NY State Fin L § 99-B (2021)
2021 New York Laws STF - State Finance Article 6 - Funds of the State 99-B - Withholding of State Aid for School Purposes Upon Default in Payment of Obligations of the Prospective Recipient.

§  99-b.  Withholding of state aid for school purposes upon default in   payment of obligations of the prospective recipient.  Whenever  a  city,   city  school  district  or  school  district, as such terms are used and   defined in the education law, or the public benefit corporation to which   the  city  of  New  York  has  assigned  payments  pursuant  to  section   twenty-seven hundred ninety-nine-tt of the public authorities law, shall   default in the payment of the principal of its bonds or notes issued for   school purposes or the payment of the interest on such bonds or notes or   in  the  payment  of both the principal of and interest on such bonds or   notes, the  allotment,  apportionment  and  payment  of  state  aid  and   assistance  pursuant  to the education law, or pursuant to any other law   hereinafter enacted providing for state aid and assistance in lieu of or   substitution  for  the  state  aid  and  assistance  presently  provided   pursuant to the education law, to any such city, city school district or   school  district,  or  to the city of New York or its school district in   the case of a default by  such  public  benefit  corporation,  shall  be   withheld  by  the  state upon the following terms and conditions. In the   event a holder or owner of any such bond or note  shall  file  with  the   state  comptroller a verified statement describing such bond or note and   alleging default in the payment thereof or the interest thereon or  both   such  principal  and  interest,  it  shall  be  the  duty  of  the state   comptroller to immediately investigate the circumstances of the  alleged   default  and  prepare and file in his office a certificate setting forth   his determinations with respect thereto and to serve a copy  thereof  by   registered  mail  upon the chief fiscal officer, as such term is defined   in the local finance law, of the city, city school district,  or  school   district  which  issued such bond or note, or in the case of such public   benefit corporation, upon the comptroller of the city of New  York,  the   chancellor of the school district of the city of New York, and the chief   fiscal officer of such public benefit corporation.Such  investigation  by  the state comptroller shall cover the current   status with respect to the payment of principal of and interest  on  all   such  outstanding  bonds  and  notes of such city, city school district,   school  district,  or  public  benefit  corporation  and  the  statement   prepared  and  filed  by the state comptroller pursuant to the foregoing   provision shall set forth a description of all such bonds and  notes  of   such  city,  city  school  district  school  district, or public benefit   corporation found to be in default  and  the  amount  of  principal  and   interest thereon past due.Upon  the  filing  of  such  a  certificate in the office of the state   comptroller, the state comptroller shall thereafter deduct and  withhold   from  the  next  succeeding  allotment, apportionment or payment of such   state aid or assistance due such city, city school  district  or  school   district, or due the city of New York or its school district in the case   of  a default by such public benefit corporation, such amount thereof as   may be required to pay the principal of and interest on such  bonds  and   notes  of  such  city,  city school district, school district, or public   benefit corporation then in default. In the  event  such  state  aid  or   assistance initially so withheld shall be insufficient to pay all of the   principal  of  and  interest  on  such bonds or notes of such city, city   school district school district, or public  benefit  corporation  so  in   default,  the state comptroller shall similarly deduct and withhold from   each succeeding allotment, apportionment or payment of such state aid or   assistance due such city, city school district, or school  district,  or   due the city of New York or its school district in the case of a default   by  such  public  benefit corporation, such amount or amounts thereof as   may be required to pay all of the principal  of  and  interest  on  such   bonds  and  notes  then in default and to cure such default. Allotments,    apportionments and payments of such state aid so deducted or withheld by   the state comptroller shall be forwarded promptly to the paying agent or   agents for the bonds and notes in default  of  such  city,  city  school   district  school  district,  or  public benefit corporation for the sole   purpose of the payment of defaulted principal of and  interest  on  such   bonds or notes; provided, however, that in the event any such allotment,   apportionment or payment of such state aid so deducted or withheld shall   be less than the total amount of all principal and interest on the bonds   and  notes  in default with respect to which the same was so deducted or   withheld, then the state comptroller shall forward to each paying  agent   an  amount  in the proportion that the amount of such bonds and notes in   default payable to such paying agent bears to the total  amount  of  the   principal  of  and  interest  then in default on such bonds and notes of   such city, city school district,  school  district,  or  public  benefit   corporation.  The  state  comptroller  shall  promptly  notify the chief   fiscal officer of such city, city school district or school district, or   in the case of such public benefit corporation, the comptroller  of  the   city  of  New York, the chancellor of the school district of the city of   New  York,  and  the  chief  fiscal  officer  of  such  public   benefit   corporation,  of  any  payment  or  payments made to any paying agent or   paying agents of defaulted bonds or notes pursuant to this provision.The state of New York hereby covenants with the purchasers and holders   and owners from time to time of bonds and notes issued by  cities,  city   school districts, school districts, and such public benefit corporations   for  school  purposes  that  it  will  not repeal, revoke or rescind the   provisions of this section or amend or modify the same so as  to  limit,   impair  or  impede  the  rights  and  remedies granted hereby; provided,   however, that nothing herein contained shall be deemed or  construed  as   requiring  the  state to continue the payment of state aid or assistance   to any city, city school district or school district or as  limiting  or   prohibiting  the  state from repealing or amending any law heretofore or   hereafter enacted relating to state aid or assistance,  the  manner  and   time of payment or apportionment thereof, or the amount thereof.