S T A T E O F N E W Y O R K
________________________________________________________________________
7535
I N S E N A T E
April 19, 2010
___________
Introduced by Sen. C. JOHNSON -- (at request of the State Comptroller)
-- read twice and ordered printed, and when printed to be committed to
the Committee on Local Government
AN ACT to amend the general municipal law, in relation to authorizing
certain local governments to establish other post employment benefits
(OPEB) trusts
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. The general municipal law is amended by adding a new
section 6-t to read as follows:
S 6-T. OTHER POST EMPLOYMENT BENEFITS (OPEB) TRUST. 1. FOR PURPOSES
OF THIS SECTION:
A. "LOCAL GOVERNMENT" SHALL MEAN A MUNICIPAL CORPORATION, SCHOOL
DISTRICT, BOARD OF COOPERATIVE EDUCATIONAL SERVICES, DISTRICT CORPO-
RATION, SPECIAL IMPROVEMENT DISTRICT GOVERNED BY A SEPARATE BOARD OF
COMMISSIONERS, COMMUNITY COLLEGE OR PUBLIC LIBRARY THAT PROVIDES OTHER
POST EMPLOYMENT BENEFITS.
B. "OTHER POST EMPLOYMENT BENEFITS" SHALL MEAN BENEFITS, EXCEPT
PENSIONS OR OTHER BENEFITS FUNDED THROUGH A PUBLIC RETIREMENT SYSTEM,
PROVIDED OR TO BE PROVIDED AS COMPENSATION BY THE LOCAL GOVERNMENT,
WHETHER PURSUANT TO STATE STATUTE, LOCAL ENACTMENT, CONTRACT OR OTHER
LAWFUL AUTHORITY, TO ITS FORMER OR CURRENT OFFICERS OR EMPLOYEES, OR
THEIR FAMILIES OR BENEFICIARIES, AFTER SERVICE TO THE LOCAL GOVERNMENT
HAS ENDED, INCLUDING, BUT NOT LIMITED TO, HEALTH CARE BENEFITS. THE TERM
"OTHER POST EMPLOYMENT BENEFITS" SHALL NOT INCLUDE CASH PAYMENTS FOR THE
MONETARY VALUE OF SICK LEAVE, VACATION OR OTHER SIMILAR ACCRUALS,
RETIREMENT INCENTIVE OR SEPARATION PAYMENTS, OR BENEFITS PROVIDED PURSU-
ANT TO THE CONSOLIDATED OMNIBUS BUDGET RECONCILIATION ACT OF 1985
(PUBLIC LAW 99-272), AS AMENDED.
2. THE GOVERNING BODY OF A LOCAL GOVERNMENT, BY RESOLUTION, MAY ESTAB-
LISH A TRUST IN THE CUSTODY OF THE CHIEF FISCAL OFFICER OF THE LOCAL
GOVERNMENT, FOR THE PURPOSE OF ACCUMULATING ASSETS TO FUND THE COST TO
THE LOCAL GOVERNMENT OF PROVIDING OTHER POST EMPLOYMENT BENEFITS.
CONTRIBUTIONS TO SUCH TRUST MAY BE MADE BY THE LOCAL GOVERNMENT BY BUDG-
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD15399-02-0
S. 7535 2
ETARY APPROPRIATION OR TRANSFER IN ACCORDANCE WITH THE PROVISIONS OF
SUBDIVISION NINE OF SECTION SIX-P OF THIS ARTICLE.
3. THE GOVERNING BOARD OF THE LOCAL GOVERNMENT IS HEREBY DECLARED TO
BE THE TRUSTEE OF ANY TRUST ESTABLISHED PURSUANT TO THIS SECTION,
PROVIDED, HOWEVER, THAT THE GOVERNING BOARD, BY RESOLUTION, MAY DESIG-
NATE THE CHIEF FISCAL OFFICER OF THE LOCAL GOVERNMENT AS TRUSTEE,
SUBJECT TO ACCEPTANCE OF SUCH POSITION BY THE CHIEF FISCAL OFFICER AND,
IN THE CASE OF A CITY WITH A POPULATION OF ONE MILLION OR MORE, THE CITY
COMPTROLLER SHALL BE THE TRUSTEE. THE TRUSTEE SHALL BE RESPONSIBLE FOR
THE OPERATION AND MANAGEMENT OF THE TRUST, INCLUDING THE DEPOSIT AND
SECURING OF TRUST ASSETS IN THE SAME MANNER AS PROVIDED IN SECTION TEN
OF THIS ARTICLE AND THE INVESTMENT OF TRUST ASSETS, AND SHALL BE SUBJECT
TO ALL THE DUTIES AND RESPONSIBILITIES IMPOSED BY LAW ON TRUSTEES,
EXCEPT TO THE EXTENT INCONSISTENT WITH THIS SECTION.
