Source: https://www.nysenate.gov/legislation/bills/2019/s4196
Timestamp: 2019-11-17 00:15:37
Document Index: 145361184

Matched Legal Cases: ['§25', '§8', '§ 25', '§ 25', '§ 25', '§ 25']

NY State Senate Bill S4196
senate Bill S4196
Relates to certain variations from generally accepted accounting principles as applied to the budget and accounts of the city of New York
Get Status Alerts for S4196
Oct 23, 2019 signed chap.406
substituted for a6294a
May 30, 2019 referred to cities
May 20, 2019 1st report cal.792
S4196 (ACTIVE) - Details
Add §25, Gen Muni L; amd §8, Chap 868 of 1975
S4196 (ACTIVE) - Summary
Establishes permitted variations from generally accepted accounting principles for the purposes of determining a deficit with respect to the budget and accounts of the city of New York.
S4196 (ACTIVE) - Sponsor Memo
BILL NUMBER: S4196
TITLE OF BILL:  An act to amend the general municipal law and the New
York state financial emergency act for the city of New York, in relation
to certain variations from generally accepted accounting principles as
applied to the budget and accounts of the city of New York
This legislation exempts amounts reported as restricted fund balance, as
a result of the Governmental Accounting Standards Board Statement No.
84, Fiduciary Activities, which establishes stricter standards on the
use of the funds classified as fiduciary activities, from being included
in the Generally Accepted Accounting Principles.
Section 1 adds a new section 25 to the General Municipal Law.  Subdivi-
sion 1 makes permanent the provision currently in section 8(1)(a) of the
Financial Emergency Act for the City of New York that provides, with
respect to the budget and accounts of New York City, that all costs that
would be treated as capital costs but for the application of Govern-
mental Accounting Standards Board Statement No.  49 would be deemed to
be capital costs. Subdivision 2 adds provisions relating to the determi-
nation of the existence of a deficit pursuant to provisions of state and
local law, including the Financial Emergency Act for the City of New
York (while it remains in effect) and the City Charter. These provisions
provide that such determination would be made without regard to changes
in restricted fund balances, as defined by the Governmental Accounting
Standards Board, where restrictions in relation to such fund balances
are imposed by state or federal law or regulation or by private or
governmental parties other than the City, and without regard to funds
held in the City's Health Stabilization, School Crossing Guards Health
Insurance and Management Benefits Funds.
Section 2 adds provisions relating to the determination of the existence
of a deficit pursuant to provisions of state and local law, including
the Financial Emergency Act for the City of New York (while it remains
in effect) and the City Charter. These provisions provide that such
determination would be made without regard to changes in restricted fund
balances, as defined by the Governmental Accounting Standards Board,
where restrictions in relation to such fund balances are imposed by
state or federal law or regulation or by private or governmental parties
other than the City, and without regard to funds held in the City's
Health Stabilization, School Crossing Guards Health Insurance and
Management Benefits Funds.
Governmental Accounting Standards Board ("GASB") Statement No. 49
addresses the accounting and financial reporting standards for certain
pollution remediation obligations. Part PP of Chapter 56 of the Laws of
2010 amended the Financial Emergency Act for the City of New York
("FEA") to provide for a variation from generally accepted accounting
principles with respect to GASB Statement No. 49 as it applies to the
City, but did not address its applicability if the FEA were to expire.
The new General Municipal Law ("GML") § 25(1) would make this provision
The new GML § 25(2) and the proposed amendment to the FEA similarly
address the applicability of GASB guidance as it relates to the City.
GASB issued its Statement No. 84 ("GASB 84") in January 2017 with
updated criteria for identifying and reporting fiduciary fund activities
of state and local governments. Pursuant to GASB 84, some funds current-
ly classified by the City as fiduciary activities will need to be
reclassified to the City's general fund (the "General Fund"). GASB 84
changed generally accepted accounting principles by providing for all
state and local governments to report an activity as a fiduciary activ-
ity only if, among other criteria: (1) the government controls the
assets of the activity; and (2) the assets of the activity are not
derived solely from the government's own-source revenue or from govern-
ment-mandated non-exchange transactions or voluntary non-exchange trans-
actions. This reclassification will require the City to expend
restricted funds during the year in which they are received as a result
of the City's obligation, pursuant to the FEA and the City's Charter, to
maintain balance in each fiscal year.
