Patrick Lynch,, et al., Respondents,v.The City of New York, et al., Appellants.BriefN.Y.May 8, 2014 To be argued by PAUL REPHEN (15 minutes) COURT OF APPEALS STATE OF NEW YORK PATRICK LYNCH, as President of the PATROLMEN’S BENEVOLENT ASSOCIATION OF THE CITY OF NEW YORK, INC., on behalf of the Aggrieved Police Officers, and the PATROLMEN’S BENEVOLENT ASSOCIATION OF THE CITY OF NEW YORK INC., & ROY RICHTER, as President of THE CAPTAIN’S ENDOWMENT ASSOCIATION OF THE CITY OF NEW YORK, INC., on behalf of the Aggrieved Police Surgeon and its future adversely affected members, & ALEXANDER HAGAN, as President of the UNIFORMED FIRE OFFICERS ASSOCIATION, on behalf of the Aggrieved Medical Officer, and its future adversely affected members, Plaintiffs-Respondents , -against- THE CITY OF NEW YORK, the NEW YORK CITY POLICE PENSION FUND, and the NEW YORK CITY FIRE DEPARTMENT PENSION FUND, Defendants-Appellants. APPELLANTS’ BRIEF MICHAEL A. CARDOZO, Corporation Counsel of the City of New York, Attorney for Respondent-Appellants, 100 Church Street, New York, New York 10007. PREPHEN@LAW.NYC.GOV (212) 356-2600 Leonard Koerner Paul T. Rephen Of Counsel October 20, 2013 TABLE OF CONTENTS Page TABLE OF AUTHORITIES ................................................................................... iii PRELIMINARY STATEMENT ...............................................................................1 QUESTION PRESENTED........................................................................................2 FACTS .......................................................................................................................2 Increased Take Home Pay ..........................................................3 Retirement and Social Security Law §480 .................................4 Enactment of Tier Three .............................................................5 2009 Legislation..........................................................................9 OPINIONS BELOW The Supreme Court ...................................................................11 The Appellate Division .............................................................12 ARGUMENT POLICE OFFICERS AND FIREFIGHTERS APPOINTED ON OR AFTER JULY 1, 2009 ARE MEMBERS OF TIER THREE OF THE RETIREMENT AND SOCIAL SECURITY LAW. ALL TIER THREE MEMBERS ARE REQUIRED TO CONTRIBUTE THREE PERCENT OF THEIR SALARIES ANNUALLY TOWARDS THEIR RETIREMENT. THERE IS NO PROVISION IN TIER THREE FOR ITHP OR ANY OFFSET OF MEMBER PENSION CONTRIBUTIONs by THE EMPLOYER. THE APPLICATION OF ITHP TO THESE TIER THREE Page ii MEMBERS WOULD HAVE THE EFFECT OF MAKING THEIR PLANS NON- CONTRIBUTORY, WHICH WOULD BE CONTRARY TO THE LEGISLATIVE INTENT IN CREATING THAT TIER. ...................................16 CONCLUSION........................................................................................................24 PRINTING SPECIFICATIONS STATEMENT .....................................................25 iii TABLE OF AUTHORITIES Cases Pages Civil Service Employees’ Assn. v. Regan, 71 NY2d 653 (1988)..............................................................................................6 Statutes 22 N.Y.C.R.R. § 600.10(d)(1)(i)..............................................................................26 Administrative Code Title 13....................................................................................3 Administrative Code §13-225....................................................................... 4, 14, 17 Administrative Code §13-226....................................................... 2, 4, 11, 17, 20, 21 Administrative Code §13-228..................................................................................21 Administrative Code §13-231..................................................................................21 Administrative Code §13-234..................................................................................21 Administrative Code §13-255............................................................................. 3, 21 Administrative Code §13-326....................................................... 2, 4, 14, 17, 20, 21 Administrative Code §13-327............................................................................. 4, 17 Administrative Code §13-331..................................................................................21 Administrative Code §13-334..................................................................................21 Administrative Code §13-337..................................................................................21 Administrative Code §13-257..................................................................................21 Administrative Code §13-359............................................................................. 3, 21 Administrative Code §13-361..................................................................................21 Administrative Code §13-363..................................................................................21 Administrative Code §13-546....................................................................................4 iv Statutes Pages Administrative Code §§13-581................................................................................18 N.Y. Retire. & Soc. Sec. Law Article 11...................................................................3 N.Y. Retire. & Soc. Sec. Law §70-a........................................................................22 N.Y. Retire. & Soc. Sec. Law §408(b) ............................................................. 