senate Bill S4182

Amended

Reforms aspects of local government and school accountability

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 13 / Mar / 2013
    • REFERRED TO EDUCATION
  • 01 / May / 2013
    • AMEND (T) AND RECOMMIT TO EDUCATION
  • 01 / May / 2013
    • PRINT NUMBER 4182A
  • 08 / Jan / 2014
    • REFERRED TO EDUCATION
  • 04 / Jun / 2014
    • AMEND (T) AND RECOMMIT TO EDUCATION
  • 04 / Jun / 2014
    • PRINT NUMBER 4182B

Summary

Reforms aspects of local government and school accountability; requires notice of reserve funds; requires resolution for reserve.

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Bill Details

Versions:
S4182
S4182A
S4182B
Legislative Cycle:
2013-2014
Current Committee:
Senate Education
Law Section:
Education Law
Laws Affected:
Amd §§1608, 1716 & 2116-b, add §3653, Ed L; amd §§6-e, 6-h & 6-r, Gen Muni L
Versions Introduced in 2011-2012 Legislative Cycle:
S5689A

Sponsor Memo

BILL NUMBER:S4182

TITLE OF BILL: An act to amend the education law, in relation to
requiring notice of reserve funds, reserves funded by resolution and
the internal audit of certain school districts; and to amend the
general municipal law, in relation to tax stabilization reserves,
reserves for bonded indebtedness, and authorizing school districts and
boards of cooperative educational services to establish retirement
contribution reserve funds for the purposes of the New York state
teachers' retirement system

PURPOSE: To provide mandate relief, flexibility and increased
transparency in school district fiscal operations.

SUMMARY OF PROVISIONS: Sections 1 and 2 of this bill would amend
Subdivision 5 of Section 1608 and Subdivision 5 of Section 1716 of the
Education Law to require school districts to include a schedule of all
reserve funds as part of the detailed statement that is appended to
the annual budget document.

Section 3 of this bill would amend Subdivision 2 of Section 2116-b of
the Education Law to allow school districts with fewer than 1,000
students to forego establishing or maintaining an internal audit
function. School districts that resolve to eliminate their internal
audit functions pursuant to this legislative change would have to
notify the State Department of Education (SED) and the Office of the
State Comptroller (OSC) of their decision.

Section 4 of this bill adds a new Section 3653 to the Education Law to
require boards of education or trustees of a school district to
authorize any increased funding of reserves by resolution.

Section 5 of this bill amends Section 6-e of the General Municipal Law
to allow school districts to establish a tax stabilization reserve
fund. School districts would be limited to using any moneys in this
fund only to lessen or prevent projected tax increases that would
otherwise be above 2.5 percent of the amount of the real property tax
levy needed to finance the annual budget. This bill would require
schools to appropriate any annual amounts placed in the reserve for
budget purposes within three years.

Section 6 of this bill amends Section 6-h of the General Municipal Law
to allow schools to establish a reserve for bonded indebtedness. This
bill would require that schools make expenditures from this reserve
only to pay the principal and interest on bonds, or to reduce
principal when refunding bonds. Also, if school officials establish
budget provisions during a given fiscal year to pay the principal and
interest on the bonds from sources other than the reserve for bonded
indebtedness, school officials would be prohibited from transferring
the reserve fund moneys during that fiscal year.

Section 7 of this bill amends Paragraphs b and c of Subdivision 1 of
Section 6-r of the General Municipal Law to allow schools to establish
reserves for teachers' retirement system contributions. Current
statutes allow schools to establish reserves only for contributions to
the New York State and Local Employees' Retirement System. This bill


would allow school districts to reserve moneys for this largest
component of their pension costs.

Section 8 of the bill would make this act effective on the first of
July next succeeding the date on which it shall have become a law.

