NY State Senate Bill 2019-S4196

Senate Bill S4196

Signed By Governor

2019-2020 Legislative Session

Relates to certain variations from generally accepted accounting principles as applied to the budget and accounts of the city of New York

download bill text pdf

Archive: Last Bill Status - Signed by Governor

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Oct 23, 2019	signed chap.406
Oct 21, 2019	delivered to governor
Jun 19, 2019	returned to senate passed assembly ordered to third reading rules cal.452 substituted for a6294a
May 30, 2019	referred to cities delivered to assembly passed senate
May 22, 2019	advanced to third reading
May 21, 2019	2nd report cal.
May 20, 2019	1st report cal.792
Mar 04, 2019	referred to local government

Votes

- May 30, 2019 - Floor Vote
  S4196
  
  46
  
  Aye
  
  12
  
  Nay
  
  0
  
  Absent
  
  4
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: May 30, 2019
      
      aye (46)
      
      Addabbo Jr.
      
      Amedore
      
      Bailey
      
      Benjamin
      
      Biaggi
      
      Boyle
      
      Breslin
      
      Brooks
      
      Carlucci
      
      Comrie
      
      Felder
      
      Gaughran
      
      Gianaris
      
      Gounardes
      
      Griffo
      
      Harckham
      
      Hoylman-Sigal
      
      Jackson
      
      Jacobs
      
      Kaminsky
      
      Kaplan
      
      Kennedy
      
      Krueger
      
      Lanza
      
      Little
      
      Liu
      
      Martinez
      
      May
      
      Mayer
      
      Metzger
      
      Montgomery
      
      Myrie
      
      Parker
      
      Persaud
      
      Ramos
      
      Ranzenhofer
      
      Rivera
      
      Salazar
      
      Sanders Jr.
      
      Savino
      
      Serrano
      
      Skoufis
      
      Stavisky
      
      Stewart-Cousins
      
      Tedisco
      
      Thomas
      
      nay (12)
      
      Akshar
      
      Antonacci
      
      Flanagan
      
      Gallivan
      
      Helming
      
      Jordan
      
      O'Mara
      
      Ortt
      
      Ritchie
      
      Robach
      
      Serino
      
      Seward
      
      excused (4)
      
      Funke
      
      Kavanagh
      
      LaValle
      
      Sepúlveda
  May 20, 2019 - Local Government Committee Vote
  S4196
  
  5
  
  Aye
  
  1
  
  Nay
  
  1
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Local Government Committee Vote: May 20, 2019
      
      aye (5)
      
      Brooks
      
      Gaughran
      
      Harckham
      
      Metzger
      
      Skoufis
      
      nay (1)
      
      Amedore
      
      aye wr (1)
      
      Ritchie

2019-S4196 (ACTIVE) - Details

See Assembly Version of this Bill:: A6294
Law Section:: General Municipal Law
Laws Affected:: Add §25, Gen Muni L; amd §8, Chap 868 of 1975

2019-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.

2019-S4196 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S4196

SPONSOR: JACKSON
 
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

 
PURPOSE:

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.

 
SUMMARY OF PROVISIONS:

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.

Section 3 is the effective date.

 
JUSTIFICATION:

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
permanent.

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
includes:

(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
employee benefits.

(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.

 
LEGISLATIVE HISTORY:
New bill.

 
STATE AND LOCAL FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2019-S4196 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4196
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               March 4, 2019
                                ___________
 
 Introduced  by  Sen. JACKSON -- read twice and ordered printed, and when
   printed to be committed to the Committee on Local Government
 
 AN ACT to amend the general municipal law and the New York state  finan-
   cial  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
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  The  general  municipal  law  is  amended by adding a new
 section 25 to read as follows:
   § 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
 TO BE CAPITAL COSTS FOR PURPOSES OF THIS CHAPTER 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
   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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            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.
   § 2. Paragraph a of subdivision 1 of section 8 of section 2 of chapter
 868 of the laws of 1975, constituting the New York state financial emer-
 gency  act  for the city of New York, as amended by section 1 of part PP
 of chapter 56 of the laws of 2010, is amended to read as follows:
   a. For its fiscal years ending June thirtieth, nineteen hundred seven-
 ty-nine through June thirtieth, nineteen hundred eighty-one, the  city's
 budget  covering  all  expenditures  other  than  capital items shall be
 prepared and balanced so that the results thereof would not show a defi-
 cit when reported in accordance with the accounting principles set forth
 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
 the provision of subdivision four of section three thousand thirty-eight
 of  the public authorities law with respect to contributions by the city
 or other public employer to any retirement system or  pension  fund  and
 subject to the provision of paragraph (c) of subdivision five of section
 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
 each fiscal year thereafter, the city's budget covering all expenditures
 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
 in  accordance  with  generally  accepted  accounting  principles.  With
 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
 capital budget not later than the commencement of the fiscal year ending
 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)
 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
 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.
   § 3. This act shall take effect immediately.

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