4. CONTRIBUTIONS TO THE TRUST, AND ANY INTEREST OR OTHER INCOME OR
EARNINGS ON CONTRIBUTIONS, SHALL BE IRREVOCABLE BEFORE ALL LIABILITIES
OF THE LOCAL GOVERNMENT FOR OTHER POST EMPLOYMENT BENEFITS HAVE BEEN
SATISFIED, AND SHALL BE SOLELY DEDICATED TO, AND USED SOLELY FOR,
PROVIDING OTHER POST EMPLOYMENT BENEFITS AND PAYING APPROPRIATE AND
REASONABLE EXPENSES OF ADMINISTERING THE TRUST. NO ASSETS, INCOME, EARN-
INGS OR DISTRIBUTIONS OF THE TRUST SHALL BE SUBJECT TO ANY CLAIM OF
CREDITORS OF THE LOCAL GOVERNMENT OR OF ANY PERSON OR ENTITY ADMINISTER-
ING A PLAN FOR THE PROVISION OF OTHER POST-EMPLOYMENT BENEFITS OR TO
ASSIGNMENT OR EXECUTION, ATTACHMENT OR ANY OTHER CLAIM ENFORCEMENT PROC-
ESS INITIATED BY OR ON BEHALF OF SUCH CREDITORS. EXCEPT AS OTHERWISE
PROVIDED IN SUBDIVISION NINE OF THIS SECTION, THE TRUSTEE SHALL NOT BE
RESPONSIBLE FOR THE ADEQUACY OF THE ASSETS OF THE TRUST TO MEET ANY
OTHER POST EMPLOYMENT BENEFIT. THE TRUSTEE SHALL NOT BE RESPONSIBLE FOR
TAKING ANY ACTION TO ENFORCE THE PAYMENT OF ANY APPROPRIATION INTO THE
TRUST. THE ASSETS OF THE TRUST, INCLUDING ALL INTEREST OR OTHER INCOME
OR EARNINGS ON CONTRIBUTIONS TO THE TRUST, SHALL BE EXEMPT FROM ALL
STATE AND LOCAL TAXES. THE TRUST MAY BE TERMINATED ONLY WHEN ALL LIABIL-
ITIES OF THE LOCAL GOVERNMENT FOR OTHER POST EMPLOYMENT BENEFITS HAVE
BEEN SATISFIED AND THERE IS NO PRESENT OR FUTURE OBLIGATION, CONTINGENT
OR OTHERWISE, OF THE LOCAL GOVERNMENT TO PROVIDE SUCH OTHER POST EMPLOY-
MENT BENEFITS. UPON SUCH TERMINATION, ANY REMAINING TRUST ASSETS, AFTER
ANY PROPER EXPENSES OF THE TRUST HAVE BEEN PAID, SHALL REVERT TO THE
LOCAL GOVERNMENT TO BE PAID INTO ONE OR MORE RESERVE FUNDS, DULY ESTAB-
LISHED PURSUANT TO THIS ARTICLE OR OTHER STATE STATUTE, IN SUCH AMOUNTS
AS DETERMINED BY THE GOVERNING BOARD OF THE LOCAL GOVERNMENT.
5. DISBURSEMENTS FROM THE TRUST SHALL BE MADE ONLY UPON A DULY AUTHOR-
IZED REQUEST PURSUANT TO RESOLUTION OF THE GOVERNING BOARD OF THE LOCAL
GOVERNMENT STATING THE AMOUNT OF THE REQUESTED DISBURSEMENT AND DETER-
MINING THAT THE DISBURSEMENT IS FOR THE SOLE PURPOSE OF PROVIDING FUNDS
FOR THE COSTS OF OTHER POST EMPLOYMENT BENEFITS CURRENTLY DUE AND PAYA-
BLE BY THE LOCAL GOVERNMENT.
6. THE TRUSTEE SHALL EXECUTE AND FILE WITH THE CLERK OF THE LOCAL
GOVERNMENT AN APPROPRIATE UNDERTAKING, SEPARATE FROM AND IN ADDITION TO
ANY OTHER UNDERTAKING REQUIRED OF THE TRUSTEE IN ANY OTHER CAPACITY, IN
AN AMOUNT SUFFICIENT TO COVER TRUST ASSETS. IN LIEU THEREOF, SUCH COVER-
AGE MAY BE INCLUDED IN A BLANKET UNDERTAKING IN ACCORDANCE WITH SECTION
ELEVEN OF THE PUBLIC OFFICERS LAW. THE COST OF THE UNDERTAKING SHALL BE
CONSIDERED TO BE A REASONABLE EXPENSE OF ADMINISTERING THE TRUST. THE
TRUSTEE MAY CONTRACT TO OBTAIN SERVICES NECESSARY FOR THE MANAGEMENT AND
OPERATION OF THE TRUST, INCLUDING THE PROFESSIONAL SERVICES NECESSARY TO
CARRY OUT HIS OR HER RESPONSIBILITIES AS TRUSTEE, PROVIDED, HOWEVER,
S. 7535 3
THAT THE CHARGES, FEES OR OTHER COMPENSATION FOR SUCH CONTRACTED
SERVICES SHALL BE REASONABLE AND CLEARLY STATED IN WRITTEN AGREEMENTS.
CONTRACTS FOR SUCH SERVICES SHALL BE LET IN A MANNER CONSISTENT WITH THE
PROCUREMENT POLICIES AND PROCEDURES ADOPTED BY THE LOCAL GOVERNMENT
PURSUANT TO SECTION ONE HUNDRED FOUR-B OF THIS CHAPTER AND SHALL BE
SUBJECT TO A REQUEST FOR PROPOSALS PROCESS AT LEAST EVERY THREE YEARS.
TWO OR MORE LOCAL GOVERNMENTS, IN ACCORDANCE WITH SECTION ONE HUNDRED
NINETEEN-O OF THIS CHAPTER, MAY JOINTLY CONTRACT TO OBTAIN SUCH
SERVICES.