LEGISLATIVE HISTORY: 2011-12 - S. 5689-A / A. 7815-A

JUSTIFICATION: OSC's experience auditing school districts and BOCES
during the last six years, as required by Chapter 263 of the Laws of
2005, has resulted in OSC identifying many internal control
deficiencies and issues of noncompliance with current statutes. While
superintendents and boards of education can and have rectified many of
these audit concerns locally by implementing our audit
recommendations, they can benefit from having available to them a
greater array of statutory options. Some existing statutes should be
modified to give school district and BOCES additional tools to address
these audit concerns fully and to improve the efficiency and
effectiveness of school operations without sacrificing good internal
controls. By the same token, our audits disclosed a number of
circumstances in which certain significant fiscal activities of school
districts and BOCES were undertaken without adequate transparency to
the governing board and taxpayers, in some cases because of a lack of
statutory direction. This bill would address these issues in the
following areas:

Internal Audit Function

As OSC has shown in its audit guidance, the internal audit function
can assist districts with a variety of operational needs, including
performance areas. However, many small schools struggle to maintain
their internal audit function because they do not have the breadth or
complexity of operations that larger districts have, which allow
larger districts to maximize the benefits from using an internal audit
staff We propose allowing school districts with fewer than 1,000
students to forego establishing or maintaining an internal audit
function. School districts that resolve to eliminate their internal
audit functions pursuant to this legislative change would have to
notify SED and OSC of their decision.

Reserve Funds

OSC's audits have identified a variety of problems in the handling of
reserve funds and surplus moneys generally by school districts and
BOCES. While the mechanisms used by the schools to fund reserves with
surpluses were not always appropriate under the existing statutory
scheme, we also recognize that superintendents and boards of education
need greater flexibility to budget and manage school district finances
adequately, especially during difficult economic times.

Currently, most local governments, but not school districts, can
create reserve funds for bonded indebtedness and for tax stabilization
purposes. Under this bill, school districts would be given the same
options In addition, while school districts presently can establish a
Retirement Contribution Reserve Fund for contributions to the New York
State and Local Employees' Retirement System (ERS), they cannot
establish such funds for their largest retirement payments, to the New


York State Teachers' Retirement System (TRS). This bill would amend
the General Municipal Law to authorize use of the Retirement
Contribution Reserve Fund to fund contributions to TRS, as well as
ERS.

In our audits, we also found that there were a number of situations
when school boards did not have current information about the amounts
in the district reserves. Without this key information, school boards
cannot effectively manage the finances of the districts. To avoid this
situation and increase transparency in school district fiscal
operations, the bill would require that all transfers into reserve
fluids be made pursuant to board resolution, and that a schedule of
all reserves, including the balance in each reserve fund and any plans
for use of the reserve in the ensuing fiscal year, be included in a
schedule appended to the annual budget document.

The Comptroller urges passage of this legislation.

FISCAL IMPLICATIONS: None.

EFFECTIVE DATE: This act shall take effect on the first of July next
succeeding the date on which it shall have become a law.

view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4182

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                             March 13, 2013
                               ___________

Introduced  by Sen. FLANAGAN -- (at request of the State Comptroller) --
  read twice and ordered printed, and when printed to  be  committed  to
  the Committee on Education

AN  ACT  to  amend the education law, in relation to requiring notice of
  reserve funds, reserves funded by resolution and the internal audit of
  certain school districts; and to amend the general municipal  law,  in
  relation  to  tax  stabilization reserves, reserves for bonded indebt-
  edness, and authorizing school districts  and  boards  of  cooperative
  educational  services  to  establish  retirement  contribution reserve
  funds for the purposes of the  New  York  state  teachers'  retirement
  system

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1.  Subdivision 5 of section 1608 of  the  education  law,  as
amended  by  section  5 of part A of chapter 436 of the laws of 1997, is
amended to read as follows:
  5. The trustee or board of trustees shall append to the  statement  of
estimated expenditures a detailed statement of the total compensation to
be paid to the superintendent of schools, and any assistant or associate
superintendents  of  schools  in  the  ensuing  school year, including a
delineation of the salary, annualized cost of benefits and  any  in-kind
or  other form of remuneration, AND A SCHEDULE OF RESERVE FUNDS, SETTING
FORTH THE NAME OF EACH RESERVE FUND, A DESCRIPTION OF ITS  PURPOSE,  THE
BALANCE  AS OF THE CLOSE OF THIRD QUARTER OF THE CURRENT SCHOOL DISTRICT
FISCAL YEAR AND A BRIEF STATEMENT EXPLAINING ANY PLANS FOR  THE  USE  OF
EACH  SUCH RESERVE FUND FOR THE ENSUING FISCAL YEAR.  The trustees shall
also append a list of all other school administrators  and  supervisors,
if any, whose annual salary will be eighty-five thousand dollars or more
in the ensuing school year, with the title of their positions and annual
salary  identified;  provided  however, that the commissioner may adjust
such salary level to reflect increases in administrative salaries  after

