N.Y. GMU Law § 6-N — New York Code / Act GMU / Article 2 / Section 6-N
Insurance reserve fund
Status: in_force

§ 6-n. Insurance reserve fund. 1. a. "Municipal corporation," as used\nin this section, shall mean a municipal corporation, as defined in\nsection two of this chapter, school district, except a school district\nin a city with a population of one hundred twenty-five thousand or more,\nboard of cooperative educational services, fire district, a district\ncorporation and a special improvement district governed by a separate\nboard of commissioners.\n  b. "Judgments", "actions" and "claims", as used in this section, shall\nmean those judgments, actions and claims against the municipal\ncorporation that arise out of those kinds of risks for which\nexpenditures may be made pursuant to subdivision two of this section.\n  2. (a) The governing board of any municipal corporation may establish\na reserve fund to be known as the insurance reserve fund. Upon the\ncreation of the fund, the municipality may make expenditures from the\nfund for any loss, claim, action or judgment for which the municipal\ncorporation is authorized or required to purchase or maintain insurance,\nexcept those kinds of risks for which insurance is authorized pursuant\nto paragraph one, two, three, fifteen, sixteen, seventeen, eighteen,\ntwenty-two or twenty-three of subsection (a) of section one thousand one\nhundred thirteen of the insurance law, or for payments in lieu of\ncontributions under article eighteen of the labor law; provided however,\nthat no municipality shall make an expenditure from such fund for any\nloss, claim, action or judgment for which the municipal corporation has\nestablished a reserve fund under any other provision of law; provided,\nfurther that the Scarsdale union free school district, the Mamaroneck\nunion free school district, the Minisink Valley central school district,\nthe Vernon Verona Sherrill central school district, the Ithaca city\nschool district, the Kenmore-Town of Tonawanda union free school\ndistrict, the Bedford central school district, the Grand Island central\nschool district, the Tonawanda city school district, the enlarged city\nschool district of Middletown, the Frontier central school district, the\nOwego Apalachin central school district, the Maine-Endwell central\nschool district, the Binghamton city school district, the Candor central\nschool district, the Cleveland Hill union free school district, the\nDepew union free school district, the Iroquois central school district,\nthe Liverpool central school district, the Auburn enlarged city school\ndistrict, the Carmel central school district, the Clarence central\nschool district, the Fulton city school district, and the Canastota\ncentral school district may establish insurance reserve funds in\ncompliance with this section and article seventy-four of the education\nlaw and such school districts may make expenditures in compliance with\nthis section and article seventy-four of the education law from such\nreserve fund for any loss, claim, action or judgment for which the\nschool districts are authorized or required to purchase or maintain\ninsurance for the kinds of risks for which insurance is authorized\npursuant to paragraph three of subsection (a) of section one thousand\none hundred thirteen of the insurance law.\n  (b) Notwithstanding any other provision of law to the contrary, where\na municipal corporation has previously established a reserve fund under\nanother provision of law for a type of risk for which expenditures may\nbe made under paragraph (a) of this subdivision, the municipal\ncorporation may, by resolution, discontinue such other reserve fund and\ntransfer any unexpended balance to the reserve fund established under\nthis section; provided, however, that to the extent such unexpended\nbalance is subject to any liabilities incurred or accrued against the\nother reserve fund, any unexpended balances so transferred shall only be\nused for such incurred or accrued liabilities including expenses in\nconnection therewith. Prior to the discontinuance of the other reserve\nfund, the fiscal and legal officers of the municipal corporation shall\ncertify to the governing board thereof the amount that may be necessary\nto satisfy all liabilities incurred or accrued against it.\n  3. There may be paid into such fund:\n  a. Such amounts as may be provided by budgetary appropriations;\n  b. Amounts from any other fund authorized by this chapter by\nresolution subject to permissive referendum; and\n  c. Such other funds as may be legally appropriated.\n  4. The amount paid into such fund during any fiscal year shall not\nexceed the greater of thirty-three thousand dollars or five per centum\nof the total budget for such fiscal year.