7. A. THE TRUSTEE SHALL MANAGE AND INVEST THE ASSETS OF THE TRUST IN A
CAREFUL AND PRUDENT MANNER. EXCEPT AS PROVIDED IN PARAGRAPH B OF THIS
SUBDIVISION, THE TRUSTEE MAY INVEST ASSETS OF THE TRUST ONLY IN SPECIAL
TIME DEPOSIT ACCOUNTS IN, AND CERTIFICATES OF DEPOSIT ISSUED BY, A BANK
OR TRUST COMPANY, AS DEFINED IN SECTION TEN OF THIS ARTICLE, LOCATED AND
AUTHORIZED TO DO BUSINESS IN THIS STATE, SECURED IN THE SAME MANNER AS
PROVIDED IN SECTION ELEVEN OF THIS ARTICLE, AND IN ELIGIBLE SECURITIES
AS DEFINED IN PARAGRAPH F OF SUBDIVISION ONE OF SECTION TEN OF THIS
ARTICLE. ALTERNATIVELY, THE TRUSTEE MAY INVEST ALL OR PART OF THE TRUST
ASSETS IN ANY FUND OF THE STATE ESTABLISHED TO RECEIVE MONIES FROM ANY
OTHER POST EMPLOYMENT BENEFIT TRUST CREATED PURSUANT TO THIS SECTION.
ANY INTEREST OR OTHER INCOME OR EARNINGS RESULTING FROM THE INVESTMENT
OF ASSETS OF THE TRUST SHALL ACCRUE TO AND BECOME PART OF THE ASSETS OF
THE TRUST.
B. WITH RESPECT TO A TRUST ESTABLISHED BY A CITY WITH A POPULATION OF
ONE MILLION OR MORE, THE CITY COMPTROLLER MAY INVEST ASSETS OF THE TRUST
AS FOLLOWS:
(I) THE CITY COMPTROLLER SHALL EXERCISE SUCH JUDGMENT, CARE, SKILL,
PRUDENCE AND DILIGENCE UNDER THE CIRCUMSTANCES THEN PREVAILING THAT A
KNOWLEDGEABLE AND PRUDENT INVESTOR ACTING IN A LIKE CAPACITY AND FAMIL-
IAR WITH SUCH MATTERS WOULD USE IN THE CONDUCT OF AN ENTERPRISE OF A
LIKE CHARACTER AND WITH LIKE AIMS; AND
(II) THE CITY COMPTROLLER SHALL PRUDENTLY DIVERSIFY THE INVESTMENT OF
THE FUND'S PORTFOLIO AMONG INVESTMENT TYPES AND WITHIN INVESTMENT TYPES
IN A MANNER CONSISTENT WITH THE FOREGOING UNLESS UNDER THE CIRCUMSTANCE
IT IS CLEARLY PRUDENT NOT TO DO SO.
8. THE TRUSTEE SHALL DEVELOP A WRITTEN INVESTMENT POLICY WHICH, AT A
MINIMUM, SHALL INCLUDE:
A. A STATEMENT OF INVESTMENT OBJECTIVES ADDRESSING, IN THE FOLLOWING
ORDER OF PRIORITY, COMPLIANCE WITH ALL LEGAL REQUIREMENTS, THE ABILITY
TO TIMELY MEET DISBURSEMENT REQUESTS WITHOUT FORCED SALE OF ASSETS,
SAFETY OF PRINCIPAL AND ATTAINMENT OF MARKET RATES OF RETURN;
B. A STATEMENT OF THE INVESTMENT OPTIONS AUTHORIZED IN SUBDIVISION
SEVEN OF THIS SECTION IN WHICH TRUST ASSETS MAY BE INVESTED;
C. STANDARDS FOR THE DIVERSIFICATION OF INVESTMENTS WHICH SHALL
ADDRESS LIMITING INVESTMENTS BY TYPE TO AVOID OVER-CONCENTRATION IN ANY
ONE PERMITTED TYPE OF INVESTMENT OR TRANSACTIONS WITH ANY ONE FIRM.
EXCEPT AS OTHERWISE PROVIDED WITH RESPECT TO A CITY WITH A POPULATION OF
ONE MILLION OR MORE AND EXCEPT INVESTMENTS MADE IN ANY FUND OF THE STATE
ESTABLISHED TO RECEIVE MONIES FROM ANY OTHER POST EMPLOYMENT BENEFIT
TRUST CREATED PURSUANT TO THIS SECTION, IN NO EVENT SHALL SUCH STANDARDS
PERMIT AGGREGATE INVESTMENTS IN:
(I) ANY CATEGORY OF ELIGIBLE SECURITIES DESCRIBED IN SUBPARAGRAPHS
(II), (V), (VI), (VII), (VIII), (IX) AND (X) OF PARAGRAPH F OF SUBDIVI-
SION ONE OF SECTION TEN OF THIS ARTICLE TO EXCEED FIVE PER CENTUM OF THE
TOTAL TRUST ASSETS HELD AT ANY TIME;
S. 7535 4
(II) THE CATEGORY OF ELIGIBLE SECURITIES DESCRIBED IN SUBPARAGRAPH
(IV) OF PARAGRAPH F OF SUBDIVISION ONE OF SECTION TEN OF THIS ARTICLE,
EXCEPT OBLIGATIONS ISSUED OR FULLY GUARANTEED BY THIS STATE, TO EXCEED
FIVE PER CENTUM OF THE TOTAL TRUST ASSETS HELD AT ANY TIME;
(III) THE OBLIGATIONS OF ANY ONE ISSUER IN ANY CATEGORY OF ELIGIBLE
SECURITIES DESCRIBED IN SUBPARAGRAPHS (II), (V), (VI), (VII), (VIII),
(IX) AND (X) OF PARAGRAPH F OF SUBDIVISION ONE OF SECTION TEN OF THIS
ARTICLE TO EXCEED TWO PER CENTUM OF THE TOTAL TRUST ASSETS HELD AT ANY