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD03379-02-3

S. 4182                             2

June thirtieth, nineteen hundred ninety-eight. The trustees shall submit
a  copy  of such list and statement, in a form prescribed by the commis-
sioner, of compensation to the commissioner within five days after their
preparation. The commissioner shall compile such data, together with the
data  submitted  pursuant  to  subdivision  three  of  section seventeen
hundred sixteen of this chapter, into a  single  statewide  compilation,
which  shall  be  made  available  to the governor, the legislature, and
other interested parties upon request.
  S 2. Subdivision 5 of section 1716 of the education law, as amended by
section 7 of part A of chapter 436 of the laws of 1997,  is  amended  to
read as follows:
  5.  The  board of education shall append to the statement of estimated
expenditures a detailed statement of the total compensation to  be  paid
to  the superintendent of schools, and any assistant or associate super-
intendents of schools in the ensuing school year,  including  a  deline-
ation  of  the  salary,  annualized  cost of benefits and any in-kind or
other form of remuneration, AND A SCHEDULE  OF  RESERVE  FUNDS,  SETTING
FORTH  THE  NAME OF EACH RESERVE FUND, A DESCRIPTION OF ITS PURPOSE, THE
BALANCE AS OF THE CLOSE OF THIRD QUARTER OF THE CURRENT SCHOOL  DISTRICT
FISCAL  YEAR  AND  A BRIEF STATEMENT EXPLAINING ANY PLANS FOR THE USE OF
EACH SUCH RESERVE FUND FOR THE ENSUING FISCAL YEAR.    The  board  shall
also  append  a list of all other school administrators and supervisors,
if any, whose annual salary will be eighty-five thousand dollars or more
in the ensuing school year, with the title of their positions and annual
salary identified; provided however, that the  commissioner  may  adjust
such  salary level to reflect increases in administrative salaries after
June thirtieth, nineteen hundred ninety-eight. The  board  of  education
shall  submit a copy of such list and statement, in a form prescribed by
the commissioner, of compensation to the commissioner within  five  days
after  their  preparation.  The  commissioner  shall  compile such data,
together with the data submitted pursuant to subdivision four of section
sixteen hundred eight of this chapter, into a single statewide  compila-
tion,  which  shall  be made available to the governor, the legislature,
and other interested parties upon request.
  S 3. Subdivision 2 of section 2116-b of the education law, as added by
chapter 263 of the laws of 2005, is amended to read as follows:
  2. School districts of less than eight teachers, school districts with
actual general fund expenditures totaling less than five million dollars
in the previous school year, or school districts with actual  enrollment
of  less  than  [three  hundred]  ONE  THOUSAND students in the previous
school year shall be exempt from this requirement. Any  school  district
claiming  such exemption shall annually certify to the commissioner that
such school district meets the requirements set forth in  this  subdivi-
sion.  ANY SCHOOL DISTRICT WITH ACTUAL ENROLLMENT OF LESS THAN ONE THOU-
SAND STUDENTS IN THE PREVIOUS SCHOOL YEAR THAT HAS ESTABLISHED AN INTER-
NAL  AUDIT  FUNCTION  MAY  DISCONTINUE SUCH FUNCTION, UPON NOTICE TO THE
STATE COMPTROLLER AND THE COMMISSIONER.
  S 4. The education law is amended by adding a new section 3653 to read
as follows:
  S 3653. RESERVES FUNDED  BY  RESOLUTION.  IN  ADDITION  TO  ANY  OTHER
REQUIREMENTS,  NO  MONIES  SHALL BE PAID OR TRANSFERRED INTO ANY RESERVE
FUND, ESTABLISHED PURSUANT TO THIS CHAPTER OR ANY OTHER CHAPTER OF  LAW,
FOR  THE  PURPOSE OF INCREASING THE FUNDING OF SUCH RESERVE FUND, UNLESS
EXPRESSLY AUTHORIZED BY A RESOLUTION OF THE BOARD OF EDUCATION OR  TRUS-
TEES OF A SCHOOL DISTRICT.

