NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9218
SPONSOR: Norris
 
TITLE OF BILL:
An act to amend the general municipal law, in relation to permitting the
Clarence central school district to establish an insurance reserve fund
 
PURPOSE OR GENERAL IDEA OF BILL:
Permits the Clarence Central school district to establish an insurance
reserve fund.
 
SUMMARY OF PROVISIONS:
Section 1 amends Paragraph(A) of subdivision 2 of section 6-n of the
general municipal law, as separately amended by chapters 251 and 338 of
the laws of 2022 by providing the Clarence Central School District the
ability to establish an insurance reserve fund.
Section 2 provides the effective date.
 
JUSTIFICATION:
The law currently authorizes municipal corporations to purchase a health
insurance plan or to i self-insure to provide health insurance for their
officers and employees, and retired officers and employees. Further,
section 6-n of the general municipal law authorizes municipal corpo-
rations to establish and make expenditures from an insurance reserve
fund for any loss, claim,' action or judgment for which the municipal
corporation is authorized or required to purchase or maintain insurance.
However, section 6-n exempts certain kinds of risks enumerated in the
insurance law, including accident and health insurance, from the types
of risks for which the municipality may make such expenditures. In this
way, section 6-n of the general municipal law prohibits municipal corpo-
rations from making expenditures from insurance reserve funds in
relation to self-funded health insurance programs. However, there is an
anomaly in the law because section 4706 of the insurance law recognizes
the stabilizing benefits of maintaining a reserve fund by requiring such
a fund where three or more municipal corporations join to form a munici-
pal cooperative health benefit plan. This legislation recognizes that
the same rationale makes a health insurance reserve fund beneficial in
the context of a single municipal corporation that self-insures, in the
case of the Clarence Central School District.
The bill allows the school district to maintain such a reserve fund and
make expenditures from such reserve fund for any loss, claim, action or
judgment for which such school district is authorized or required to
purchase or maintain insurance. In so doing, the school district and its
taxpayers may obtain the significant stabilizing benefits of maintaining
a reserve fund and.avoid the financial burden that would result when a
municipal corporation or school district wishing to self-insure could
not do so because of the large- year-to-year variations in claims
against a self-funded health insurance program.
 
PRIOR LEGISLATIVE HISTORY:
None
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None
 
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
9218
IN ASSEMBLY
February 16, 2024
___________
Introduced by M. of A. NORRIS -- read once and referred to the Committee
on Education
AN ACT to amend the general municipal law, in relation to permitting the
Clarence central school district to establish an insurance reserve
fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph (a) of subdivision 2 of section 6-n of the gener-
2 al municipal law, as separately amended by chapters 589 and 598 of the
3 laws of 2023, is amended to read as follows:
4 (a) The governing board of any municipal corporation may establish a
5 reserve fund to be known as the insurance reserve fund. Upon the
6 creation of the fund, the municipality may make expenditures from the
7 fund for any loss, claim, action or judgment for which the municipal
8 corporation is authorized or required to purchase or maintain insurance,
9 except those kinds of risks for which insurance is authorized pursuant
10 to paragraph one, two, three, fifteen, sixteen, seventeen, eighteen,
11 twenty-two or twenty-three of subsection (a) of section one thousand one
12 hundred thirteen of the insurance law, or for payments in lieu of
13 contributions under article eighteen of the labor law; provided however,
14 that no municipality shall make an expenditure from such fund for any
15 loss, claim, action or judgment for which the municipal corporation has
16 established a reserve fund under any other provision of law; provided,
17 further that the Scarsdale union free school district, the Mamaroneck
18 union free school district, the Minisink Valley central school district,
19 the Vernon Verona Sherrill central school district, the Ithaca city
20 school district, the Kenmore-Town of Tonawanda union free school
21 district, the Bedford central school district, the Grand Island central
22 school district, the Tonawanda city school district, the enlarged city
23 school district of Middletown, the Frontier central school district, the
24 Owego Apalachin central school district, the Maine-Endwell central
25 school district, the Binghamton city school district, the Candor central
26 school district, the Cleveland Hill union free school district, the
27 Depew union free school district, the Liverpool central school district,
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14525-01-4
A. 9218 2
1 the Auburn enlarged city school district, the Carmel central school
2 district, the Clarence central school district and the Canastota central
3 school district may establish insurance reserve funds in compliance with
4 this section and article seventy-four of the education law and such
5 school districts may make expenditures in compliance with this section
6 and article seventy-four of the education law from such reserve fund for
7 any loss, claim, action or judgment for which the school districts are
8 authorized or required to purchase or maintain insurance for the kinds
9 of risks for which insurance is authorized pursuant to paragraph three
10 of subsection (a) of section one thousand one hundred thirteen of the
11 insurance law.
12 § 2. This act shall take effect immediately.