senate Bill S4034

2013-2014 Legislative Session

Relates to the pre-audit of expenditures from the state insurance fund by the state comptroller; repealer

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Archive: Last Bill Status - In Committee


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

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Actions

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 08, 2014 referred to finance
Mar 05, 2013 referred to finance

Co-Sponsors

S4034 - Bill Details

See Assembly Version of this Bill:
A3732
Current Committee:
Senate Finance
Law Section:
Workers' Compensation Law
Laws Affected:
Amd §88, rpld §88, Work Comp L
Versions Introduced in 2011-2012 Legislative Session:
A10316, S7562

S4034 - Bill Texts

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Relates to the pre-audit of expenditures from the state insurance fund by the state comptroller.

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BILL NUMBER:S4034

TITLE OF BILL: An act to amend the workers' compensation law, in
relation to the pre-audit of expenditures from the state insurance
fund by the state comptroller and to repeal certain provisions of such
law relating thereto

PURPOSE:

This bill clarifies that payments from the State Insurance Fund are
subject to pre-audit by the State Comptroller.

SUMMARY OF PROVISIONS:

There are two Sections numbered 88 in the Workers' Compensation Law.
Section 1 of this bill amends the Section 88 of the Workers'
Compensation Law that was amended by Chapter 6 of the Laws of 2007 and
Section 2 of this bill repeals the Section 88 of the Workers'
Compensation Law that was amended by Chapter 635 of the Laws of 1996.
These amendments make it clear that the payments made from the State
Insurance Fund ("Fund") are subject to pre-audit by the State
Comptroller.

Section 3 of this bill states that this act would take effect
immediately and be deemed effective as of April 1, 1996.

PRIOR LEGISLATIVE HISTORY:

S. 7562 and A. 10316 - (Passed Assembly) of 2011- 2012

JUSTIFICATION:

Chapter 635 of the Laws of 1996 made major changes to the State's
workers' compensation system as part of that chapter, Section 88 of
the Workers' Compensation Law was amended to provide that the Fund
shall not be considered a State agency or fund for purposes of Section
4 of the State Finance Law, thus eliminating it from the appropriation
requirement of that section, and eliminating approval of the Fund's
budget by the Budget Director. The amendment was intended, in part, to
prevent further transfers of the State Insurance Fund's moneys to the
State's general fund.

These amendments to Section 88 of the Workers' Compensation Law
exceeded their intended purpose by attempting to eliminate the
constitutionally mandated pre-audit of the Fund's funds by OSC
pursuant to Section 111 of the State Finance Law, apparently as a
corollary to eliminating the Fund from the appropriation requirement
of Section 4 of the State Finance Law. However, the requirements of
appropriation and pre-audit derive from two separate constitutional
provisions.

Section 4 of the State Finance Law, which requires appropriation of
all money "under the management of the State, or any agency or officer
thereof," is broader than the constitutional appropriation requirement
of Article VII, Section 7, as articulated by the Court of Appeals. in
Anderson v. Reaan (53 N.Y.2d 356) the Court indicated that "off
budget" funds (those deposited outside the State Treasury) are not


subject to the appropriation requirement of Article VII, Section 7.
Therefore, it is constitutionally permissible to remove off-budget
State funds from the appropriation requirement of State Finance Law
Section 4. It does not follow that off-budget funds can be removed
from the constitutional pre-audit requirement, which derives
independently from Article V, Section 1 of the New York State
Constitution.

Article V, Section 1 mandates the pre-audit by the Comptroller of all
money of the State and all money under its control, and is not limited
to funds in the State Treasury. Section 111 of the State Finance Law
is merely a codification of that constitutional requirement. The
exemption of the Fund from the appropriations requirement of Section 4
of the State Finance Law does not alter the fact that the Fund's
moneys are both money of the State and money under the control of the
State for purposes of Article V, Section 1 of the State Constitution.

This bill deletes the language added by Chapter 635 which purported to
eliminate the pre-audit authority of the Comptroller.