As of June 30, 2018, there was approximately $3.3 billion spread over
more than 400 accounts held outside the General Fund. This amount
(1) Restricted Assets ($1.7 billion). These are funds generated from a
private entity or government entity other than the City of New York
where use of such funds is restricted by private or government parties
other than the City of New York.
(2) Health Stabilization Fund ($1.3 billion). Created in July 1984, this
fund is used to provide reserves to maintain current employee health
insurance benefits and to enhance benefits in certain instances. This
money is invested and used to pay for various benefit enhancements that
are collectively bargained or agreed to by the City and its public
employee unions. The City makes contributions to the fund in accordance
with collectively bargained obligations and can only draw down from the
fund by mutual agreement with public employee unions.
(3) Management Benefits Fund ($91 million). This is the managerial
welfare benefit fund used to pay for benefits, such as dental and vision
care, for unrepresented employees.  The account is funded with City
money based on the collectively bargained civilian welfare fund rate. It
is crucial to ensure that the account is sufficiently funded to preserve
(4) School Crossing Guards Health Insurance Fund ($1.1 million). This
fund is used to pay for health insurance for school crossing guards
working during summer school sessions. The account is funded with City
money based on collectively bargained rates. It is crucial to ensure
that the account is sufficiently funded to preserve employee benefits.
The new GML § 25(2) and the proposed amendment to the FEA would exempt
these accounts that do not meet GASB 84 criteria for exemption from
deficit determinations, allowing the City to carry such funds across
fiscal years and properly expend them in accordance with their purposes.
S4196 (ACTIVE) - Bill Text download pdf
cial  emergency  act  for the city of New York, in relation to certain
the budget and accounts of the city of New York
§ 25.  TREATMENT  OF  CAPITAL  COSTS  AND  RESTRICTED  FUND  BALANCES.
NOTWITHSTANDING  THE  PROVISIONS  OF ANY GENERAL OR SPECIAL STATE LAW OR
LOCAL LAW TO THE CONTRARY, INCLUDING BUT NOT LIMITED  TO  THE  NEW  YORK
CITY  CHARTER,  THE FOLLOWING SHALL APPLY WITH RESPECT TO THE BUDGET AND
ACCOUNTS OF THE CITY OF NEW YORK:
1. ALL COSTS THAT WOULD BE CAPITAL COSTS IN ACCORDANCE WITH  GENERALLY
ACCEPTED  ACCOUNTING PRINCIPLES, BUT FOR THE APPLICATION OF GOVERNMENTAL
ACCOUNTING STANDARDS BOARD STATEMENT NUMBER FORTY-NINE, SHALL BE  DEEMED
OF  STATE  OR  LOCAL LAW, INCLUDING BUT NOT LIMITED TO THE NEW YORK CITY
CHARTER, RELEVANT TO THE TREATMENT OF SUCH COSTS; AND
2. THE DETERMINATION AS TO THE EXISTENCE OF A DEFICIT PURSUANT TO  THE
NEW  YORK  STATE FINANCIAL EMERGENCY ACT FOR THE CITY OF NEW YORK, WHILE
SUCH ACT REMAINS IN EFFECT, AND ANY OTHER PROVISION OF  STATE  OR  LOCAL
LAW,  INCLUDING  BUT  NOT LIMITED TO THE NEW YORK CITY CHARTER, SHALL BE
MADE WITHOUT REGARD TO CHANGES IN RESTRICTED FUND BALANCES,  AS  DEFINED
BY  THE  GOVERNMENTAL  ACCOUNTING STANDARDS BOARD, WHERE RESTRICTIONS IN
RELATION TO SUCH FUND BALANCES ARE IMPOSED BY STATE OR  FEDERAL  LAW  OR
REGULATION,  OR  OTHERWISE BY PRIVATE OR GOVERNMENTAL PARTIES OTHER THAN
THE CITY OF NEW YORK, AND WITHOUT REGARD TO FUNDS  HELD  IN  THE  HEALTH
LBD10407-01-9
S. 4196                             2
STABILIZATION FUND, THE SCHOOL CROSSING GUARDS HEALTH INSURANCE FUND AND
THE MANAGEMENT BENEFITS FUND ESTABLISHED BY THE CITY OF NEW YORK.