S. 4182                             3

  S 5. Section 6-e of the general municipal law, as added by chapter 655
of  the laws of 1992, paragraph m of subdivision 1 as added, paragraph n
of subdivision 1 as relettered, subdivision 3 and paragraph d of  subdi-
vision  4 as amended by chapter 528 of the laws of 2000, and subdivision
5  as  amended by chapter 140 of the laws of 1996, is amended to read as
follows:
  S 6-e. Contingency and tax stabilization reserve  fund  for  municipal
corporations. 1. As used in this section:
  a.  "Annual  budget"  means  the annual budget or estimate, as finally
adopted, of a municipal corporation which is required by law to adopt an
annual budget or estimate of the expenditures to be made  for  a  fiscal
year  for  the  general support or for the expenses of the government of
such municipal corporation during such fiscal year.
  b. "Base year" means the most recent fiscal year for which  an  annual
report  has  been  filed  with the state comptroller pursuant to section
thirty of this chapter.
  c. "Chief executive  officer"  means  a  chief  executive  officer  as
defined in paragraph five-a of section 2.00 of the local finance law.
  d.  "Chief  fiscal officer" means a chief fiscal officer as defined in
paragraph five of section 2.00 of the local finance law.
  e. "Eligible portion of the annual budget" means:
  (1) in the case of a contingency and tax  stabilization  reserve  fund
established  for  a  county,  city,  village,  SCHOOL  DISTRICT  or fire
district, the general fund portion of the annual budget;
  (2) in the case of a contingency and tax  stabilization  reserve  fund
established  for  a  town,  the  town-wide general fund and highway fund
portions of the annual budget; and
  (3) in the case of a contingency and tax  stabilization  reserve  fund
established  for  the  part  of a town outside any villages, the general
fund and highway fund portions of the annual budget for such part of the
town.
  f. "Estimated revenue" means revenue from a specific source  which  is
expected  to  be  received during a fiscal year and which is included in
the annual budget as finally adopted for that fiscal year.
  g. "Governing board" means a governing board as defined in section two
of this chapter and, in the case of a  fire  district,  shall  mean  the
board  of fire commissioners AND IN THE CASE OF A SCHOOL DISTRICT, SHALL
MEAN THE BOARD OF EDUCATION OR BOARD OF TRUSTEES, OR FOR A COMMON SCHOOL
DISTRICT HAVING ONE TRUSTEE, SUCH TRUSTEE.
  h. "Municipal corporation" means a municipal corporation as defined in
section two of this chapter and shall also include a fire  district  AND
SCHOOL DISTRICT.
  i.  "Public  emergency" means an epidemic, conflagration, riot, storm,
flood or other sudden, unforeseen or unexpected occurrence or  condition
which requires the immediate expenditure of moneys to protect the public
health,  safety  or  welfare  of the inhabitants of the municipal corpo-
ration.
  j. "Tentative budget" means the tentative budget prepared pursuant  to
section  three hundred fifty-four of the county law, section one hundred
six of the town law or section 5-504 of the village law, the  [statement
of  expenditures]  PROPOSED  BUDGET  prepared  pursuant  to  section one
hundred eighty-one of the town law, THE STATEMENT OF ESTIMATED  EXPENDI-
TURES  PREPARED  PURSUANT  TO SECTION SIXTEEN HUNDRED EIGHT OR SEVENTEEN
HUNDRED SIXTEEN OF THE EDUCATION LAW or similar document prepared pursu-
ant to general, special or local law.