18, 20 N.Y. Retire. & Soc. Sec. Law §440(c) ....................................................... 7, 8, 9, 10 N.Y. Retire. & Soc. Sec. Law §480........................................ 4, 5, 12, 13, 18, 19, 21 N.Y. Retire. & Soc. Sec. Law §480(b) ........................... 5, 10, 11, 14, 15, 18, 19, 21 N.Y. Retire. & Soc. Sec. Law §500................................................................ 6, 7, 17 N.Y. Retire. & Soc. Sec. Law §500(a) .............................................................. 22-23 N.Y. Retire. & Soc. Sec. Law §500(c) ......................................................................7 N.Y. Retire. & Soc. Sec. Law §505.........................................................................17 N.Y. Retire. & Soc. Sec. Law §508-a......................................................... 16, 22, 23 N.Y. Retire. & Soc. Sec. Law §508-a(a) .......................................................... 13, 16 N.Y. Retire. & Soc. Sec. Law §517(a) ....................................................................17 N.Y. Retire. & Soc. Sec. Law §600, sub.(a) ....................................................... 8, 16 N.Y. Retire. & Soc. Sec. Law §606-a............................................................... 22, 23 N.Y. Retire. & Soc. Sec. Law §1200(a)(b)..............................................................10 COURT OF APPEALS STATE OF NEW YORK PATRICK LYNCH, as President of the PATROLMEN’S BENEVOLENT ASSOCIATION OF THE CITY OF NEW YORK, INC., on behalf of the Aggrieved Police Officers, and the PATROLMEN’S BENEVOLENT ASSOCIATION OF THE CITY OF NEW YORK INC., & ROY RICHTER, as President of THE CAPTAIN’S ENDOWMENT ASSOCIATION OF THE CITY OF NEW YORK INC., on behalf of the Aggrieved Police Surgeon and its future adversely affected members, & ALEXANDER HAGAN, as President of the UNIFORMED FIRE OFFICERS ASSOCIATION, on behalf of the Aggrieved Medical Officer, and its future adversely affected members, Plaintiffs-Respondents, -against- THE CITY OF NEW YORK, the NEW YORK CITY POLICE PENSION FUND, and the NEW YORK FIRE DEPARTMENT PENSION FUND, Defendants-Appellants. APPELLANTS’ BRIEF PRELIMINARY STATEMENT In this Article 78 proceeding, the appellants appeal from an order of the Appellate Division, First Department entered May 16, 2013 which affirmed, with one Justice dissenting, an order of the Supreme Court, New York County 2 (Edmead, J), entered January 20, 2012 which ordered appellants to provide respondents with the pension benefit known as increased take-home-pay (6-15)1. QUESTION PRESENTED Police officers and firefighters appointed on or after July 1, 2009 are members of Tier Three of the pension system. Are members of that tier entitled to participate in the statutory benefit known as Increased-Take-Home-Pay (Administrative Code §§13-226, 13-326) under which the City assumes a portion of the required employee annuity contributions? FACTS This appeal concerns the pension rights of police officers and firefighters appointed after June 30, 2009. Pension benefits and obligations throughout the five City pension systems, which include the Police Pension Fund, the City Teachers’ Retirement System, the Fire Department Pension Fund, the Board of Education Retirement System, and the City Employees’ Retirement System, are largely determined by a member’s tier status. There are currently six tiers in the City pension systems, and a member’s tier is primarily determined by job title and the date on which the member joins a retirement system. An eligible employee who became a City pension system member in any of the five pension systems prior to July 1, 1973 is a Tier One member. Statutory provisions 1 Numbers in parentheses unless otherwise indicated refer to the pages of the record on appeal. 3 governing Tier One members are contained in Title 13 of the Administrative Code. In 1973, the New York State Legislature enacted Tier Two for new members joining a State or City pension system. Generally, an eligible employee who became a City pension system member in any of the five pension systems between July 1, 1973 and July 1, 1976 is a Tier Two member. Statutory provisions governing Tier Two are contained in Article 11 of the Retirement and Social Security Law (RSSL) and Title 13 of the Admin. Code. Article 11 contains provisions that modify certain Tier One Admin. Code provisions2. Increased Take Home Pay Tiers One and Two police officers and firefighters receive a retirement allowance at the end of their careers which consists of an annuity based on contributions made by them and a pension provided by the City. Admin Code § §13-255, 13-359. The amount of annuity contribution made by each member varies depending upon his or her age at entry and actuarial assumptions determined by the City actuary for the pension funds. Commencing in the 1960’s legislation was enacted which authorized the City to assume a portion of the annuity contributions required to be made by City employees. The program was denominated “Increased-Take-Home-Pay” (hereafter ITHP) and is codified with 2 Although Tier Two made some significant modifications to the Tier One program with respect to civilian employees, primarily regarding retirement age and the calculation of final average salary, there are no significant differences between those tiers in the case of police officers and firefighters, and the two tiers are indistinguishable for the purposes of this appeal. 