TIME OR FIVE PER CENTUM OF THE DIRECT LIABILITIES OF SUCH ISSUER; OR
(IV) THE OBLIGATIONS OF ANY ONE ISSUER IN THE CATEGORY OF ELIGIBLE
SECURITIES DESCRIBED IN SUBPARAGRAPH (IV) OF PARAGRAPH F OF SUBDIVISION
ONE OF SECTION TEN OF THIS ARTICLE, EXCEPT OBLIGATIONS ISSUED OR FULLY
GUARANTEED BY THIS STATE, TO EXCEED TWO PER CENTUM OF THE TOTAL TRUST
ASSETS HELD AT ANY TIME OR FIVE PER CENTUM OF THE DIRECT LIABILITIES OF
SUCH ISSUER;
D. EXCEPT WITH RESPECT TO INVESTMENTS MADE IN ANY FUND OF THE STATE
ESTABLISHED TO RECEIVE MONIES FROM ANY OTHER POST EMPLOYMENT BENEFIT
TRUST CREATED PURSUANT TO THIS SECTION, A STATEMENT OF THE MAXIMUM TIME
REMAINING TO MATURITY OF INDIVIDUAL INVESTMENTS AND THE MAXIMUM WEIGHTED
AVERAGE MATURITY OF ALL INVESTMENTS, WHICH SHALL BE CONSISTENT WITH THE
INVESTMENT OBJECTIVE TO TIMELY MEET DISBURSEMENT REQUESTS;
E. EXCEPT WITH RESPECT TO INVESTMENTS MADE IN ANY FUND OF THE STATE
ESTABLISHED TO RECEIVE MONIES FROM ANY OTHER POST EMPLOYMENT BENEFIT
TRUST CREATED PURSUANT TO THIS SECTION, A REQUIREMENT THAT THE MARKET
VALUE OF INVESTMENTS SHALL BE DETERMINED AT LEAST MONTHLY, AND AT LEAST
ANNUALLY BY A QUALIFIED OUTSIDE PROFESSIONAL, AND THAT AT LEAST ONCE
EACH MONTH THE PORTFOLIO OF INVESTMENTS BE TESTED FOR SENSITIVITY TO
CHANGES IN INTEREST RATES. THE TERM "MARKET VALUE" AS USED IN THIS
SECTION SHALL HAVE THE SAME MEANING AS PROVIDED IN SUBDIVISION THREE OF
SECTION FORTY-TWO OF THIS CHAPTER; AND
F. CRITERIA FOR THE SELECTION OF ANY PROFESSIONAL INVESTMENT SERVICES,
INCLUDING, BUT NOT LIMITED TO, THE QUALIFICATION OF ANY INDIVIDUAL
RETAINED FOR SUCH SERVICES AS A REGISTERED INVESTMENT ADVISOR AS DEFINED
UNDER THE INVESTMENT ADVISORS ACT OF 1940, AS AMENDED (15 USC S 80B-1 ET
SEQ.).
9. NEITHER THE LOCAL GOVERNMENT NOR THE TRUSTEE SHALL BE LIABLE FOR
ANY LOSS OR EXPENSE SUFFERED BY THE TRUST IN THE ABSENCE OF BAD FAITH,
WILLFUL MISCONDUCT OR INTENTIONAL WRONGDOING. THE TRUSTEE SHALL BE
CONSIDERED TO BE AN EMPLOYEE OF THE LOCAL GOVERNMENT FOR PURPOSES OF
SECTION EIGHTEEN OF THE PUBLIC OFFICERS LAW, PROVIDED, HOWEVER, THAT THE
COSTS OF ANY DEFENSE OR INDEMNIFICATION OF THE TRUSTEE ARISING FROM THE
EXERCISE OF THE FUNCTIONS OF TRUSTEE SHALL BE PAYABLE FROM THE ASSETS OF
THE TRUST.
10. THE TRUSTEE SHALL PREPARE OR CAUSE TO BE PREPARED AN ANNUAL FINAN-
CIAL REPORT OF ASSETS, LIABILITIES, REVENUES AND EXPENSES OF THE TRUST
IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. THE TRUS-
TEE SHALL CAUSE THE ACTIVITIES UNDERTAKEN IN CONNECTION WITH THE TRUST,
INCLUDING THE ANNUAL FINANCIAL REPORT, TO BE AUDITED ANNUALLY, EITHER
SEPARATELY OR AS PART OF THE OVERALL AUDIT OF THE REPORTING ENTITY, IN
ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS, BY AN INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANT ENGAGED IN A MANNER CONSISTENT WITH THE
PROCUREMENT POLICIES AND PROCEDURES ADOPTED BY THE LOCAL GOVERNMENT
PURSUANT TO SECTION ONE HUNDRED FOUR-B OF THIS CHAPTER AND SHALL BE
SUBJECT TO A REQUEST FOR PROPOSALS PROCESS AT LEAST EVERY FIVE YEARS.
THE AUDIT SHALL BE COMPLETED WITHIN ONE HUNDRED TWENTY DAYS FROM THE
CLOSE OF THE FISCAL YEAR OF THE LOCAL GOVERNMENT. A COPY OF THE ANNUAL
S. 7535 5
FINANCIAL REPORT AND THE REPORT OF SUCH AUDIT SHALL BE PROVIDED TO THE
STATE COMPTROLLER, THE TRUSTEE AND THE GOVERNING BOARD OF THE LOCAL
GOVERNMENT AND SHALL BE PUBLICLY AVAILABLE AND POSTED ON THE WEBSITE OF
THE LOCAL GOVERNMENT, IF SUCH A WEBSITE IS MAINTAINED.
