In our last post, we reviewed that Section 216 of the New York State General Municipal Law (GML) allows a sponsor to "abolish" the program. You can read that post here. First, we must consider some background information.
Section 216 of the GML is titled "Authorization to establish service award programs for volunteer firefighters of political subdivisions of the state and for volunteer firefighters other than of political subdivisions of the state". Section 216(1)(a) states, in part:
A political subdivision that has "control" of a fire department is essentially a fire district, a village with a village fire department, a city, and a town where a single fire department contracts only with that town to provide protection in a fire protection district. This covers an overwhelming majority of all LOSAPs in New York - likely 95%.
The fire departments/companies that fall under the remaining 5% are termed special fire companies in the statute, and are defined as:
These plans must be established and amended in accordance with Section 216-a of the GML. Essentially, for an independent fire company that is not within the borders of a village, fire district or city, that contracts with two or more municipalities to provide fire protection. The distinction will be important for the remainder of this article.
With that as background, we can start to address the question, Can a LOSAP be terminated? The generally accepted definition of the word “terminate” is the ending of a something, such as a contract, usually before the agreed-upon term or natural end. In a general pension context, terminate typically means to stop the plan and distribute accrued benefits immediately. The term "terminate" is not found in Section 216 - instead, the term "abolish" is used as discussed in our prior post.
However, it does show up in Section 216-a(11), which states:
This section of the statute does not provide specific direction for what happens after a plan is terminated, and as previously reviewed this section does not apply to a majority of LOSAPs adopted in NY State.
However, we may be able to glean some additional insight from the rules that apply to State-administered LOSAPs. Most LOSAPs are locally administered (probably 99%) but roughly fifteen years ago a sponsor was allowed to elect for the State to administer the plan on their behalf. New York Codes, Rules and Regulations, Title 2, Chapter IV, Part 155. Section 155.13 addresses the termination of a defined benefit program that is administered by the State. Subsection (a) and (d) of this Section states the following:
As previously discussed, Section 216 does not provide for the termination of a LOSAP, but Section 216-a does. Therefore, it seems that the State deems that the terms “abolish” and “terminate” to be interchangeable. With this in view, even though these Rules and Regulations do not apply to a locally-administered LOSAP, a sponsor could consider them authority to do so, as well as a blueprint for how to terminate a LOSAP.
Since Firefly does not and cannot provide legal advice, this post is for informational purposes only. If your municipality is considering terminating its LOSAP, we suggest forwarding this article to your local attorney for feedback and guidance.