4 respect to police officers and firefighters in Admin Codes §§13-226, 13-326 respectively.3 ITHP was extended to police officer’s and firefighters in 1963. L 1963, chs. 223 and 224. The connection between ITHP and the member’s obligation to make annuity contributions is made clear by the language of §13-226, and 13-326, subd. e which authorized the City to reduce the contribution of each member made pursuant to sections 13-225 and 13-327. Sections 13-225, and 13- 327 define a member’s obligation to make contributions towards his or her annuity. During the period from January 1963 to 1968 City ITHP contributions amounted to 2.5% of a member’s salary. In 1968 the ITHP benefit was increased to 5% of salary and remained at 5% through 1974. The contribution was subsequently reduced to 2.5% for police officers and firefighters during the mid- 1970’s as a consequence of the City’s fiscal crisis and remained at that level until 2000 when it was again increased to 5% for police officers and firefighters. In the absence of ITHP, police members and firefighters of Tiers One and Two would on average contribute approximately 7% of salary towards their retirement. Retirement and Social Security Law §480 Initially, the ITHP program was made temporary and required 3 ITHP for teachers is found in Admin Code §13-546 and for other civilian employees in Admin Code §13-152. 5 extension on a bi-annual basis by executive order of the Mayor. In 1974, however, the Legislature amended the Retirement and Social Security Law by adding a new §480. Laws of 1974, ch 510, §24. Subdivision b of that section provided: Any program under which an employer in a public retirement system funded by the state or one of its political subdivision assumes all or part of the contribution which would otherwise be made by its employees toward retirement, which expires or terminates during nineteen hundred seventy-four, is hereby extended until July first, nineteen hundred seventy-six, notwithstanding the provisions of any other general, special or local law. In approving this legislation Governor Wilson stated the bill will: extend until July 1, 1976 all temporary retirement benefits for members and retirees of public retirement systems (other than supplemental benefits) otherwise scheduled to expire this year. McKinney’s 1974 Session Laws, p. 2098 The Legislature continued to extend RSSL §480(b) annually or bi-annually until December 2009 when Governor Paterson approved legislation making that section (the extension of temporary benefits) permanent. Laws of 2009, ch. 504, Part A, §5. Enactment of Tier Three 6 The fiscal crisis of the early 1970’s lead to a demand for pension reform to reduce the costs of government. Following the recommendation of a Permanent Commission on Public Employee Pension and Retirement Systems, the Legislature in 1976 enacted Tier Three of the retirement law. (Chap. 890, RSSL Art. 14 §500 et. Seq.) Unlike the earlier Tier Two legislation, Tier Three was not an overlay on the existing pension system but an entirely new retirement structure of benefits and contributions. In approving the Tier Three legislation the Governor stated “These bills create a new retirement program for public employees hired on or after July 1, 1976.” 1976 McKinney’s Session Laws p. 2455. See also Civil Service Employees’ Assn. v. Regan, 71 NY2d 653, 659 (1988) (…the legislative history of chapter 890 [of the laws of 1976] confirms a comprehensive package creating a ‘new retirement program for employees hired on or after July 1, 1976’). The rights and obligations of Tier Three members with regard to contributions and benefits are governed by the provisions of RSSL Art. 14. This is made clear by RSSL §500, which provides in relevant part: Notwithstanding any other provision of law … the provisions of this article [14] shall apply to all members who join or rejoin a public retirement system of the state on or after July first nineteen seventy-six… In the event that there is a conflict between the provisions of this article and the provisions of any other law or code, the provisions of this article shall govern. 