N.Y. General Municipal Law § 6-n: Insurance reserve fund

§ 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.