S. 4182                             4

  k. "Unanticipated expenditure" means an  expenditure  for  a  specific
purpose  for  which  there  is no or insufficient appropriation or which
will cause an appropriation to be insufficient that is necessitated by a
change in federal or state laws, rules or regulations,  a  court  order,
judgement or decree, a public emergency, or an industry-wide price, rate
or  premium  increase, which takes effect or occurs after final adoption
of the annual budget and which could not  have  been  reasonably  antic-
ipated prior to final adoption of the annual budget.
  l.  "Unanticipated  revenue  loss"  means  estimated  revenue which is
rendered unreceivable because of a change  in  federal  or  state  laws,
rules  or  regulations,  a  court  order,  judgement or decree, or other
circumstance, which takes effect or occurs after final adoption  of  the
annual budget and which could not have been reasonably anticipated prior
to final adoption of the annual budget.
  m.  "Unappropriated  unreserved  fund  balance"  means  the difference
between the total assets for a fund and the total liabilities,  deferred
revenues,  encumbered appropriations, amounts appropriated for the ensu-
ing fiscal year's budget,  and  amounts  reserved  for  stated  purposes
pursuant  to  law,  including reserve funds established pursuant to [the
general municipal law] THIS CHAPTER OR THE EDUCATION LAW for  the  fund,
as  determined  through application of the system of accounts prescribed
by the state comptroller pursuant to section thirty-six of this chapter.
  n. "Voting strength" means the aggregate number of votes which all the
members of the governing board are entitled to cast.
  2. The governing board of  any  municipal  corporation  OTHER  THAN  A
SCHOOL  DISTRICT,  by resolution subject to a permissive referendum, may
establish a contingency and  tax  stabilization  reserve  fund  for  the
municipal  corporation  and, in the case of a town, also for the part of
the town outside any  villages.  Such  permissive  referendum  shall  be
governed by:
  a.  in  the  case  of  a  county, sections one hundred one through one
hundred three of the county law;
  b. in the case of a city, sections twenty-four through  twenty-six  of
the municipal home rule law;
  c.  in  the case of a town or the part of a town outside any villages,
article seven of the town law;
  d. in the case of a village, article nine of the village law; and
  e. in the case of a fire district, subdivision four of  section  six-g
of this article.
  2-A.  A SCHOOL DISTRICT MAY ESTABLISH A CONTINGENCY AND TAX STABILIZA-
TION RESERVE FUND BY A RESOLUTION OF ITS GOVERNING BOARD.
  3. There may be  paid  into  the  contingency  and  tax  stabilization
reserve  fund  such  amounts  as  may  be provided therefor by budgetary
appropriation, unappropriated unreserved fund balance  in  the  eligible
portion  of  the annual budget, and such revenues as are not required by
law to be paid into any other fund or account; provided,  however,  that
no  amount  may  be  appropriated for payment into a contingency and tax
stabilization reserve fund which would cause the balance of the fund  to
exceed  ten percent of the eligible portion of the annual budget for the
fiscal year for which the appropriation would be made.
  4. a. The moneys in a contingency and tax stabilization  reserve  fund
may  be expended only pursuant to an appropriation for a purpose author-
ized by this subdivision. Except as provided  in  paragraph  e  of  this
subdivision, such an appropriation shall be made only upon the recommen-
dation  of  the chief executive officer and the adoption of a resolution

S. 4182                             5

appropriating the recommended amount  by  at  least  two-thirds  of  the
voting strength of the governing board.
  b.  The  moneys  in  a  contingency and tax stabilization reserve fund
ESTABLISHED BY A MUNICIPAL CORPORATION OTHER THAN A SCHOOL DISTRICT  may
be  used  to  finance  an  unanticipated  revenue loss chargeable to the
eligible portion of the annual budget, subject to the following  limita-
tions:
  (1)  the  maximum  amount  of  moneys  in the fund that may be used to
finance an unanticipated revenue loss shall equal either the  amount  of
the  revenue  actually  received  for the base year or the amount of the
estimated revenue for the current fiscal year, whichever is less,  minus
the amount of the revenue actually received for the current fiscal year;
and
  (2) the moneys in the fund may be used only to finance that portion of
the  unanticipated  revenue  loss  which,  as a matter of law, cannot be
financed with amounts available in any other account or fund.
  c. The moneys in a contingency  and  tax  stabilization  reserve  fund
ESTABLISHED  BY A MUNICIPAL CORPORATION OTHER THAN A SCHOOL DISTRICT may
be used to finance an unanticipated expenditure chargeable to the eligi-
ble portion of the annual budget, subject to the following limitations:
  (1) the maximum amount of moneys in the  fund  that  may  be  used  to
finance  an  unanticipated expenditure shall equal the sum of the amount
of the unanticipated expenditure and the amount  appropriated  for  that
purpose for the current fiscal year minus either the amount appropriated
for  that  purpose for the current fiscal year or the actual expenditure
for the same purpose in the base year, whichever is greater; and
  (2) the moneys in the fund may be used only to finance that portion of
an unanticipated expenditure which,  as  a  matter  of  law,  cannot  be
financed with amounts available in any other account or fund.
  d.  The  moneys  in the contingency and tax stabilization reserve fund
may be used to lessen or prevent any projected increase in excess of two
and one-half percent in the amount of the real property tax levy  needed
to  finance  the  eligible  portion  of  the  annual budget for the next
succeeding fiscal year. The maximum amount of moneys in  the  fund  that
may  be  used  for  this  purpose shall equal the difference between the
projected amount of such real property tax levy and one hundred two  and
one-half  percent  of the amount of the real property tax levy needed to
finance the eligible portion of the annual budget for the current fiscal
year.
  e. When preparing the tentative budget of a municipal corporation,  if
the current balance of a contingency and tax stabilization reserve fund,
as shown by the statement of the chief fiscal officer required by subdi-
vision  six of this section, exceeds ten percent of the eligible portion
of the annual budget for the current fiscal year, such excess  shall  be
used  to  reduce the amount of real property taxes needed to finance the
eligible portion of the annual budget for  the  next  succeeding  fiscal
year. IN ADDITION, IN THE CASE OF A SCHOOL DISTRICT, ANY MONIES DEPOSIT-
ED  TO SUCH RESERVE FUND WHICH ARE NOT EXPENDED TO LESSEN OR PREVENT ANY
PROJECTED INCREASE IN EXCESS OF TWO AND ONE-HALF PERCENT IN  THE  AMOUNT
OF  THE REAL PROPERTY TAX LEVY NEEDED TO FINANCE THE ELIGIBLE PORTION OF
THE ANNUAL BUDGET FOR ANY OF  THE  THREE  FISCAL  YEARS  SUCCEEDING  THE
FISCAL  YEAR  IN  WHICH THE MONIES ARE SO DEPOSITED SHALL BE RETURNED TO
THE GENERAL FUND ON OR BEFORE THE FIRST DAY OF THE  FOURTH  FISCAL  YEAR
FOLLOWING THE DEPOSIT OF SUCH MONIES TO SUCH RESERVE FUND.
  5.  The  moneys  in the contingency and tax stabilization reserve fund
shall be deposited in one or more of the banks or trust companies desig-