7 The Administrative Code provisions governing Tiers One and Two benefits and contributions do not apply to Tier Three members. The basic elements of Tier Three consist of an integration of social security benefits with service retirement and disability benefits. There is no provision for an employee annuity or contributions based on actuarial determinations. Instead, all employees are required to make a fixed contribution of 3% of salary each year. RSSL §517(a). Most significantly, it is undisputed that Tier Three contains no provisions for an ITHP program or any other obligation on the part of the employer to assume a portion of the employee contribution of 3% of salary. At the same time the Legislature enacted Tier Three, it temporarily excluded police officers and firefighters from its coverage and continued them in Tier Two. RSSL §500(c); 1981 Legislative Annual pps. 352-353. In 1981 RSSL §440(c) was enacted (Chap. 665) to give permanent Tier Two status to police officers and firefighters who became members of a retirement system between July 1, 1976 and June 30, 1981, and temporary Tier Two status to those who were to become members between July 1, 1981 and July 1, 1983 (see 1981 Legislative Annual pps. 352-353, supra). In 1983 the Legislature established a new Tier Four (Chap. 414) which was made applicable to persons who joined a public retirement system after July 1, 1976. Laws of 1983 Ch. 414 §1. Specifically excluded from its coverage 8 however are members of the New York City Police Pension Fund, the City Fire Department Pension Fund and members of the uniform force of the City Department of Correction. RSSL §600, subd.(a). At the same time, RSSL §440 (c) was amended by Chapter 411 of the Laws of 1983 to give permanent Tier Two status to police officers and firefighters who became members between July 1, 1981 and June 30, 1983, and amended section 2 of Chapter 665 of the Laws of 1981 to give police officers and firefighters who join or rejoin a public retirement system between July 1, 1983 and June 30, 1985 temporary Tier Two status until July 1, 1985. In 1985, RSSL §440(c) was amended by Chapter 281 of the Laws of 1985 to extend permanent Tier Two status to police officers and firefighters who last joined a public retirement system on or after July 1, 1976, but prior to July 1, 1987. This pattern was repeated by successive legislative enactments every two years between 1987 and 2007 which gave permanent Tier Two status to police officers and firefighters who became members between July 1, 1987 and June 30, 2009. See Laws of 1987, Ch. 205; Laws of 1989, Ch. 234; Laws of 1991, Ch. 197; Laws of 1993, Ch. 125; Laws of 1995, Ch. 125; Laws of 1997, Ch. 152; Laws of 1999, Ch. 144; Laws of 2001, Ch. 45; Laws of 2003, Ch. 91; Laws of 2005, Ch. 32, and Laws of 2007, Ch. 63. 9 2009 Legislation The 2007 extension of §440 (c) was due to expire on June 30, 2009 (Laws of 2007 ch. 63). On June 8, 2009 Governor Paterson vetoed the bill (S. 1409) that would have extended Tier Two coverage for two more years. In his veto message (Veto message No. 5 of 2009) the Governor observed that Tier Two coverage for police officers and firefighters had “routinely” been extended since 1976. He continued, however: But these are not routine times. The State and localities are hemorrhaging revenue at an alarming rate due to the recession and financial crisis… Police officers and firefighters have earned the State’s gratitude, and they should be well-compensated upon retirement. But that does not mean we can continue the present, unaffordable pension system, without enacting measures to reduce costs. I am not willing to ignore the present reality and simply re-enact the same provisions that have contributed to New York’s financial straits, without accompanying reform. As a result of the Governor’s veto and the Legislature’s failure to override, police officers and firefighters appointed on or after July 1, 2009 were no longer eligible for Tier Two membership. Since Tier Four specifically excluded police officers and firefighters from its coverage, members of those uniform forces appointed after that date are members of Tier Three. The Governor’s veto message recognized that as a consequence of his action, police officers and firefighters 10 appointed after June 30, 2009 would receive less generous pension benefits than those appointed before them. On December 10, 2009 the Governor approved legislation (Chap. 504) creating a new Tier Five. In so far as that legislation effects this appeal, police officers and firefighters who became members of the New York State and Local Police and Fire Retirement System on or after July 1, 2010 were required to contribute 3% of annual wages to the retirement system and had more stringent overtime and vesting provisions applied to them: Chap 504, Part A. These modified pension provisions, however, were not made applicable to New York City police officers, firefighters or to persons who joined the State retirement system on or after July 1, 1976 but prior to July 1, 2009. RSSL §1200 (a)(b); RSSL §440(c). As noted earlier, the provisions establishing the ITHP program had been temporarily and periodically continued by the Legislature over the last quarter century. Section 5 of Chapter 504 Part A of the Laws of 2009 amended RSSL §480(b) to make the ITHP provisions permanent for those to whom it applied. Since police officers and firefighters appointed on or after July 1, 2009 are members of Tier Three and not subject to ITHP, the making of that benefit permanent did not alter their pension rights. 