N.Y. Public Authorities Law § 3669: Control period

§ 3669. Control period. 1. The authority shall impose a control

period over the county or the Nassau health care corporation upon its

determination at any time that any of the following events has occurred

or that there is a substantial likelihood and imminence of such

occurrence: (a) the county or the Nassau health care corporation shall

have failed to pay the principal of or interest on any of its bonds or

notes when due or payable, (b) the county or the Nassau health care

corporation shall have incurred a major operating funds deficit of one

percent or more in the aggregate results of operations of such funds

during its fiscal year assuming all revenues and expenditures are

reported in accordance with generally accepted accounting principles,

subject to the provisions of this title, (c) the county or the Nassau

health care corporation shall have otherwise violated any provision of

this title and such violation substantially impairs the marketability of

the county's bonds or notes or the Nassau health care corporation's

bonds or notes, (d) the chief fiscal officer's certification at any

time, at the request of the authority or on the chief fiscal officer's

initiative, which certification shall be made from time to time as

promptly as circumstances warrant and reported to the authority, that on

the basis of facts existing at such time such officer could not make the

certification described by paragraph (b) of this subdivision in the

definition of interim finance period in section thirty-six hundred

fifty-one of this title, or (e) the authority makes the finding required

under paragraph (g) of subdivision two of section thirty-six hundred

sixty-seven of this title. The authority shall terminate any such

control period when it determines that none of the conditions which

would permit the authority to impose a control period exist. After

termination of a control period the authority shall annually consider

paragraphs (a) through (e) of this subdivision and determine whether, in

its judgment, any of the events described in such paragraphs have

occurred and the authority shall publish each such determination. Any

certification made by the chief fiscal officer hereunder shall be based

on such officers' written determination which shall take into account a

report and opinion of an independent expert in the marketing of

municipal securities selected by the authority, and the opinion of such

expert and any other information taken into account shall be made public

when delivered to the authority. Notwithstanding any part of the

foregoing to the contrary, in no event shall any control period continue

beyond the later of (i) January first, two thousand thirty, or (ii) the

date when all bonds of the authority are refunded, discharged or

otherwise defeased.

2. In carrying out the purposes of this title during any control

period:

(a) The authority shall (i) consult with the county or the covered

organizations in the preparation of the financial plan, and certify to

the county the revenue estimates approved therein, (ii) prescribe the

form of the financial plan and the supporting information required in

connection therewith, (iii) exercise the rights of approval, disapproval

and modification with respect to the financial plan, including but not

limited to the revenue estimates contained therein, and (iv) in the

event the authority has made the finding required under section

thirty-six hundred sixty-seven of this title, formulate and adopt its

modifications to the financial plan, such modifications to become

effective on their adoption by the authority.

(a-1) If a control period is imposed over the Nassau health care

corporation, the authority shall require the Nassau health care

corporation to report financial information to the authority in such

form and manner and containing such information as the authority shall

prescribe, including, but not limited to, expenditure and cash flow

projections, disbursements and receipts, and budget data depicting

overall trends of actual revenue and expenditures and any other

information described in section thirty-six hundred sixty-seven of this

title determined to be relevant by the authority.

(b) The authority shall, from time to time and to the extent it deems

necessary or desirable in order to accomplish the purposes of this

title, (i) review the operations, management, efficiency and

productivity of such county operations and of such covered organizations

or portions thereof as the authority may determine, and make reports

thereon; (ii) audit compliance with the financial plan in such areas as

the authority may determine; (iii) recommend to the county and the

covered organizations such measures relating to their operations,

management, efficiency and productivity as it deems appropriate to

reduce costs and improve services so as to advance the purposes of this

title; and (iv) obtain information on the financial condition and needs

of the county and the covered organizations. Nothing herein shall

diminish the powers of the state comptroller otherwise provided by law

and the authority may request the assistance of the state comptroller in

the performance of the above functions.

(c) The authority shall (i) receive from the county and the covered

organizations and from the state comptroller, and review, such financial

statements and projections, budgetary data and information, and

management reports and materials as the authority deems necessary or

desirable to accomplish the purposes of this title, and (ii) inspect,

copy and audit such books and records of the county and the covered

organizations as the authority deems necessary or desirable to

accomplish the purposes of this title.