11. A. A TRUSTEE OF A TRUST ESTABLISHED PURSUANT TO THE PROVISIONS OF
SUBDIVISION TWO OF THIS SECTION MAY ENTER INTO AN AGREEMENT WITH THE
TRUSTEES OF ONE OR MORE OTHER SUCH TRUSTS FOR THE COOPERATIVE INVESTMENT
OF MONEYS CONSTITUTING ALL OR PART OF THE ASSETS OF THE TRUSTS IN
SPECIAL TIME DEPOSIT ACCOUNTS IN, AND CERTIFICATES OF DEPOSIT ISSUED BY,
A BANK OR TRUST COMPANY, AS DEFINED IN SECTION TEN OF THIS ARTICLE,
LOCATED AND AUTHORIZED TO DO BUSINESS IN THIS STATE, SECURED IN THE SAME
MANNER AS PROVIDED IN SECTION ELEVEN OF THIS ARTICLE, AND IN ELIGIBLE
SECURITIES AS DEFINED IN PARAGRAPH F OF SUBDIVISION ONE OF SECTION TEN
OF THIS ARTICLE. THE AGREEMENT SHALL BE SUBJECT TO THE APPROVAL OF THE
GOVERNING BOARD OF EACH LOCAL GOVERNMENT IF THE GOVERNING BOARD DOES NOT
SERVE AS TRUSTEE.
B. EVERY AGREEMENT FOR THE COOPERATIVE INVESTMENT OF TRUST ASSETS
SHALL CONTAIN, AT A MINIMUM, THE FOLLOWING:
(I) A DESCRIPTION OF THE CREATION, MEMBERSHIP, POWERS AND RESPONSIBIL-
ITIES OF THE BOARD ESTABLISHED IN ACCORDANCE WITH PARAGRAPH C OF THIS
SUBDIVISION;
(II) A STATEMENT DESIGNATING ONE OF THE PARTICIPATING TRUSTEES AS THE
LEAD PARTICIPATING TRUSTEE WHO SHALL HAVE CUSTODY ON BEHALF OF THE
PARTICIPATING TRUSTEES OF ALL MONEYS TO BE INVESTED PURSUANT TO THE
COOPERATIVE INVESTMENT AGREEMENT AND THE INVESTMENTS MADE PURSUANT TO
THE COOPERATIVE INVESTMENT AGREEMENT;
(III) A STATEMENT THAT THE MONEYS OF THE PARTICIPATING TRUSTEES MAY BE
COMMINGLED FOR INVESTMENT PURPOSES, PROVIDED THAT THE MONEYS OF EACH
PARTICIPATING TRUSTEE SHALL BE SEPARATELY ACCOUNTED FOR AND INVESTMENT
EARNINGS SHALL BE PRORATED AMONG AND CREDITED TO PARTICIPATING TRUSTEES
IN PROPORTION TO THE AMOUNT OF THE MONEYS OF EACH PARTICIPATING TRUSTEE
HELD BY THE LEAD PARTICIPATING TRUSTEE;
(IV) A STATEMENT OF THE INVESTMENT POLICY APPLICABLE TO INVESTMENTS
MADE PURSUANT TO THE AGREEMENT; THIS INVESTMENT POLICY SHALL CONFORM TO
THE REQUIREMENTS OF SUBDIVISION EIGHT OF THIS SECTION;
(V) THE PARTICIPATING TRUSTEES' RIGHTS TO MAKE CONTRIBUTIONS AND
RECEIVE DISTRIBUTIONS, THE FREQUENCY WITH WHICH EARNINGS WILL BE
DISTRIBUTED TO THE PARTICIPATING TRUSTEES, AND THE CIRCUMSTANCES, IF
ANY, UNDER WHICH A PARTICIPATING TRUSTEES' RIGHTS TO MAKE CONTRIBUTIONS
OR RECEIVE DISTRIBUTIONS MAY BE LIMITED OR DEFERRED;
(VI) A DESCRIPTION OF THE MANNER IN WHICH EXPENSES INCURRED IN ADMIN-
ISTERING THE COOPERATIVE INVESTMENT AGREEMENT, INCLUDING, BUT NOT LIMIT-
ED TO, THE COST OF ACTUAL AND NECESSARY EXPENSES INCURRED BY THE BOARD
ESTABLISHED IN ACCORDANCE WITH PARAGRAPH C OF THIS SUBDIVISION, AND
OTHER COSTS OF ADMINISTERING THE INVESTMENTS MADE PURSUANT TO THE AGREE-
MENT, ARE TO BE APPORTIONED AMONG THE PARTICIPATING TRUSTEES. SUCH
APPORTIONED COSTS SHALL BE CONSIDERED EXPENSES OF ADMINISTERING THE
TRUSTS;
(VII) A DESCRIPTION OF THE METHODOLOGY THAT SHALL BE UTILIZED TO
ESTABLISH THE VALUE OF EACH PARTICIPATING TRUSTEE'S INTEREST IN INVEST-
MENTS MADE PURSUANT TO THE AGREEMENT, INCLUDING THE VALUE OF CONTRIB-
UTIONS AND DISTRIBUTIONS, AND THE CALCULATION OF YIELD THEREON;
(VIII) A PROVISION REQUIRING THAT, AT LEAST ONCE A MONTH, THE PORTFO-
LIO OF INVESTMENTS MADE PURSUANT TO THE AGREEMENT BE TESTED FOR SENSI-