11 New York City police officers and firefighters hired on or after July 1, 2009 are members of Tier Three and are subject to pension contributions of 3% of their compensation. On July 6, 2010 petitioners commenced an action challenging the alleged failures of the City to apply ITHP to these officers (38-50). In an order dated April 1, 2011 that action was converted into an Article 78 proceeding (7). In a subsequent order entered January 20, 2012, the Supreme Court granted the petition (6), which was later affirmed by the Appellate Division, First Department (573). On August 27, 2013, the appellate Division granted leave to appeal (571). OPINIONS BELOW The Supreme Court Justice Edmead observed that the relevant section of the Administrative Code §13-226 (the ITHP provision) does not refer to pension tiers “Rather, they make the benefits that they provide available to each ‘member’” (10). She continued: Indisputably, the Administrative Code provisions were written to include future, as well as then-employed officers and firefighters, and needless to say, police officers and firefighters, who are in Tier 3 are members of their respective pension funds. Id. The Court concluded (10-11): [A]t the time that RSSL §480 (b) was amended, in 2009, to make the provisions of that statute applicable to City employees joining the retirement system on or after January 1, 2010 (L 2009, Ch. 504, approved Dec. 10, 2009), there had been police officers and firefighters who 12 had been in Tier 3 of their respective pension funds for more than five months, because on June 3, 2009, Governor Paterson had vetoed a bill (S. 1409) that would have extended placement in Tier II for uniformed members of the police department who became members on or after July 1, 2009 but prior to July 1, 2011. ‘The Legislature is presumed to be aware of law in existence at the time of an enactment’ (citations omitted). That general principle is all the more applicable here, where the enactment of chapter 504 followed Governor’s Paterson’s veto by approximately six months, and where Chapter 504 retained the RSSL §480 requirement that the City contribute a portion of the sums that police officers and firefighters pay toward their retirement benefits, although the major thrust of the Chapter was to reduce the City’s and the State’s pension costs…” The Court rejected petitioners’ argument that the failure to provide Tier Three Members with ITHP violated a 2000 collective bargaining agreement between the City and the Municipal Labor Committee under which the City agreed to support legislation increasing the ITHP rate from 2.5% to 5% for police and firefighters in Tiers One and Two. In rejecting this argument the court held (13): …it was hardly in the contemplation of either party to the MLC Agreement that, nine years later, newly hired police officers and firefighters would no longer be placed in Tier II of their respective pension systems. The Appellate Division The majority, after describing the history of ITHP, noted that prior to 1974 ITHP increased officers’ take-home pay by having the City assume a portion of the officers’ contribution towards their annuities (577). In 1974, however, the majority stated that ITHP was “recodified as Retirement and Social Security Law 13 §480”, (581) which section “makes no reference to any ‘annuity contribution’”. The majority continued (582): By its own language, §480 is not restricted to Tier I or II, or to annuity contributions. Rather it applies to ‘any program’ under which a government employer makes a ‘contribution which would otherwise be made by its employees towards retirement’ (Emphasis in original) This statutory language, the majority reasoned, “indicates a legislative policy to apply ITHP to any government employee, regardless of pension tier” (citations omitted.) Id.. According to the majority, this conclusion …is buttressed by the fact that, rather than being included in Retirement and Social Security Law article 11, governing tier II, the statute was enacted as the sole occupant of its own free standing article Article 13. Id. Recognizing that Tier Three’s provisions “are generally less favorable for members than tier I and II …” , the majority, continued, “it is not unthinkable that the legislature might wish to soften the blow for Tier III police officers by continuing to extend them the benefits of ITHP contributions” (583). It concluded Again, the plain language of §480 and its placement in its own free standing article are indicative of a legislative intent that ITHP contributions continue to apply to police officers, regardless of their tier. Id. As an example of legislative intent not to diminish or exclude ITHP in Tier Three, the majority pointed to RSSL §508-a(a) which “expressly mentions ITHP” ( 584). “[T]he fact that the legislature expressly mentioned ITHP in tier III 14 but did not state that ITHP was inapplicable to that tier shows that it never intended to exclude ITHP from Tier III…” Id. In his dissent, Justice Friedman placed emphasis on the fact that the legislation creating the ITHP benefit does not apply to members of Tier Three because that plan does not contain an annuity component (587). In this regard he observed: [The majority] essentially rewrites the law to fit the square peg of the tier III system into the round hole of an ITHP program that was created for members of tiers I and II. In so doing, the majority takes the 1974 law [ creating §480, sub. b] that extended