\n  5. The moneys in such fund shall be deposited and secured in the\nmanner provided by section ten of this article. The governing board, or\nthe chief fiscal officer of such municipal corporation, if the governing\nboard shall delegate such duty to him, may invest the moneys in such\nfund in the manner provided by section eleven of this article. Any\ninterest earned or capital gain realized on the money so deposited or\ninvested shall accrue to and become part of such fund.\n  6. The chief fiscal officer shall account for this fund separate and\napart from all other funds of the municipal corporation. Such accounting\nshall show: the source, date and amount of each sum paid into the fund;\nthe interest earned by such fund; capital gains or losses resulting from\nthe sale of investments of this fund; the order, purpose thereof, date\nand amount of each payment from this fund; the assets of the fund,\nindicating cash balance and a schedule of investments. The chief fiscal\nofficer, within sixty days of the end of each fiscal year, shall furnish\na detailed report of the operation and condition of this fund to the\ngoverning board. The chief fiscal officer shall also keep a separate\naccount for each kind of risk funded pursuant to subdivision two of this\nsection.\n  7. Notwithstanding any provision of law to the contrary, municipal\ncorporations shall not have the power to enter into agreements, among\nthemselves or one for the other, to pool their reserve fund established\npursuant to subdivision two of this section for the payment of\njudgments, actions and claims.\n  8. Any action or claim shall be compromised or settled by the\ngoverning board, officer or employee of the municipal corporation\nauthorized to settle or compromise actions or claims on behalf of the\nmunicipal corporation.\n  9. An expenditure may be made from this fund for the payment of all or\npart of the cost, including interest, of:\n  a. Judgments;\n  b. Actions that have been compromised or settled and that have been\napproved by the court in which the action or proceeding is pending;\n  c. Claims that have been settled or compromised and that have been\napproved by a justice of the supreme court of the judicial district in\nwhich the municipal corporation is located;\n  d. The uninsured portion of any loss to property owned by the\nmunicipal corporation if such loss arises out of a kind of risk\ndescribed in subdivision two of this section.\n  e. Expert or professional services rendered in connection with the\ninvestigation, adjustment or settlement of claims, actions or judgments.\n  10. The order of the court or the justice approving such settlement or\ncompromise may be granted upon motion of the body, officer or employee\nof the municipal corporation authorized to do so, supported by an\naffidavit setting forth the cause of action or claim against the\nmunicipal corporation and also such other information which, in its or\nhis opinion, will enable the court or justice to arrive at a\ndetermination that such compromise or settlement is just, reasonable and\nto the interest of the municipal corporation. Such body, officer or\nemployee may also present the affidavit of other persons in support of\nsuch motion. The court or the justice, in order to arrive at such a\ndetermination, may require such body, officer or employee to present\nadditional information by a supplementary affidavit or affidavits or may\nrequire other persons to present additional information by their\naffidavits.\n  11. Notwithstanding subdivisions eight and nine of this section or any\nother provision of law to the contrary, the governing body of any\nmunicipal corporation may, without judicial approval, compromise or\nsettle any action or claim and make an expenditure from this fund where\nthe amount of such settlement or compromise does not exceed twenty-five\nthousand dollars.\n  12. The members of the governing board shall be guilty of a\nmisdemeanor if they:\n  a. Authorize a withdrawal from this fund for any purpose except as\nprovided in this section; or\n  b. Expend any money withdrawn from this fund for a purpose other than\nas provided in this section.\n  13. If, after the establishment of such fund, the municipality\ndetermines that such fund is no longer needed, the moneys remaining in\nsuch fund may be transferred to any other reserve fund of the municipal\ncorporation authorized by this chapter that is comprised of moneys which\nwere raised on the same tax base as the moneys in the reserve fund\nestablished under this section or section thirty-six hundred fifty-one\nof the education law, only to the extent that the moneys in this fund\nshall exceed the sum sufficient to pay all liabilities incurred or\naccrued against it. Prior to the discontinuance of such fund, the fiscal\nand legal officers of such municipal corporation shall certify to the\ngoverning board thereof the amount that may be necessary to retain in\nsuch fund to satisfy all liabilities incurred or accrued against it and\nsuch sum shall be retained in the fund for payment of such amounts or\nuntil later certified that such funds are no longer needed.\n