TIVITY TO CHANGES IN INTEREST RATES; THIS PROVISION SHALL REQUIRE THAT
THE TESTING METHODOLOGY BE ADOPTED BY THE BOARD ESTABLISHED IN ACCORD-
S. 7535 6
ANCE WITH PARAGRAPH C OF THIS SUBDIVISION AND BE REASONABLY DESIGNED TO
RELIABLY QUANTIFY THE EFFECT OF A CHANGE IN INTEREST RATES ON THE MARKET
VALUE OF THE PORTFOLIO;
(IX) A STATEMENT THAT THE BOARD ESTABLISHED IN ACCORDANCE WITH PARA-
GRAPH C OF THIS SUBDIVISION MAY PROCURE THE SERVICES OF PROFESSIONALS
AND ENTER INTO OTHER CONTRACTS IT DEEMS APPROPRIATE TO ASSIST IN
FULFILLING RESPONSIBILITIES UNDER THE AGREEMENT, PROVIDED THAT: (A) THE
PROFESSIONALS WHO SHALL RENDER SUCH SERVICES, INDIVIDUALLY AND COLLEC-
TIVELY, SHALL MEET ALL QUALIFICATIONS DEEMED APPROPRIATE BY THE BOARD;
(B) THE PROCUREMENT OF SUCH CONTRACTUAL SERVICES SHALL BE SUBJECT TO A
REQUEST FOR PROPOSAL PROCESS AT LEAST EVERY THREE YEARS; (C) THE
CONTRACTS FOR SUCH SERVICES SHALL ENSURE COMPLIANCE WITH THE REQUIRE-
MENTS OF THIS SECTION; AND (D) THE CHARGES, FEES AND OTHER COMPENSATION
FOR ANY CONTRACTED SERVICES SHALL BE REASONABLE AND CLEARLY STATED IN
WRITTEN AGREEMENTS;
(X) A PROVISION REQUIRING THAT EACH PARTICIPATING TRUSTEE RECEIVE
WRITTEN CONFIRMATION OF EACH CONTRIBUTION MADE BY OR DISTRIBUTION MADE
TO THE PARTICIPATING TRUSTEE NO LATER THAN THE FOLLOWING BUSINESS DAY
AFTER WHICH THE CONTRIBUTION OR DISTRIBUTION OCCURS;
(XI) A PROVISION REQUIRING THAT EACH PARTICIPATING TRUSTEE RECEIVE A
MONTHLY STATEMENT THAT SETS FORTH THE FOLLOWING INFORMATION FOR THE
PRECEDING MONTH: (A) ALL ACTIVITY BY THE PARTICIPATING TRUSTEE; (B) THE
VALUE OF THE PARTICIPATING TRUSTEE'S INTEREST UNDER THE AGREEMENT AT THE
BEGINNING AND END OF THE MONTH; AND (C) AN ITEMIZATION OF ALL INVEST-
MENTS HELD UNDER THE AGREEMENT AS OF THE END OF THE MONTH, INCLUDING THE
MARKET VALUE OF EACH INVESTMENT AS OF THAT DATE;
(XII) A PROVISION REQUIRING THAT EACH PARTICIPATING TRUSTEE AND THE
STATE COMPTROLLER RECEIVE IMMEDIATE NOTIFICATION OF ANY EVENT OR CIRCUM-
STANCE THAT MAY REQUIRE A DEFERRAL OF DISTRIBUTIONS OR MAY CAUSE INVEST-
MENT LOSSES NOT ANTICIPATED BY THE INVESTMENT POLICY AND OF ANY OTHER
MATERIAL ADVERSE EVENT RELATING TO THE INVESTMENTS MADE PURSUANT TO THE
AGREEMENT;
(XIII) A PROVISION REQUIRING THAT A CERTIFIED PUBLIC ACCOUNTANT ANNU-
ALLY CONDUCT AN AUDIT, IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING
STANDARDS, OF THE ACTIVITIES UNDERTAKEN PURSUANT TO THE AGREEMENT. A
COPY OF THIS ANNUAL AUDIT SHALL BE DISTRIBUTED TO EACH PARTICIPATING
TRUSTEE AND TO THE STATE COMPTROLLER WITHIN ONE HUNDRED TWENTY DAYS
AFTER THE CLOSE OF THE FISCAL YEAR ESTABLISHED UNDER THE AGREEMENT;
(XIV) A PROVISION REQUIRING THAT EACH PARTICIPATING TRUSTEE ANNUALLY
RECEIVE, AND EACH PROSPECTIVE PARTICIPATING TRUSTEE RECEIVE PRIOR TO
THEIR PARTICIPATION IN THE AGREEMENT, AN INFORMATION STATEMENT THAT
INCLUDES, AT A MINIMUM, THE FOLLOWING: (A) A BRIEF HISTORY OF THE AGREE-
MENT; (B) A DESCRIPTION OF THE ORGANIZATION AND TERMS OF THE COOPERATIVE
INVESTMENT AGREEMENT, INCLUDING THE POWERS AND RESPONSIBILITIES OF THE
BOARD ESTABLISHED IN ACCORDANCE WITH SUBPARAGRAPH C OF THIS SUBDIVISION
AND THE QUALIFICATIONS OF ANY PROFESSIONALS RETAINED IN ACCORDANCE WITH
