If a village, town, city, or fire district elected to participate in the “State pension” in order to provide a retirement benefit to its employees, that municipality is participating in the New York State and Local Retirement System (NYSLRS). This system is actually comprised of two pension plans – the Employee’s Retirement System (ERS) and the Police and Fire Retirement System (PFRS).

While a LOSAP is not part of the NYSLRS, and the scale and scope of the NYSLRS is significantly greater than a LOSAP, it can be an interesting benchmark for comparison. How much larger is the NYSLRS than an average DB LOSAP? Based on information we received from the State on 256 defined benefit (DB) fire department LOSAPs, the average DB had $2 million in assets. We know that 256 DB plans is not representative of the total number in New York – the actual amount is likely between 475 and 500 based on other information that is available.  If all DB plans were considered, the average of $2 million per plan would certainly be different. Additionally, those values are now over two years old.

For our purposes, however, an average DB LOSAP in New York could be reasonably assumed to have an asset value of around $2 million. In general, each DB plan is individually managed by the sponsoring municipality. That $2 million being managed by a sponsor pales in comparison to the value of the assets held for the NYSLRS, which is $194.3 billion as of March 31, 2020. This means from an asset standpoint, the NYSLRS is about 100,0000 times larger than an average LOSAP! Therefore, drawing conclusions between the two can be misleading if the proper context is not kept. That said, it is interesting to see the financial condition of the NYSLRS and use some of the information provided as a comparison to a locally-administered LOSAP.

On September 3, 2020 the Office of the State Comptroller released the contribution rates for the NYSLRS. The rates for the ERS increased from 14.6% to 16.2% of payroll, and PFRS from 24.4% to 28.3% of payroll. That represents increases of about 11% and 16% respectively.

The funded ratio was reported to be 86.2%, a decrease from 96.1% as of 2019 and 98% as of 2018. You can read the press release here: https://www.osc.state.ny.us/press/releases/2020/09/nyslrs-announces-employer-contribution-rates-retirement-system-2021-22

The assumed rate of return on the Common Retirement Fund assets is 6.80%. The Fund earned -2.68% during the fiscal year that ended on March 31, 2020. The fiscal-year end of March 31 was bad timing this year, when the investment markets saw significant declines in March due to the onset of the COVID-19 pandemic. This was a significant factor in the increase in the contribution rates. As of March 31, 2020, the Fund had about 49% of the assets allocated to publicly traded equities, with another 11% in private equity. About 26% was in cash, bonds, and mortgages, 10% in real estate and real assets, and the remaining in alternative strategies.

Additional information about the Common Retirement Fund can be found in this press release: https://www.osc.state.ny.us/press/releases/2020/07/dinapoli-state-pension-fund-value-1943-billion

Each year, the Retirement Systems Actuary issues a report on the actuarial assumptions used to determine the employer contribution rates. Michael Dutcher is the Actuary and is very skilled and clear in his written communications.  We suggest you download and read the report, which is located here:
https://www.osc.state.ny.us/sites/default/files/retirement/documents/pdf/2020-09/actuarial-assumptions-2020.pdf

We suggest reading the Executive Summary and the section on the Investment Rate of Return found on pages 5 to 9. Mr. Dutcher does an excellent job walking the reader through the importance of the Investment Rate of Return Assumption and the process used to select it.

Some key takeaways from this information for LOSAP sponsors are:

• Funding a pension plan, or a LOSAP, is a long-term proposition and a longer-term view should be applied during analysis.
  
• A diversified portfolio, which includes exposure to equities, may be necessary to achieve certain rate of return goals over the long term.
  
• Short-term cost increases are a reality when short-term returns do not match the long-term goals.
  
• Funded ratios can and will fluctuate, as can be seen by the decrease in the NYSLRS funded ratio from 98% to 86%.
  
• Managing a pension shouldn’t be done in silos and by one person – having multiple inputs from the likes of the municipal board, municipal employees like the secretary and treasurer, actuary, administration, asset manager, accountant, attorney, and others, is valuable in making sound policy decisions.

Firefly Admin Inc. is guided by six core principles – Serve, Trust, Value, Teach, Grow, and Collaborate. These principles can be applied in many ways, including both in how we deliver our services to clients and how we operate internally as a team.

Recently, we have made several internal decisions on enhancing our service offerings, all done in line with these principles. However, the purpose of this communication is to highlight one we are very excited to announce, which is the addition of Craig Relyea, ASA to our team.
Craig joins Firefly as an Actuary; he is an Associate of the Society of Actuaries and a Member of the American Academy of Actuaries. Most recently, Craig has been working for a health insurance company, assisting them manage their large volume of data, analyzing and helping develop trends and pricing for their products. For the 10 years prior, Craig worked with service award programs and developed a specific expertise in this field – one that we are extremely fortunate to now have working for Firefly’s clients.