Accordingly. the Comptroller urges passage of this legislation.

BUDGET IMPLICATIONS:

This bill has no significant fiscal impact.

EFFECTIVE DATE:

This bill would take effect immediately and be deemed effective as of
April 1, 1996.

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

                                  4034

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              March 5, 2013
                               ___________

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

AN  ACT  to amend the workers' compensation law, in relation to the pre-
  audit of expenditures from the state insurance fund by the state comp-
  troller and to repeal certain provisions of such law relating thereto

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

  Section  1. Section 88 of the workers' compensation law, as amended by
chapter 6 of the laws of 2007, is amended to read as follows:
  S 88. Administration expenses. The entire expense of administering the
state insurance fund shall be paid out of such fund WHICH SHALL  NOT  BE
CONSIDERED  AN AGENCY OR A FUND OF THE STATE FOR THE PURPOSES OF SECTION
FOUR OF THE STATE FINANCE LAW.  The portion of such expenses  applicable
and  chargeable  to  the  disability  benefits fund [and the medical and
hospital malpractice fund] shall be determined  on  an  equitable  basis
with due allowance for the division of overhead expenses. Not later than
the  first  day  of November there shall be submitted to the director of
the budget for his approval an estimated budget of expenditures for  the
succeeding calendar year having due regard to the business interests and
contract  obligations  of  the fund.   There may not be expended for the
state insurance fund  for  purposes  of  administration  more  than  the
amounts specified in such budget for each item of expenditure, except as
authorized  by  the director of the budget.  THERE SHALL BE SUBMITTED TO
THE DIRECTOR OF THE BUDGET QUARTERLY FINANCIAL STATEMENTS ON A  CALENDAR
YEAR  BASIS.  In no case shall the amount of ADMINISTRATIVE expenditures
so authorized for an entire year [for] FROM  THE  workers'  compensation
[insurance]  FUND  exceed  twenty-five per centum of the earned premiums
for such insurance for that year. In no case shall the amount of  ADMIN-
ISTRATIVE  expenditures  authorized for the disability benefits fund for
an entire year exceed twenty-five per centum of the premiums  earned  by

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02599-01-3

S. 4034                             2

that fund FOR SUCH INSURANCE FOR THAT YEAR. [In no case shall the amount
of expenditures authorized for the medical and hospital malpractice fund
for  an entire year exceed twenty-five per centum of the premiums earned
by that fund.] If there be officers or employees of the department whose
duties relate partly to the general work of the department and partly to
the work of the state insurance fund, and in case there is other expense
which  is  incurred jointly on behalf of the general work of the depart-
ment and the state insurance fund, an  equitable  apportionment  of  the
expense  shall  be  made and the part thereof which is applicable to the
state insurance fund shall be chargeable thereto. The  expenses  of  the
department  of audit and control incurred in connection with the pre-au-
dit of expenditures of the state insurance fund, as required by  section
one  hundred  eleven of the state finance law, shall be a charge against
and be paid out of the moneys of the  state  insurance  fund  and  there
shall  be  included  in  the  annual estimate submitted pursuant to this
section an amount sufficient to pay such expenses for the period covered
by such estimate. Notwithstanding section four of the state finance law,
the state comptroller is  authorized  to  process  or  approve  payments
related  to  business taxes, various workers' compensation board assess-
ments and assessments related to the workers' compensation rating  board
directly from the fund's accounts without explicit appropriation author-
ity. The commissioner of labor shall include in his annual report to the
legislature  a  statement  of  the  commissioners showing the expense of
administering the state fund for the preceding year. All appointments to
positions in the state insurance fund shall be  made  subject  to  civil
service requirements.
  S  2. Section 88 of the workers' compensation law, as amended by chap-
ter 635 of the laws of 1996, is REPEALED.
  S 3. This act shall take effect immediately;  provided,  however  that
section  one  of this act shall be deemed to have been in full force and
effect on and after April 1, 1996.

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