gency  act  for the city of New York, as amended by section 1 of part PP
ty-nine through June thirtieth, nineteen hundred eighty-one, the  city's
budget  covering  all  expenditures  other  than  capital items shall be
in the state  comptroller's  uniform  system  of  accounts  for  munici-
palities,  as  the same may be modified by the comptroller, in consulta-
tion with the city comptroller, for application to the city; subject  to
of  the public authorities law with respect to contributions by the city
or other public employer to any retirement system or  pension  fund  and
three  thousand  thirty-eight of the public authorities law with respect
to expense items included in the capital budget of  the  city.  For  the
fiscal  year ending June thirtieth, nineteen hundred eighty-two, and for
other than capital items shall be prepared  and  balanced  so  that  the
results  thereof  would  not  show a deficit when reported in accordance
with generally accepted accounting principles and would  permit  compar-
ison  of the budget with the report of actual financial results prepared
respect  to  financial  plans  that include the fiscal years ending June
thirtieth, nineteen hundred seventy-nine through June  thirtieth,  nine-
teen  hundred  eighty-one,  the  city's budget covering all expenditures
other than capital items shall be prepared in accordance with  generally
accepted  accounting  principles and there shall be substantial progress
in each such fiscal year towards achieving a city  budget  covering  all
expenditures  other  than  capital  items the results of which would not
show a deficit when  reported  in  accordance  with  generally  accepted
accounting  principles.  The city shall eliminate expense items from its
June thirtieth, nineteen hundred eighty-two. For the fiscal year  ending
June  thirtieth,  nineteen hundred eighty-nine, and for each fiscal year
thereafter, the budgets covering all  expenditures  other  than  capital
items  of  each  of  the  covered  organizations  shall  be prepared and
balanced so that the results thereof  would  not  show  a  deficit  when
reported  in  accordance  with generally accepted accounting principles;
and for each fiscal year  prior  thereto,  there  shall  be  substantial
progress  towards  such  goal.    Notwithstanding  the foregoing and the
provisions of any general or special state  law  or  local  law  to  the
contrary, including but not limited to the New York city charter[,]: (I)
to be capital costs for purposes of this [chapter]  ACT  and  any  other
provision  of  state  or local law, including but not limited to the New
York city charter, relevant to the treatment of such costs; AND (II) THE
DETERMINATION AS TO THE EXISTENCE OF A DEFICIT PURSUANT TO THIS ACT  AND
ANY  OTHER PROVISION OF STATE OR LOCAL LAW, INCLUDING BUT NOT LIMITED TO
THE NEW YORK CITY CHARTER, SHALL BE MADE WITHOUT REGARD  TO  CHANGES  IN
S. 4196                             3
RESTRICTED  FUND  BALANCES,  AS  DEFINED  BY THE GOVERNMENTAL ACCOUNTING
STANDARDS BOARD, WHERE RESTRICTIONS IN RELATION TO  SUCH  FUND  BALANCES
ARE  IMPOSED  BY  STATE  OR  FEDERAL  LAW OR REGULATION, OR OTHERWISE BY
PRIVATE  OR  GOVERNMENTAL  PARTIES  OTHER THAN THE CITY OF NEW YORK, AND
WITHOUT REGARD TO FUNDS HELD  IN  THE  HEALTH  STABILIZATION  FUND,  THE
SCHOOL CROSSING GUARDS HEALTH INSURANCE FUND AND THE MANAGEMENT BENEFITS
FUND ESTABLISHED BY THE CITY OF NEW YORK.