S. 4182                             6

nated, in the manner provided by law, as depositories of  the  funds  of
such  municipal  corporation.  The  governing board, or the chief fiscal
officer having custody of such money of such municipal  corporation,  if
the  governing  board  shall  delegate  such duty to him, may invest the
moneys in such fund in obligations specified in section eleven  of  this
article.  Any  interest  earned or capital gain realized on the money so
deposited or invested shall accrue to and become part of such fund.
  6. The chief fiscal officer shall account for the contingency and  tax
stabilization  reserve  fund  separate and apart from all other funds of
the municipal corporation. Such accounting shall show: the source,  date
and  amount  of each sum paid into the fund; the interest earned by such
fund; capital gains or losses resulting from the sale of investments  of
the  fund;  the order, source thereof, date and amount of each appropri-
ation from this fund; the assets of the fund,  indicating  cash  balance
and a schedule of investments. Not later than sixty days after the start
of  each fiscal year and at such times as may be required by the govern-
ing board, the chief fiscal officer shall furnish to the governing board
a detailed report of the operation and condition of the fund during  the
preceding  fiscal  year  which shall include a statement of receipts and
disbursements, and a statement of the balance of the fund as of the last
day of such preceding fiscal year and such other dates as may be  speci-
fied  by  the  governing  board. Not later than thirty days prior to the
last date provided by law for the filing of the  tentative  budget,  the
chief  fiscal  officer  shall furnish to the officer or body responsible
for preparing the tentative budget a statement of the current balance of
the fund.
  7. The members of the governing board are hereby declared trustees  of
the  moneys  in  the  contingency and tax stabilization reserve fund and
shall be subject to all duties and responsibilities imposed  by  law  on
trustees,  and  such  duties and responsibilities may be enforced by the
municipal corporation or by any board, commission,  agency,  officer  or
taxpayer thereof.
  8.  Any officer of a municipal corporation shall be guilty of a misde-
meanor if he or she willfully and knowingly causes the municipal  corpo-
ration to:
  a.  Appropriate  moneys  from  the  contingency  and tax stabilization
reserve fund for any purpose not authorized by this section.
  b. Expend any money from the contingency and tax stabilization reserve
fund for a purpose other than that for which it was appropriated.
The provisions of this subdivision shall be considered to be in addition
to any other penalties provided by law.
  S 6. Section 6-h of the general municipal law, as added by chapter 742
of the laws of 1945, the section heading and subdivisions 2, 5, 6 and  8
as  amended by chapter 592 of the laws of 1957, subdivision 1 as amended
by chapter 755 of the laws of 1965, subdivision 9 as amended by  chapter
140  of the laws of 1996 and subdivision 11 as amended by chapter 424 of
the laws of 2001, is amended to read as follows:
  S 6-h. Reserve fund for payment of bonded  indebtedness  in  counties,
cities, villages, towns, SCHOOL DISTRICTS and fire districts. 1. As used
in  this section, the term "governing board," in so far as it is used in
reference to a county, shall mean the board of supervisors  thereof;  in
so  far  as  it  is  used  in reference to a city, shall mean the "local
legislative body" thereof, as that term is defined in subdivision  seven
of  section  two of the municipal home rule law, as amended from time to
time; in so far as it is used in reference to a village, shall mean  the
board  of  trustees  thereof;  in so far as it is used in reference to a