preexisting ITHP benefit to tiers I and II employees and applies it to police officers and firefighters hired in 2009 or later, who belong to the entirely dissimilar tier III of the retirement system. Id. He recognized that RSSL §480(b) did not create an ITHP program but referred to a preexisting program and provided for its temporary continuance (588). Justice Friedman concluded, therefore, that resolution of the case was determined by an examination of the applicable provisions of law that created ITHP prior To 1974 (589). These provisions are contained in Admin. Code §§13- 225 and 13-326, and make clear that ITHP applies only to the annuity portion of an employee’s retirement allowance. Justice Friedman recognized that Tier Three contains no annuity component and that Tier Three members make no annuity 15 contributions “to which the pre-1974 ITHP program extended by RSSL §408(b) could apply” (591). He continued: The majority manages to reach its result by resolutely ignoring the fact that the nature of a ‘program’ extended by RSSL §480(b) cannot be determined from the text of §480(b) itself. Again, §480(b) simply refers, in pertinent part, to ‘[a]ny program under which an employer … assumes all or part of the contribution which would otherwise be made by its employees toward retirement, which expires or terminates during [1974]’ Id. He observed in note 5 of his dissent (592): Given that §480(b) simply extends certain preexisting program fitting a very general description, there is no basis for the majority’s claim that ‘the Legislature shifted the ITHP codification from the New York City Administrative Code to the Retirement and Social Security Law’. A person seeking to learn how ITHP functions could search RSSL §480(b) in vain for such information. Justice Friedman emphasized that the relevant statutes were those pre- 1974 provisions that applied ITHP to an employee’s annuity contribution. He opined (592 - 593): Simply put, in the case of a tier III employee, there is no annuity contribution to which an ITHP program can be applied. It seems to me that this conclusion is unavoidable unless one rewrites the ITHP program to apply to non-annuity pension contributions, which is essentially what the majority chooses to do. I do not believe that we have authority to engage in judicial legislating of this kind. 16 He rejected the majority’s reliance on RSSL §508-a, noting (593): Given that RSSL §508-a(a) does not itself create any ITHP program for tier 3 members, the statute’s placeholder reference to payment of a ‘reserve-for- increased-take-home pay, if any,’ does not change the fact that, to determine whether ‘any’ ITHP reserve actually does apply to a particular tier 3 member, one must examine the underlying ITHP provision. The majority utterly fails to undertake any such examination. ARGUMENT POLICE OFFICERS AND FIREFIGHTERS APPOINTED ON OR AFTER JULY 1, 2009 ARE MEMBERS OF TIER THREE OF THE RETIREMENT AND SOCIAL SECURITY LAW. ALL TIER THREE MEMBERS ARE REQUIRED TO CONTRIBUTE THREE PERCENT OF THEIR SALARIES ANNUALLY TOWARDS THEIR RETIREMENT. THERE IS NO PROVISION IN TIER THREE FOR ITHP OR ANY OFFSET OF MEMBER PENSION CONTRIBUTIONS BY THE EMPLOYER. THE APPLICATION OF ITHP TO THESE TIER THREE MEMBERS WOULD HAVE THE EFFECT OF MAKING THEIR PLANS NON- CONTRIBUTORY, WHICH WOULD BE CONTRARY TO THE LEGISLATIVE INTENT IN CREATING THAT TIER. Petitioners do not challenge our contention that New York City police officers and firefighters appointed on or after July 1, 2009 are members of Tier Three (RSSL Article 14). The Legislature did not override Governor Paterson’s veto of the extension of Tier Two in 2009, and the provisions of Tier Four (RSSL Art. 15) specifically excludes police officers and firefighters. RSSL §600, subd. a.. The rights and obligations of Tier Three members are governed exclusively by the 17 provisions of RSSL Article 14. RSSL §500 specifically states the article’s provisions apply to all Tier Three members notwithstanding any other provision of law and that to the extent “there is a conflict between the provisions of this article [14] and the provisions of any other law or code, the provisions of this article shall govern.” It is undisputed that Tier Three members are required to contribute 3% of annual wages to the retirement system in which they have membership. RSSL §517. It is not asserted that Article 14 contains an ITHP provision or other employer offset of the employee’s requirement to make the 3% contribution. Nor does Article 14 incorporate by reference any other ITHP program. As noted earlier, police officers and firefighters who are members of Tiers One and Two receive a retirement allowance consisting of a City funded pension and an annuity based upon employee contributions. A Tier Three member, on the other hand, receives “a pension equal to fifty percent of the final average salary less fifty percent of the primary social security benefit at age sixty-two.” RSSL §505. There is no annuity component in Tier Three. It is also beyond dispute that the ITHP provisions of the Administrative Code applicable to police officers and firefighters (Admin. Code §§13-225, 13-226, 13-326, 13-327) are limited to those persons who are members of Tiers One and