§ 6-n. Insurance reserve fund. 1. a. "Municipal corporation," as used
in this section, shall mean a municipal corporation, as defined in
section two of this chapter, school district, except a school district
in a city with a population of one hundred twenty-five thousand or more,
board of cooperative educational services, fire district, a district
corporation and a special improvement district governed by a separate
board of commissioners.

b. "Judgments", "actions" and "claims", as used in this section, shall
mean those judgments, actions and claims against the municipal
corporation that arise out of those kinds of risks for which
expenditures may be made pursuant to subdivision two of this section.

2. (a) The governing board of any municipal corporation may establish
a reserve fund to be known as the insurance reserve fund. Upon the
creation of the fund, the municipality may make expenditures from the
fund for any loss, claim, action or judgment for which the municipal
corporation is authorized or required to purchase or maintain insurance,
except those kinds of risks for which insurance is authorized pursuant
to paragraph one, two, three, fifteen, sixteen, seventeen, eighteen,
twenty-two or twenty-three of subsection (a) of section one thousand one
hundred thirteen of the insurance law, or for payments in lieu of
contributions under article eighteen of the labor law; provided however,
that no municipality shall make an expenditure from such fund for any
loss, claim, action or judgment for which the municipal corporation has
established a reserve fund under any other provision of law; provided,
further that the Scarsdale union free school district, the Mamaroneck
union free school district, the Minisink Valley central school district,
the Vernon Verona Sherrill central school district, the Ithaca city
school district, the Kenmore-Town of Tonawanda union free school
district, the Bedford central school district, the Grand Island central
school district, the Tonawanda city school district, the enlarged city
school district of Middletown, the Frontier central school district, the
Owego Apalachin central school district, the Maine-Endwell central
school district, the Binghamton city school district, the Candor central
school district, the Cleveland Hill union free school district, the
Depew union free school district, the Iroquois central school district,
the Liverpool central school district, the Auburn enlarged city school
district, the Carmel central school district, the Clarence central
school district, the Fulton city school district, and the Canastota
central school district may establish insurance reserve funds in
compliance with this section and article seventy-four of the education
law and such school districts may make expenditures in compliance with
this section and article seventy-four of the education law from such
reserve fund for any loss, claim, action or judgment for which the
school districts are authorized or required to purchase or maintain
insurance for the kinds of risks for which insurance is authorized
pursuant to paragraph three of subsection (a) of section one thousand
one hundred thirteen of the insurance law.

(b) Notwithstanding any other provision of law to the contrary, where
a municipal corporation has previously established a reserve fund under
another provision of law for a type of risk for which expenditures may
be made under paragraph (a) of this subdivision, the municipal
corporation may, by resolution, discontinue such other reserve fund and
transfer any unexpended balance to the reserve fund established under
this section; provided, however, that to the extent such unexpended
balance is subject to any liabilities incurred or accrued against the
other reserve fund, any unexpended balances so transferred shall only be
used for such incurred or accrued liabilities including expenses in
connection therewith. Prior to the discontinuance of the other reserve
fund, the fiscal and legal officers of the municipal corporation shall
certify to the governing board thereof the amount that may be necessary
to satisfy all liabilities incurred or accrued against it.

3. There may be paid into such fund:

a. Such amounts as may be provided by budgetary appropriations;

b. Amounts from any other fund authorized by this chapter by
resolution subject to permissive referendum; and

c. Such other funds as may be legally appropriated.

4. The amount paid into such fund during any fiscal year shall not
exceed the greater of thirty-three thousand dollars or five per centum
of the total budget for such fiscal year.

5. The moneys in such fund shall be deposited and secured in the
manner provided by section ten of this article. The governing board, or
the chief fiscal officer of such municipal corporation, if the governing
board shall delegate such duty to him, may invest the moneys in such
fund in the manner provided by section eleven of this article. Any
interest earned or capital gain realized on the money so deposited or
invested shall accrue to and become part of such fund.

6. The chief fiscal officer shall account for this fund separate and
apart from all other funds of the municipal corporation. Such accounting
shall show: the source, date and amount of each sum paid into the fund;
the interest earned by such fund; capital gains or losses resulting from
the sale of investments of this fund; the order, purpose thereof, date
and amount of each payment from this fund; the assets of the fund,
indicating cash balance and a schedule of investments. The chief fiscal
officer, within sixty days of the end of each fiscal year, shall furnish
a detailed report of the operation and condition of this fund to the
governing board. The chief fiscal officer shall also keep a separate
account for each kind of risk funded pursuant to subdivision two of this
section.

7. Notwithstanding any provision of law to the contrary, municipal
corporations shall not have the power to enter into agreements, among
themselves or one for the other, to pool their reserve fund established
pursuant to subdivision two of this section for the payment of
judgments, actions and claims.

8. Any action or claim shall be compromised or settled by the
governing board, officer or employee of the municipal corporation
authorized to settle or compromise actions or claims on behalf of the
municipal corporation.

9. An expenditure may be made from this fund for the payment of all or
part of the cost, including interest, of:

a. Judgments;

b. Actions that have been compromised or settled and that have been
approved by the court in which the action or proceeding is pending;

c. Claims that have been settled or compromised and that have been
approved by a justice of the supreme court of the judicial district in
which the municipal corporation is located;

d. The uninsured portion of any loss to property owned by the
municipal corporation if such loss arises out of a kind of risk
described in subdivision two of this section.

e. Expert or professional services rendered in connection with the
investigation, adjustment or settlement of claims, actions or judgments.

10. The order of the court or the justice approving such settlement or
compromise may be granted upon motion of the body, officer or employee
of the municipal corporation authorized to do so, supported by an
affidavit setting forth the cause of action or claim against the
municipal corporation and also such other information which, in its or
his opinion, will enable the court or justice to arrive at a
determination that such compromise or settlement is just, reasonable and
to the interest of the municipal corporation. Such body, officer or
employee may also present the affidavit of other persons in support of
such motion. The court or the justice, in order to arrive at such a
determination, may require such body, officer or employee to present
additional information by a supplementary affidavit or affidavits or may
require other persons to present additional information by their
affidavits.

11. Notwithstanding subdivisions eight and nine of this section or any
other provision of law to the contrary, the governing body of any
municipal corporation may, without judicial approval, compromise or
settle any action or claim and make an expenditure from this fund where
the amount of such settlement or compromise does not exceed twenty-five
thousand dollars.

12. The members of the governing board shall be guilty of a
misdemeanor if they:

a. Authorize a withdrawal from this fund for any purpose except as
provided in this section; or

b. Expend any money withdrawn from this fund for a purpose other than
as provided in this section.

13. If, after the establishment of such fund, the municipality
determines that such fund is no longer needed, the moneys remaining in
such fund may be transferred to any other reserve fund of the municipal
corporation authorized by this chapter that is comprised of moneys which
were raised on the same tax base as the moneys in the reserve fund
established under this section or section thirty-six hundred fifty-one
of the education law, only to the extent that the moneys in this fund
shall exceed the sum sufficient to pay all liabilities incurred or
accrued against it. Prior to the discontinuance of such fund, the fiscal
and legal officers of such municipal corporation shall certify to the
governing board thereof the amount that may be necessary to retain in
such fund to satisfy all liabilities incurred or accrued against it and
such sum shall be retained in the fund for payment of such amounts or
until later certified that such funds are no longer needed.