NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10316
SPONSOR: Wright 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: There are two Sections 88 in the Workers' Compensation Law.
This bill amends the Section 88 of the Workers' Compensation Law that
was amended by Chapter 6 of the Laws of 2007 and repeals the Section 88
of the Workers' Compensation Law that was amended by Chapter 635 of the
Laws of 1996. These changes are needed to clarify that payments from the
State Insurance Fund are subject to pre-audit by the State Comptroller.
SUMMARY OF PROVISIONS: There are two Sections 88 in the Workers'
Compensation Law. Section one 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 two 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 Comp-
troller.
Section three of this bill states that this act would take effect imme-
diately and be deemed effective as of April 1, 1996.
PRIOR LEGISLATIVE HISTORY: New bill.
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 appro-
priation 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 Fund's funds 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 ther-
eof," is broader than the constitutional appropriation requirement of
Article VII, Section 7, as articulated by the Court of Appeals. In
ANDERSON V. REGAN (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: constitu-
tional 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 funds 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 of the Comptroller. Accordingly, the Comp-
troller 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.
