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A10512 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10512
 
SPONSOR: Steck
  TITLE OF BILL: An act to amend the general municipal law, in relation to the insurance reserve funds of the Niskayuna central school district   PURPOSE OR GENERAL IDEA OF BILL: To authorize the Niskayuna Central School District to maintain a reserve fund for the district's self-funded health insurance program.   SUMMARY OF PROVISIONS: Section 1. This section amends paragraph (a) of subdivision 2 of section 6-n of the general municipal law, as amended by chapters 414 and 416 of the laws of 2016, to provide that in the case of the Niskayuna central school district, an insurance reserve fund may be established and such school district may make expenditures from such reserve fund for any loss, claim, action or judgment for which the school district is author- ized or required to purchase or maintain insurance for the kinds of risks for which insurance is authorized pursuant to paragraph three of subsection (a) of section one thousand one hundred thirteen of the insurance law.   JUSTIFICATION: The law currently authorizes municipal corporations to purchase a health insurance plan or to 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 together to form a municipal cooperative health bene- fit plan. This legislation recognizes that the same rationale makes a health insurance reserve fund beneficial in the context of a single Niskayuna 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.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: None to the State.   EFFECTIVE DATE: This act shall take effect immediately.
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