In our June 2022 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 service award program may be adopted only by … the political subdivision having control of the fire departments and fire companies…
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:
“Special fire company or department” means a fire company or department for which a service award program cannot be established pursuant to subdivision one or two of section two hundred sixteen of this article which provides fire protection services to two or more political subdivisions under contracts with the governing boards thereof.
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:
11. A service award program for the volunteer firefighters of a special fire company or department shall remain in effect until terminated by the political subdivisions which are parties to the agreement to jointly sponsor the program. The service award program shall be terminated only if: (a) the governing board of each and every such political subdivision approves a resolution to terminate the program by an affirmative vote of at least sixty percent of the governing board; and (b) the eligible voters of each and every such political subdivision separately approve a proposition to terminate the program.
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:
(a) A State-administered defined benefit volunteer firefighter service award program may be terminated by the sponsor in the manner provided by section 216 or 216-a of the General Municipal Law.
(d) Upon the termination of a State-administered defined benefit volunteer firefighter service award program, all participants who have earned nonforfeitable rights to a service award or beneficiaries of such participants, including those then receiving payment of their service awards, shall be paid a single-sum equal to the actuarial present value of the unpaid balance of their earned service awards as of the date of program termination. Payment shall be made within one year of the effective date of termination.
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.
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