(d) All contracts entered into by the county or any covered

organization during any control period must be consistent with the

provisions of this title and must comply with the requirements of the

financial plan as approved by the authority. With respect to all

contracts or other obligations to be entered into by the county or any

covered organization during any control period requiring the payment of

funds or the incurring of costs by the county or any covered

organizations:

(i) Within twenty days from the commencement of a control period, the

county executive, or the chairperson of the Nassau health care

corporation in the case of a control period imposed pursuant to

paragraph a-one of subdivision two of this section, shall present to the

authority proposed guidelines respecting the categories and types of

contracts and other obligations required to be reviewed by the authority

pursuant to this subdivision. Any such guidelines may provide a

different standard for review with respect to contracts of any covered

organization as the authority shall determine. Within thirty days from

the commencement of a control period, the authority shall approve or

modify and approve such proposed guidelines or promulgate its own in the

event that such proposed guidelines are not submitted to it within the

twenty days as provided for herein. Such guidelines may thereafter be

modified by the authority from time to time on not less than thirty

days' notice to the county executive or chairperson of the Nassau health

care corporation and the county executive or chairperson of the Nassau

health care corporation may from time to time propose modifications to

the authority. Unless expressly disapproved or modified by the authority

within thirty days (or such additional time, not exceeding thirty days,

as the authority shall have notified the county or covered organization

that it requires to complete its review and analysis) from the date of

submission by the county executive or chairperson of the Nassau health

care corporation, any such proposed guidelines or modifications shall be

deemed approved by the authority;

(ii) Prior to entering into any contract or other obligation subject

to review of the authority under its guidelines, the county or any

covered organization shall submit a copy of such contract or other

obligation to the authority accompanied by an analysis of the projected

costs of such contract or other obligation and certification that

performance thereof will be in accordance with the financial plan, all

in such form and with such additional information as the authority may

prescribe. The authority shall promptly review the terms of such

contract or other obligation and the supporting information in order to

determine compliance with the financial plan;

(iii) The authority shall, by order, disapprove any contract or other

obligation reviewed by it only after adoption of a resolution

determining that, in its judgment, the performance of such contract or

other obligation would be inconsistent with the financial plan, and upon

such order the county or covered organization shall not enter into such

contract or other obligation; and

(iv) If the authority approves the terms of a reviewed contract or

other obligation, the county or covered organization may enter into such

contract or other obligation upon the terms submitted to the authority.

Failure of the authority to notify the county or covered organization

within thirty days (or such additional time, not exceeding thirty days,

as the authority shall have notified the county or covered organization

that it requires to complete its review and analysis) after submission

to it of a contract or other obligation that such contract or other

obligation has been disapproved shall be deemed to constitute authority

approval thereof.

(e) The authority shall review the terms of each proposed long-term

and short-term borrowing by the county and any covered organization to

be effected during any control period, and no such borrowing shall be

made during any control period unless it is approved by the authority.

Neither the county nor any covered organization shall be prohibited from

issuing bonds or notes to pay outstanding bonds or notes.

(f) The authority shall issue, to the appropriate official of the

county and each covered organization, such orders as it deems necessary

to accomplish the purposes of this title, including, but not limited to,

timely and satisfactory implementation of an approved financial plan.

Any order so issued shall be binding upon the official to whom it was

issued and failure to comply with such order shall subject the official

to the penalties described in subdivision four of this section.

(g) The authority is authorized to and shall withhold any transitional

state aid and not pay such moneys to the county during any control

period.

3. Authorization for wage freeze. (a) During a control period, upon a

finding by the authority that a wage freeze is essential to the adoption

or maintenance of a county budget or a financial plan that is in

compliance with this title, the authority, after enactment of a

resolution so finding, may declare a fiscal crisis. Upon making such a

declaration, the authority shall be empowered to order that all

increases in salary or wages of employees of the county and employees of

covered organizations which will take effect after the date of the order

pursuant to collective bargaining agreements, other analogous contracts

or interest arbitration awards, now in existence or hereafter entered

into, requiring such salary increases as of any date thereafter are

suspended. Such order may also provide that all increased payments for

holiday and vacation differentials, and shift differentials for

employees of the county and employees of covered organizations which

will take effect after the date of the order pursuant to collective

bargaining agreements, other analogous contracts or interest arbitration

awards requiring such increased payments as of any date thereafter are,

in the same manner, suspended. Such order may also provide that all

increased payments for salary adjustments according to plan and step-ups

or increments be suspended; provided, however, when (i) the county

executive provides a four year financial plan approved by the county

legislature pursuant to paragraph (a) of subdivision two of section

thirty-six hundred sixty-seven of this title and the authority

determines, pursuant to paragraph (b) of such subdivision, that such

financial plan is complete and complies with the standards set forth in

such subdivision, and (ii) the authority makes a certification to the

county setting forth revenue estimates agreed to by the authority in

accordance with such determination, the salary adjustments according to

plan and step-ups or increments, not including cost of living increases,

shall not be suspended for each year in which the four year financial

plan has been certified. This inability to suspend the salary

adjustments according to plan and step-ups or increments shall be

applicable to county employees and employees of covered organizations,

whether or not they are covered by a collectively negotiated agreement,

if an individual employee or members of an employee's bargaining unit

previously participated in a wage freeze implemented by the authority

under this section and such wage freeze was subsequently lifted by the

authority by the issuance of a resolution, pursuant to paragraph (b) or

(c) of this subdivision, certifying that the suspension of their wage

increases or an agreement by the collective bargaining representative or

by such unrepresented employee was an acceptable and appropriate

contribution toward alleviating the fiscal crisis of the county.

