 31, 2014, Mr. Baum's widow, Rochelle Baum, files a written application therefor, including a retirement benefit option election and election of the beneficiary of such benefits, with the head of the New York city teachers' retirement system; and upon receipt of such application, the head of the New York city teachers' retirement system shall calculate Israel Baum's retirement benefits retroactive to September 20, 2009 and thereafter and pay such benefits accordingly as if he had retired on September 20, 2009. The amount of benefits payable pursuant to this act shall be reduced by the ordinary death benefit which has been paid to Rochelle Baum, less the retroactive sum of previous years that is owed to Mrs. Baum, the exact amount to be calculated actuarially. Due to the length of his service, Mr. Baum was eligible to retire with full pension benefits. Mr. Baum's intent to retire was evidenced by the fact that he, along with his wife, Rochelle Baum, attended a special seminar for teachers given in February 2009 called "Getting Ready for Retirement"; this seminar was expressly designed for those members of the retirement system who were planning to retire within the year. The Baums received a letter dated January 22, 2009 confirming their participation. At the seminar, the Baums wereEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08354-05-4 S. 7834 2
given a package of documents and an overview regarding retirement proce- dures and benefits. Mr. Baum also submitted an informal designated date of retirement as requested. Subsequently, on June 22, 2009, Mr. and Mrs. Baum attended a personal session at the Board of Education in downtown Brooklyn for the purpose of discussing Mr. Baum's retirement. The Baums discussed the various retirement allowance options and decided that they would select Option 1 - Equal Pay Option, which would allow the benefi- ciary to receive monthly payments equal to 100% of his reduced retire- ment allowance payments. The beneficiary of Israel Baum's retirement allowance was to be his wife, Rochelle Baum. S 2. Any costs incurred as a result of the enactment of this act shall be borne by the New York City Board of Education. S 3. This act shall take effect immediately. FISCAL NOTE -- Pursuant to Legislative Law, Section 50: PROVISIONS OF PROPOSED LEGISLATION: The proposed legislation would authorize the New York City Teachers' Retirement System ("NYCTRS") to pay pension benefits to the widow of Mr. Israel Baum (Mrs. Rochelle Baum) as if Mr. Baum had retired for service on September 20, 2009 (his date of death), elected a 100% Joint & Survivor form of payment and died immediately thereafter. BACKGROUND: Mr. Baum became a Tier III member of NYCTRS on October 1, 1977. He died on September 20, 2009 without having filed a Service Retire- ment application with NYCTRS. Accordingly, NYCTRS paid on or around February 18, 2010 an Ordinary Death Benefit equal to three times Mr. Baum's last year's salary plus his accumulated contributions plus the interest to his widow, Mrs. Rochelle Baum. These amounts are summarized as follows: *Three times last year's salary $324,419.85 *Accumulated contributions 86,982.30 *Interest to date of payment 7,428.28 $418,830.43 The proposed legislation, if enacted, would authorize NYCTRS to pay pension benefits to Mrs. Baum as if Israel Baum had retired for service on his date of death of September 20, 2009 and elected a 100% Joint & Survivor option with Mrs. Baum as his beneficiary, offset by the Ordi- nary Death Benefit ("ODB") that has previously been paid. The 100% Joint & Survivor benefit that would be payable to Mrs. Baum has been estimated to be approximately $59,900 per year. The actual implementation of this legislation including any recognition of the difference in taxability of the ODB as compared to the Service Retire- ment benefit would be determined by NYCTRS if the proposed legislation is enacted. All costs associated with the implementation of this proposed legis- lation would be borne by the New York City Board of Education. The Effective Date of the proposed legislation would be the Date of Enactment. FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: The estimated financial impact of this proposed legislation has been calculated based on the difference between (1) the Service Retirement benefits Mrs. Baum would receive if this prosed legislation were enacted and (2) the ODB that has already been paid to Mrs. Baum. Based on the actuarial assumptions and methods described herein, the enactment of this proposed legislation would increase the ActuarialS. 7834 3 Present Value of Benefits ("APVB") and the Unfunded Actuarial Accrued Liability ("UAAL") of NYCTRS by approximately $1,287,000 as of June 30, 2014 prior to offsetting for the ODB that Mrs. Baum has previously been paid. This amount includes the monthly payment that Mrs. Baum would have received from September 2009 to June 2014 and the post-retirement Death Benefit that would have been paid to Mrs. Baum upon Mr. Baum's death (had Mr. Baum retired for service on his date of death and elected the 100% Joint & Survivor benefit with Mrs. Baum as his beneficiary) brought forward to June 30, 2014 in accordance with NYCTRS Policies and Proce- dures regarding delayed interest calculations. The ODB previously paid to Mrs. Baum brought forward with compound interest of 7% per annum from September 20, 2009 to June 30, 2014 is approximately $563,000. Therefore, the net increase in the APVB and UAAL of NYCTRS would be approximately $724,000 as of June 30, 2014. FINANCIAL IMPACT - ANNUAL EMPLOYER COSTS AND ANNUAL EMPLOYER CONTRIB- UTIONS: In accordance with Section 13.638.2(k-2) of the Administrative Code of the City of New York ("ACNY"), 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. For this proposed legislation, Mrs. Baum would be collecting a pension and therefore the entire increase in UAAL of $724,000 based on the Actuary's actuarial assumptions and methods in effect on June 30, 2013 would be recognized in the first year. CONTRIBUTION TIMING: If enacted during the 2014 Legislative Session on or before June 30, 2014, the pension payable to Mrs. Baum would likely first be reflected in the June 30, 2014 census data. In accordance with the One-Year Lag methodology used to determine employer contributions, increased employer contributions would be consistent with the increased employer costs and would be determined for Fiscal Year 2016. If enacted during the 2014 Legislative Session after June 30, 2014 but on or before June 30, 2015, the pension payable to Mrs. Baum would like- ly first be reflected in the June 30, 2015 census data and increased employer contributions would be determined for Fiscal Year 2017. ACTUARIAL ASSUMPTIONS AND METHODS: The additional APVB and UAAL for employer contribution purposes presented herein have been calculated by using the actuarial assumptions and methods in effect for the June 30, 2013 (Lag) actuarial valuation used to determine Fiscal Year 2015 employer contributions of NYCTRS. 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 NYCTRS. 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 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 Actuaries. 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 2014 Legislative Session. It is Fiscal Note 2014-13, dated April 7, 2014 prepared by the Chief Actuary for the New York City Teach- ers' Retirement System.