S. 4182                             7

town, shall mean the town board thereof; in so far  as  it  is  used  in
reference   to   a   fire   district,  shall  mean  the  board  of  fire
commissioners; IN SO FAR  AS  IT  IS  USED  IN  REFERENCE  TO  A  SCHOOL
DISTRICT, SHALL MEAN THE BOARD OF EDUCATION OR BOARD OF TRUSTEES, OR FOR
A COMMON SCHOOL DISTRICT HAVING ONE TRUSTEE, SUCH TRUSTEE.
  2.  The  governing  board  of  any county, city, village, town, SCHOOL
DISTRICT or fire district may by resolution adopted by a  majority  vote
of  its  governing  body establish a reserve fund for the payment of its
bonded indebtedness as herein described, provided,  however,  that  such
debt  reserve  fund shall not be established for, or moneys therein used
to pay, any obligations payable in the first instance from  assessments,
or  from  taxes levied upon an area in such county, city, village, town,
SCHOOL DISTRICT or fire district smaller than the area of  such  county,
city, village, town, SCHOOL DISTRICT or fire district.
  3.  Such  fund may be established for the payment of one or of several
issues of bonds of such  [municipality]  MUNICIPAL  CORPORATION,  SCHOOL
DISTRICT OR FIRE DISTRICT or the purchase of the same.
  4. There may be paid into such fund:
  a.  Such  an amount as may be provided therefor by budgetary appropri-
ation.
  b. Such revenues as are not otherwise appropriated or required by  law
to be paid into any other fund or account.
  5.  An expenditure from such a reserve fund may only be made by appro-
priation pursuant to a resolution of the governing board of the  munici-
pal  corporation, SCHOOL DISTRICT or fire district establishing the same
and only for the payment of the principal and interest on  bonds  issued
by  such  municipal  corporation,  SCHOOL  DISTRICT or fire district and
forming a part of an issue having a maximum maturity of  not  less  than
five  years; or for the purchase of bonds of such municipal corporation,
SCHOOL DISTRICT or fire district forming a part of  an  issue  having  a
maximum  maturity  of  not less than five years at a price not to exceed
the par value thereof and accrued interest to the date  of  delivery  of
such  bonds  to  such  municipal  corporation,  SCHOOL  DISTRICT or fire
district, provided, however, that if any such bonds were issued  subject
to  the  right  of  such  municipal corporation, SCHOOL DISTRICT or fire
district to redeem the same prior to the maturity date thereof then such
purchase may be made for the redemption of such bonds at the  price  and
on  the  terms stated in such bonds or in the proceeding authorizing the
same as the case may be.
  Where provision has been made in the current budget from  funds  other
than  a  reserve  fund  for the payment of the principal and interest on
bonds or the purchase thereof,  no  expenditure  may  be  made  for  the
purchase  or  payment  of  the  same from such a reserve fund during the
current fiscal year for which such budget was adopted.
  All expenditures from such fund as provided in  this  subdivision  may
only  be  made by the chief fiscal officer of the municipal corporation,
SCHOOL DISTRICT or fire district establishing the same.
  Any such bonds so paid, purchased or redeemed and any interest coupons
representing unmatured interest attached thereto shall be cancelled  and
destroyed  by  the  chief  fiscal officer of such municipal corporation,
SCHOOL DISTRICT or fire district establishing such fund who shall make a
notation of such cancellation and destruction in the  bond  register  of
such municipal corporation, SCHOOL DISTRICT or fire district. Such nota-
tion  shall  describe  each  such  bond by title, date of issue, number,
denomination and date of maturity, and if coupons are  attached  thereto
by number, face value and date of maturity.