Two. Justice Friedman explained (591): 18 Hence tier III members make no annuity contributions to which the pre-1974 ITHP program extended by Retirement and Social Security Law §480(b) could apply. It is irrelevant that the statute itself does not state that that the program being extended is restricted to reduction of annuity contributions because that restriction is plain upon examination of the pre-existing ITHP program the statute extended. The holding of the Appellate Division is based entirely on a construction of RSSL §480(b), which the majority concluded was a 1974 “recodification” or supersession of ITHP contained in the Administrative Code ( 581). As previously noted, between the enactment of ITHP in 1963 and 1974, the Legislature biannually authorized the Mayor, in his discretion by mayoral executive order, to establish ITHP programs. In 1974 ITHP was continued but the Mayor was deprived of discretion. That year the Legislature enacted a new RSSL§480 entitled “Extension of temporary benefits”. Laws of 1974, Ch. 510, §24. Subdivision b of that section provided: Any program under which an employer in a public retirement system of the state or of one its political subdivisions assumes all or part of the contribution which would otherwise be made by its employees toward retirement, which expires or terminates during nineteen seventy-four, is hereby extended until July first nineteen seventy-six, notwithstanding the provisions of any other general, special or local law. In his statement approving the legislation, the Governor stated that the purpose of this portion of chapter 510 was to: 19 extend until July 1, 1976 all temporary retirement benefits otherwise scheduled to expire this year. 1974 Legislative Annual pps. 43, 390. Nothing contained in the language of the amendment or its legislative history states or suggests a legislative intent to “recodify” then existing ITHP programs or create new ones for future employees in then non-existent Tier Three. In the years following 1974, the Legislature continued the temporary extension of ITHP on an annual or biannual basis. In December 2009 the Governor approved legislation making the provisions of §480(b) permanent (Chap. 504, Part A, §5). However, since all police officers and firefighters appointed on or after July first of that year were members of Tier Three, the act making ITHP permanent did not effect them. Section 480(b) did not establish an ITHP program but temporarily extended the ITHP program contained in the Administrative Code, which admittedly applies only to Tiers One and Two members. Petitioners’ reliance on §480, therefore, begs the question. To prevail in the case, they must point to some other applicable statute that grants Tier Three members ITHP benefits. This they cannot do. In his dissent, with which we agree in its entirety, Justice Friedman correctly observed (588-589): …§480(b) refers to a ‘program’ that already existed at the time of the statute’s original enactment in 1974 and provides that preexisting programs shall continue to exist. 20 * * * Thus, contrary to the view of the majority and the Supreme Court, the fact that Retirement and Social Security Law §408(b) does not contain language limiting its applicability to any particular tier of the pension system is not determinative. Rather, we must look to the preexisting provisions of law that created the ITHP program to determine whether the program has any applicability to police officers and firefighters covered by tier III. When this approach is taken, it becomes clear that the ITHP program has no applicability to tier III employees. As discussed earlier, under ITHP the City assumed a portion of the police officer or firefighter’s required contribution towards his or her annuity Admin. Code §§13-226, 13-326. Because Tier Three members have no annuity, ITHP does not apply to them. Justice Friedman recognized this (592 - 594): Simply put, in the case of a tier III employee, there is no annuity contribution to which the ITHP program can be applied. It seems to me that this conclusion is unavoidable unless one rewrites the ITHP program to apply to non-annuity pension contributions, which is essentially what the majority chooses to do. * * * To be clear, it is my view that ITHP does not apply to tier III employees because the benefit provided by ITHP (reduction of the employee’s annuity contributions) cannot be applied (absent judicial rewriting) to an employee who makes no annuity contributions. Neither petitioners nor the Appellate Division or the Supreme Court indicated what purpose would have been served by a reenactment or recodification 21 of ITHP in 1974. At that time all City employees who were members of a City pension system had ITHP. The Legislature could not have foreseen the provisions of Tier Three which were enacted in 1976. Thus, the majority’s speculation that the Legislature “might wish to soften the blow for tier III police officers by continuing to extend them the benefit of ITHP contributions” (583) simply makes no sense. If §480(b) was intended to create a new or different ITHP program from that then existing in the Administrative Code, it contains no language for its administration. Compare §480(b) with the language of §§13-226 and 13-326. The Administrative Code provisions not only set forth a mandate for ITHP contributions but also establishes a contingent reserve fund to pay for it, a statutory guarantee of it and is replete with references to ITHP for purposes of calculating a member’s pension See Admin. Code §§13-228, 13-331, 13-231, 13-334, 13-234, 13-337, 13-255, 13-359, 13-361, 13-257, 13-363. In support of its holding the majority reasoned (582): Moreover, the conclusion that the section 480 recodification was intended to extend ITHP to any current position is buttressed by the fact that, rather than being included in Retirement and social security Law Article 11, governing tier II, the statute was enacted as the sole occupant of its own freestanding Article, Article 13 22 The ITHP extender could not have been inserted in RSSL Article 11, as the majority suggested, because it applied to both Tiers One and Two. Moreover, the extender also covered members of the State Retirement System who also had ITHP. See e.g. RSSL §70-a. From a legislative drafting perspective, therefore, it made perfect sense to place the temporary extension of ITHP benefits and other temporary benefits in a new Article 13. In further support of its view that the Legislature “never intended to exclude ITHP from tier III”, the majority cites RSSL §508-a. That section added in 1998 (ch. 388) amended the retirement law applicable to all tiers by providing that a retirement system member who had a vested right to retirement benefits but died prior to retirement would receive a benefit equal to one half of the amount of the ordinary death benefit which would have been payable had the death occurred on his or her last day of active service. The relevant Tier Three provision is contained in §508-a which states that that benefit “plus the reserve-for-increased- take-home pay, if any” will be provided to the covered individuals. An identical provision is provided for Tier Four members. RSSL §606-a. An examination of the Tier Three legislation indicates that the language relied upon the majority is not evidence of a legislative intent to extend ITHP to those covered by that tier. Tier Three was made applicable to all persons who joined a public retirement system of the State on or after July 1, 1976. RSSL 23 §500(a). Tier Three, however, was made effective on January 1, 1977. Laws of 1976 ch. 890, §9. Thus any person employed between July, 1, 1976 and December 31, 1976 became members of Tier Two until January 1, 1977 when Tier Three became effective. During that brief period of time such individuals would have been members of Tier Two and would have had ITHP for that limited time. When Tier Four was created in 1983 those individuals would have moved to that Tier.4 Thus when the legislature enacted RSSL §508-a (and 606-a) in 1998, there were in all likelihood members of Tiers Three and Four who had small ITHP reserves as a result of their brief 1976 membership in Tier Two. In 1998 the Legislature wanted to ensure that such individuals would not lose ITHP benefits, if any, if they sought to take advantage of the amendment. It is certainly not evidence of a legislative intent to extend ITHP to all Tier Three members. If petitioners prevail in this litigation, the application of ITHP to them would relieve them of the obligation to make any contributions towards their retirement (Tier Three requires a 3% of salary contribution by the employee. ITHP requires the city to assume 5% of the employee’s salary.) It is undisputed that ITHP does not relieve Tiers One and Two members from making some 4 As noted above, when Tier Four was created in 1983 it was made applicable to all persons who join or rejoin a public retirement system on or after July 1, 1976. Chap. 414, §1 The only exceptions for our purposes were City police officers and firefighters who remained in Tier Two and City correction officers who continued in Tier Three. 24 contribution towards their retirement. The result sought by plaintiff would put them in a better position then members of Tiers One and Two. Indeed, no City retirement plan relieves employees from contributing towards their retirement. Obviously, this was not the intent of Governor Paterson in vetoing the extension of Tier Two (which had become too costly) or the legislative purpose in creating Tier Three. Justice Friedman correctly stated that the majority had engaged in “judicial legislating” by “rewriting ITHP from the bench to make it apply to pension contributions that the program [ITHP], as written, simply does not cover (594). CONCLUSION THE ORDER APPEALED FROM SHOULD BE REVERSED AND THE PETITION DISMISSED WITH COSTS. Michael A. Cardozo Corporation Counsel of the City of New York Attorney for Appellants 100 Church Street New York, N.Y. 10007 REPHEN@LAW.NYC.GOV (212) 356-2600 By: Paul T. Rephen Leonard Koerner Paul T. Rephen Of Counsel 25 PRINTING SPECIFICATIONS STATEMENT This brief was prepared with Microsoft Word 2003, using Times New Roman 14 pt. for the body and Times New Roman 12 pt. for footnotes. According to the aforementioned processing system, the entire brief, including portions that may be excluded from the word count pursuant to 22 N.Y.C.R.R. § 600.10(d)(1)(i), contains 6,124 words.