In recent months, Craig assisted us with a couple actuarial projects on a consulting basis. Now that he has been hired as an employee, he will be involved in all facets of our services, including administration, consulting, and client meetings. His unique experience will allow him to make an immediate and significant impact. While adding Craig’s talents will enhance the service we can provide, his addition is equally important to strengthening the continuity of our services over time. This illustrates our commitment to ensure our services can be trusted and valued in the future.

On actuarial matters, Craig will work closely with our consulting actuary, Tony Fiorillo. Tony Fiorillo is also an Associate of the Society of Actuaries, and he certified all valuations we prepared in 2020. We entered into a consulting agreement with Tony in January 2020. This also means we will not be relying as much on our collaboration with Jefferson Solutions, Inc. We continue to work with Jefferson on specific projects and recommend any municipality in need for GASB 75 valuations to contact them through their website, www.jefsi.com.

As a result of the addition of Craig and Tony, our team now consists of five professionals all with at least ten years of experience with service award programs. Although 2020 was not typical by any measurement, we successfully delivered on our promises, making at least one part of our clients’ year routine. All annual reports and participant benefit statements were delivered timely, both in paper form and electronically. We were also able to provide our clients a draft of the resolution to award points for the period of the COVID-19 pandemic at no additional fee.

If you’d like to contact Craig, please email him at craig@fireflyadmin.com. Although Tony Fiorillo is a project-based consultant, if you have questions about an actuarial valuation or would like to touch base with him, you can email Tony at tf@fireflyadmin.com.

​For those municipalities that have chosen to partner with Firefly, we are thankful for the trust you have placed in us, and we will continue to work to validate that trust.

As was mentioned in a previous post, a bill was introduced in the Senate to try and address the impact of the current COVID-19 pandemic will  have on the ability of volunteers to earn LOSAP points in 2020.

Since that post, the bill was amended to include changes to Articles 11-AA and 11-AAA, which are the statutes that govern the LOSAPs for volunteer ambulance squads.

Yesterday, May 11th, an Assembly bill was introduced which mirrors the amended Senate version. We have included it at the bottom of this post for you.

Our comments on the version Senate bill were provided to the legislature and other interested parties. A condensed version will be made available soon.

In the meantime, please do not assume this bill will pass. We will continue to monitor and update you as this situation develops.

A bill was introduced in the Senate this week to address how the current COVID-19 pandemic has impacted how firefighters can earn LOSAP points.

At this point, we are providing the text of the bill with no comments. It can be found at the bottom of this article.

In general, we maintain that we cannot assess how this pandemic will impact how firefighters can earn 50 points until we are clearly near the bottom of the curve. Therefore, it is difficult to know how to best address this situation. Since this legislation is only in bill form, we encourage you not to wait for this bill to possibly become law - start thinking about ways to be creative to allow firefighters to earn points in 2020.

We have been asked for our input on this bill and will be providing it soon.

If you have any questions, please contact us!  Stay safe!

What does it mean to be a professional? 

In many contexts, the term professional means paid, in particular in the sporting world. A professional athlete is paid, an amateur is not. 

Muhammad Ali (then Cassius Clay) won the light heavyweight gold medal in the 1960 Olympics as an amateur. In October of that same year, he fought for the first time as a professional, defeating Tunney Hunsaker. What was the tangible difference in the amateur Ali in the summer of 1960 versus the professional Ali a mere four months later? Was the difference more than a paycheck? I wouldn't think so.

Clearly, professional implies the person is being paid to perform. But someone who is paid to do a job is not always a professional. So clearly, professionalism means a higher standard than just being paid to do a job.

A professional shows up and does the job even when she isn't 100%. A professional accepts accountability and responsibility for the job. A professional is trusted. 

These attributes - trusted, accountable, responsible, reliable - are a few words I would use that make someone a professional. 

A large part of my life is spent with volunteers - clearly volunteer firefighters, but also volunteers at church, little league, cub scouts, and so many other places. I'd like to argue that just because someone is a volunteer, it doesn't make them an amateur. It is clear to me you can maintain a professional demeanor while volunteering.

Given that this is a blog directed to the volunteer emergency services, I want to specifically thank all of you volunteer firefighters and first responders who are professional in action, though not in compensation. Thank you for showing up when your community needs it, even when it isn't convenient.  Thank you for being trusted, and responsible for the safety of our neighborhoods. Thank you to all who are dedicated to show up, give of themselves, and improve the lives of others around them.

Happy New Year.