S. 4182                             8

  6.  The  governing  board of a municipal corporation may, subject to a
permissive referendum, authorize the transfer of a  portion  or  all  of
such  reserve  to a capital reserve fund established pursuant to section
six-c of [the general municipal law] THIS ARTICLE.
  The board of fire commissioners of a fire district may, subject to the
approval  of  the  voters  at  a  regular  or  special  election in such
district, in the manner provided in section one hundred seventy-nine  of
the town law, authorize the transfer of a portion or all of such reserve
to a capital reserve fund established pursuant to section six-g [hereof]
OF THIS ARTICLE.
  THE GOVERNING BOARD OF A SCHOOL DISTRICT MAY AUTHORIZE THE TRANSFER OF
A  PORTION  OR ALL OF SUCH RESERVE TO A CAPITAL RESERVE FUND ESTABLISHED
PURSUANT TO SECTION THIRTY-SIX HUNDRED FIFTY-ONE OF THE EDUCATION LAW.
  7. The chief fiscal officer shall keep a  separate  account  for  each
fund established. Such account shall show:
  a. The date and amount of each sum paid into the fund.
  b. The interest earned by such fund.
  c.  The capital gains or losses resulting from the sale of investments
of the fund.
  d. The interest or capital gains which have accrued to the fund.
  e. The amount and date of each withdrawal from the fund.
  f. The assets of the fund, indicating the cash balance therein  and  a
schedule of the amounts invested. The chief fiscal officer at the termi-
nation  of each fiscal year shall render a detailed report of the opera-
tion and condition of each of such funds to the governing board.
  8. The members of the governing board are hereby declared trustees  of
such  funds  and shall be subject to all the duties and responsibilities
imposed by law on trustees, and such duties and responsibilities may  be
enforced  by  the  county,  city, village, town, SCHOOL DISTRICT or fire
district, as the case may be, or by any board, commission, agency, offi-
cer or taxpayer thereof.
  9. The moneys in each such fund shall be deposited and secured in  the
manner  provided  by section ten of this article. The governing board or
the chief fiscal officer of such municipal corporation, SCHOOL  DISTRICT
or  fire  district,  if  the governing board shall delegate such duty to
him, may invest the moneys in each such fund in the manner  provided  in
section  eleven  of  this  article. Any interest earned or capital gains
realized on the moneys so deposited or  invested  shall  accrue  to  and
become a part of each such fund. The separate identity of each such fund
shall  be maintained whether its assets consist of cash, investments, or
both.
  10. The members of the governing board shall be guilty of a  misdemea-
nor if they:
  a.  Authorize a withdrawal from a fund for any other purpose except as
provided in this section.
  b. Expend any money withdrawn from a fund for  a  purpose  other  than
that as provided in this section.
  11.  Notwithstanding  the foregoing provisions of this section, in any
town which is located wholly or partly within the  Adirondack  park  and
has  within  its  boundaries state lands subject to taxation assessed at
more than thirty [percentum] PER CENTUM of the  total  taxable  assessed
valuation  of  the  town  as determined from the assessment rolls of the
town, as completed from time to time, a reserve fund for the payment  of
bonded  indebtedness  shall  not  be established on and after May first,
nineteen hundred forty-eight, unless the state comptroller, on behalf of
the state, shall consent thereto, and, on and after May first,  nineteen

S. 4182                             9

hundred  forty-eight,  in  any such town no expenditure or transfer from
any such fund heretofore or hereafter established shall be  made  unless
the state comptroller, on behalf of the state, shall consent thereto.
  S 7. Paragraphs b and c of subdivision 1 of section 6-r of the general
municipal  law, as added by chapter 260 of the laws of 2004, are amended
to read as follows:
  b. "Participating employer" means: (I)  a  participating  employer  as
defined  in  subdivision  twenty  of  section  two of the retirement and
social security law or in subdivision twenty of  section  three  hundred
two  of such law, OR (II) AN EMPLOYER AS DEFINED IN SUBDIVISION THREE OF
SECTION FIVE HUNDRED ONE OF THE EDUCATION LAW.
  c. "Retirement contribution" shall mean all  or  any  portion  of  the
amount  payable  by  a municipal corporation to: (I) either the New York
state and local employees' retirement system or the New York  state  and
local police and fire retirement system pursuant to section seventeen or
three  hundred  seventeen  of the retirement and social security law; OR
(II) THE NEW YORK STATE TEACHERS' RETIREMENT SYSTEM PURSUANT TO  SECTION
FIVE HUNDRED TWENTY-ONE OF THE EDUCATION LAW.
  S  8.  This act shall take effect on the first of July next succeeding
the date on which it shall have become a law.

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