THE AGREEMENT; (C) A DESCRIPTION OF THE INVESTMENT OBJECTIVES, POLICIES
AND PRACTICES CONTAINED IN THE AGREEMENT INCLUDING THOSE PERTAINING TO
LIQUIDITY, METHODOLOGY FOR DETERMINING PARTICIPATING TRUSTEES' INTER-
ESTS, DISTRIBUTION OF EARNINGS AND CALCULATION OF YIELD; (D) A
DESCRIPTION OF THE CURRENT INVESTMENTS HELD UNDER THE AGREEMENT; (E) A
LISTING OF THE CHARGES, FEES OR OTHER COMPENSATION FOR SERVICES PROVIDED
UNDER THE AGREEMENT; AND (F) A DESCRIPTION OF THE REQUIRED PROCEDURES
FOR INITIATION AND TERMINATION OF PARTICIPATION IN THE AGREEMENT;
(XV) A PROVISION REQUIRING THAT ALL PARTICIPATING TRUSTEES RECEIVE AT
LEAST ONCE A YEAR A REPORT DETAILING THE FOLLOWING INFORMATION FOR THE
S. 7535 7
PRECEDING TWELVE MONTHS: (A) THE PORTFOLIO OF INVESTMENTS CURRENTLY HELD
PURSUANT TO THE AGREEMENT, INCLUDING, FOR EACH INVESTMENT, THE MARKET
VALUE, TIME REMAINING TO MATURITY, INTEREST EARNED AND REALIZED, AND
UNREALIZED GAINS AND LOSSES; (B) THE OVERALL INVESTMENT RESULTS, YIELD
AND WEIGHTED AVERAGE MATURITY; (C) A LIST OF THE FEES PAID FOR ALL
PROFESSIONAL SERVICES PROCURED UNDER THE AGREEMENT; AND (D) A STATEMENT
OF ALL OTHER EXPENSES INCURRED BY THE BOARD ESTABLISHED IN ACCORDANCE
WITH PARAGRAPH C OF THIS SUBDIVISION IN ADMINISTERING THE INVESTMENTS
MADE PURSUANT TO THE AGREEMENT; AND
(XVI) A PROVISION REQUIRING THAT, IF THE BOARD ESTABLISHED IN ACCORD-
ANCE WITH PARAGRAPH C OF THIS SUBDIVISION OBTAINS A RATING FROM A
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION, SUCH RATING AND
ANY SUBSEQUENT CHANGES THEREIN BE DISCLOSED TO EACH PARTICIPATING TRUS-
TEE.
C. EVERY AGREEMENT FOR THE COOPERATIVE INVESTMENT OF TRUST ASSETS
SHALL BE ADMINISTERED BY A BOARD SUBJECT TO THE FOLLOWING:
(I) THE NUMERICAL MEMBERSHIP OF THE BOARD SHALL BE NOT LESS THAN TEN
PERCENT OF THE TOTAL NUMBER OF PARTICIPATING TRUSTEES IN THE AGREEMENT
AS OF APRIL FIRST EACH YEAR; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL
THE NUMERICAL MEMBERSHIP OF THE BOARD BE LESS THAN THREE, EXCEPT IN
THOSE INSTANCES WHERE THE AGREEMENT OR THE COOPERATIVE INVESTMENT OF
TRUST ASSETS HAS ONLY TWO PARTICIPATING TRUSTEES, IN WHICH EVENT THE
NUMERICAL MEMBERSHIP OF THE BOARD SHALL BE TWO; AND PROVIDED FURTHER
THAT IN NO EVENT SHALL THE NUMERICAL MEMBERSHIP OF THE BOARD BE MORE
THAN FIFTEEN. ALL BOARD MEMBERS SHALL BE PARTICIPATING TRUSTEES. IF THE
GOVERNING BOARD OF A LOCAL GOVERNMENT ACTS AS TRUSTEE, ANY MEMBER OF
SUCH GOVERNING BOARD MAY BE DESIGNATED BY THE GOVERNING BOARD AS THE
PARTICIPATING TRUSTEE FOR THIS PURPOSE. ANY PARTICIPATING TRUSTEE MAY
OFFER TO SERVE ON THE BOARD. THE TERMS OF THE MEMBERS OF THE BOARD AND
THE ELECTION OF BOARD MEMBERS SHALL BE THE SAME AS PROVIDED IN SUBDIVI-
SION TWO OF SECTION FORTY-FOUR OF THIS CHAPTER. VACANCIES ON THE BOARD
MAY BE FILLED BY THE REMAINING MEMBERS OF THE BOARD BY APPOINTMENT OF A
PARTICIPATING TRUSTEE TO FILL THE VACANCY UNTIL THE NEXT ANNUAL ELECTION
AT WHICH TIME THE UNEXPIRED TERM OF THE VACANCY SHALL BE FILLED IN THE
SAME MANNER AS ALL BOARD MEMBER POSITIONS. THE MEMBERS OF THE BOARD
SHALL SERVE WITHOUT COMPENSATION FOR SERVICE AS BOARD MEMBERS, BUT MAY
BE REIMBURSED FOR ACTUAL AND NECESSARY EXPENSES INCURRED IN THE PERFORM-
ANCE OF OFFICIAL DUTIES AS BOARD MEMBERS.