Irrespective of the duration of any approved or accepted four-year

financial plan, for employees who are members of a bargaining unit, this

inability to suspend the salary adjustment according to plan and

step-ups or increments shall take effect October first, two thousand

sixteen and shall be in effect for employees for the duration of the

next collective bargaining agreement succeeding either (i) the

collective bargaining agreement in effect on November sixth, two

thousand eighteen or (ii) the most recently expired collective

bargaining agreement prior to November sixth, two thousand eighteen;

whichever is later. If the succeeding collective bargaining agreement's

duration is modified, extended, or renewed, this modification, extension

or renewal does not modify, extend or renew the term of the inability to

suspend salary adjustments according to plan and step-ups or increments.

For employees who are not members of a bargaining unit, this inability

to suspend the salary adjustment according to plan and step-ups or

increments shall be effective October first, two thousand sixteen

through December first, two thousand twenty-one. For the purposes of

computing the pension base of retirement allowances, any suspended

salary or wage increases and any suspended other payments shall not be

considered as part of compensation or final compensation or of annual

salary earned or earnable. The suspensions authorized hereunder shall

continue until one year after the date of the order and, to the extent

of any determination of the authority that a continuation of such

suspensions, to a date specified by the authority, is necessary in order

to achieve the objectives of the financial plan, such suspensions shall

be continued to the date specified by the authority, which date shall in

no event be later than the end of the interim finance period, provided

that such suspensions shall terminate with respect to employees who have

agreed to a deferral of salary or wage increase upon the certification

of the agreement by the authority pursuant to paragraph (b) of this

subdivision.

(b) This subdivision shall not be applicable to employees of the

county or employees of a covered organization covered by a collective

bargaining agreement or an employee of the county or a covered

organization not covered by a collective bargaining agreement where the

collective bargaining representative or such unrepresented employee has

agreed to a deferment of salary or wage increase, by an instrument in

writing which has been certified by the authority as being an acceptable

and appropriate contribution toward alleviating the fiscal crisis of the

county. Any such agreement to a deferment of salary or wage increase may

provide that for the purposes of computing the pension base of

retirement allowances, any deferred salary or wage increase may be

considered as part of compensation or final compensation or of annual

salary earned or earnable.

(c) The authority may, if it finds that the fiscal crisis has been

sufficiently alleviated or for any other appropriate reason, direct that

the suspensions of salary or wage increases or suspensions of other

increased payments or benefits shall, in whole or in part, be

terminated.

4. Prohibition; penalties. (a) During any control period (i) no

officer or employee of the county or of any of the covered organizations

shall make or authorize an obligation or other liability in excess of

the amount available therefor under the financial plan as then in

effect; (ii) no officer or employee of the county or of any of the

covered organizations shall involve the county or any of the covered

organizations in any contract or other obligation or liability for the

payment of money for any purpose required to be approved by the

authority unless such contract has been so approved and unless such

contract or obligation or liability is in compliance with the financial

plan as then in effect.

(b) No officer or employee of the county or any of the covered

organizations shall take any action in violation of any valid order of

the authority or shall fail or refuse to take any action required by any

such order or shall prepare, present or certify any information

(including any projections or estimates) or report to the authority or

any of its agents that is false or misleading, or, upon learning that

any such information is false or misleading, shall fail promptly to

advise the authority or its agents thereof.

(c) In addition to any penalty or liability under any other law, any

officer or employees of the county or any of the covered organizations

who shall violate paragraph (a) or (b) of this subdivision shall be

subject to appropriate administrative discipline, including, when

circumstances warrant, suspension from duty without pay or removal from

office by order of either the governor or the county executive; and any

officer or employees of the county or any of the covered organizations

who shall knowingly and willfully violate paragraph (a) or (b) of this

subdivision shall, upon conviction, be guilty of a misdemeanor.

(d) In the case of a violation of paragraph (a) or (b) of this

subdivision by an officer or employee of the county or any of the

covered organizations, the county executive or the chief executive

officer of such covered organization shall immediately report to the

authority all pertinent facts together with a statement of the action

taken thereon.