(II) THE BOARD SHALL MEET AT LEAST QUARTERLY AT DATES AND TIMES TO BE
ESTABLISHED BY THE MEMBERS OF THE BOARD. A QUORUM OF THE MEMBERS MUST BE
PRESENT TO TRANSACT ANY BOARD BUSINESS. TWO-THIRDS OF THE MEMBERSHIP OF
THE BOARD SHALL CONSTITUTE A QUORUM. TO TRANSACT ANY BUSINESS OR EXER-
CISE ANY POWER, THE BOARD SHALL ACT BY A MAJORITY VOTE OF THE MEMBERS
PRESENT AT ANY MEETING AT WHICH A QUORUM IS IN ATTENDANCE.
(III) THE PROVISIONS OF ARTICLE EIGHTEEN OF THIS CHAPTER SHALL APPLY
TO THE BOARD AS IF THE BOARD WERE A MUNICIPALITY. NO MEMBER OF THE BOARD
SHALL HAVE AN INTEREST IN A CONTRACT ENTERED INTO BY THE BOARD PROHIBIT-
ED BY SECTION EIGHT HUNDRED ONE OF THIS CHAPTER.
D. THE BOARD OF A COOPERATIVE INVESTMENT AGREEMENT SHALL HAVE THE
FOLLOWING POWERS AND RESPONSIBILITIES:
(I) ADMINISTERING ALL ASPECTS OF THE AGREEMENT FOR THE COOPERATIVE
INVESTMENT OF TRUST ASSETS;
(II) ENTERING INTO THOSE CONTRACTS DEEMED APPROPRIATE, TO ASSIST IN
THE MANAGEMENT OF THE AGREEMENT;
(III) WHERE AUTHORIZED UNDER THE AGREEMENT: (A) DELEGATING THE DAILY
RESPONSIBILITIES OF MAKING INVESTMENT DECISIONS PURSUANT TO THE AGREE-
S. 7535 8
MENT TO THE LEAD PARTICIPATING TRUSTEE, PROVIDED THAT SUCH DELEGATION
SHALL IN NO WAY RELIEVE THE BOARD OF ITS RESPONSIBILITIES UNDER THIS
SECTION, AND PROVIDED FURTHER THAT SUCH LEAD PARTICIPATING TRUSTEE HAS
SECURED AN ADDITIONAL UNDERTAKING, OR SECURED ADDITIONAL COVERAGE UNDER
A BLANKET UNDERTAKING IN ACCORDANCE WITH SECTION ELEVEN OF THE PUBLIC
OFFICERS LAW, IN AN AMOUNT TO BE DETERMINED BY THE BOARD, THE COST OF
WHICH SHALL BE DEEMED TO BE AN EXPENSE INCURRED BY THE BOARD IN ADMINIS-
TERING THE INVESTMENTS MADE PURSUANT TO THE AGREEMENT;
(IV) MONITORING COMPLIANCE WITH THE INVESTMENT POLICY ESTABLISHED
UNDER THE AGREEMENT; AND
(V) MONITORING COMPLIANCE WITH THE REPORTING AND DISCLOSURE REQUIRE-
MENTS ESTABLISHED UNDER THE AGREEMENT.
12. THE STATE COMPTROLLER MAY MAKE, AMEND AND REPEAL SUCH RULES AND
REGULATIONS AS THE STATE COMPTROLLER MAY DEEM APPROPRIATE FOR THE PROPER
OPERATION AND MANAGEMENT OF TRUSTS ESTABLISHED PURSUANT TO THIS SECTION.
13. NOTHING CONTAINED IN THIS SECTION SHALL BE INTERPRETED OR
CONSTRUED TO:
A. CREATE ANY OBLIGATION IN, IMPOSE ANY OBLIGATION ON, OR ALTER ANY
OBLIGATION OF ANY LOCAL GOVERNMENT TO PROVIDE OTHER POST EMPLOYMENT
BENEFITS;
B. LIMIT OR RESTRICT THE AUTHORITY OF A LOCAL GOVERNMENT TO MODIFY OR
ELIMINATE OTHER POST EMPLOYMENT BENEFITS;
C. ASSURE OR DENY OTHER POST EMPLOYMENT BENEFITS; OR
D. REQUIRE ANY LOCAL GOVERNMENT TO FUND ITS LIABILITY FOR OTHER POST
EMPLOYMENT BENEFITS.
S 2. Subdivision 9 of section 6-p of the general municipal law, as
added by chapter 518 of the laws of 1996, is amended to read as follows:
9. If, after the establishment of such fund, the municipality deter-
mines that such fund is no longer needed, the moneys remaining in such
fund may be transferred to any other reserve fund OR ANY OTHER POST
EMPLOYMENT BENEFITS TRUST of the municipal corporation authorized by
this chapter that is comprised of moneys which were raised on the same
tax base as the moneys in the reserve fund established under this
section or TO A RESERVE FUND ESTABLISHED PURSUANT TO section thirty-six
hundred fifty-one of the education law, only to the extent that the
moneys in this fund shall exceed the sum sufficient to pay all liabil-
ities incurred or accrued against it. Prior to the discontinuance of
such fund, the fiscal and legal officers of such municipal corporation
shall certify to the governing board thereof the amount that may be
necessary to retain in such fund to satisfy all liabilities incurred or
accrued against it and such sum shall be retained in the fund for
payment of such amounts or until later certified that such funds are no
longer needed.
S 3. Nothing in section 6-t of the general municipal law, as added by
section one of this act, shall affect the validity of the establishment
or implementation of the New York city retiree health benefit trust,
established June 12, 2006 by the city of New York as grantor, and
neither the operation nor any amendment of such trust shall be subject
to such section 6-t. The establishment of such trust and its operation
in accordance with its terms is hereby ratified and approved.
S 4. This act shall take effect immediately.