Bill S4034-2013

Relates to the pre-audit of expenditures from the state insurance fund by the state comptroller; repealer

Relates to the pre-audit of expenditures from the state insurance fund by the state comptroller.

Details

Actions

  • Jan 8, 2014: REFERRED TO FINANCE
  • Mar 5, 2013: REFERRED TO FINANCE

Memo

BILL NUMBER:S4034

TITLE OF BILL: An act to amend the workers' compensation law, in relation to the pre-audit of expenditures from the state insurance fund by the state comptroller and to repeal certain provisions of such law relating thereto

PURPOSE:

This bill clarifies that payments from the State Insurance Fund are subject to pre-audit by the State Comptroller.

SUMMARY OF PROVISIONS:

There are two Sections numbered 88 in the Workers' Compensation Law. Section 1 of this bill amends the Section 88 of the Workers' Compensation Law that was amended by Chapter 6 of the Laws of 2007 and Section 2 of this bill repeals the Section 88 of the Workers' Compensation Law that was amended by Chapter 635 of the Laws of 1996. These amendments make it clear that the payments made from the State Insurance Fund ("Fund") are subject to pre-audit by the State Comptroller.

Section 3 of this bill states that this act would take effect immediately and be deemed effective as of April 1, 1996.

PRIOR LEGISLATIVE HISTORY:

S. 7562 and A. 10316 - (Passed Assembly) of 2011- 2012

JUSTIFICATION:

Chapter 635 of the Laws of 1996 made major changes to the State's workers' compensation system as part of that chapter, Section 88 of the Workers' Compensation Law was amended to provide that the Fund shall not be considered a State agency or fund for purposes of Section 4 of the State Finance Law, thus eliminating it from the appropriation requirement of that section, and eliminating approval of the Fund's budget by the Budget Director. The amendment was intended, in part, to prevent further transfers of the State Insurance Fund's moneys to the State's general fund.

These amendments to Section 88 of the Workers' Compensation Law exceeded their intended purpose by attempting to eliminate the constitutionally mandated pre-audit of the Fund's funds by OSC pursuant to Section 111 of the State Finance Law, apparently as a corollary to eliminating the Fund from the appropriation requirement of Section 4 of the State Finance Law. However, the requirements of appropriation and pre-audit derive from two separate constitutional provisions.

Section 4 of the State Finance Law, which requires appropriation of all money "under the management of the State, or any agency or officer thereof," is broader than the constitutional appropriation requirement of Article VII, Section 7, as articulated by the Court of Appeals. in Anderson v. Reaan (53 N.Y.2d 356) the Court indicated that "off budget" funds (those deposited outside the State Treasury) are not

subject to the appropriation requirement of Article VII, Section 7. Therefore, it is constitutionally permissible to remove off-budget State funds from the appropriation requirement of State Finance Law Section 4. It does not follow that off-budget funds can be removed from the constitutional pre-audit requirement, which derives independently from Article V, Section 1 of the New York State Constitution.

Article V, Section 1 mandates the pre-audit by the Comptroller of all money of the State and all money under its control, and is not limited to funds in the State Treasury. Section 111 of the State Finance Law is merely a codification of that constitutional requirement. The exemption of the Fund from the appropriations requirement of Section 4 of the State Finance Law does not alter the fact that the Fund's moneys are both money of the State and money under the control of the State for purposes of Article V, Section 1 of the State Constitution.

This bill deletes the language added by Chapter 635 which purported to eliminate the pre-audit authority of the Comptroller.

Accordingly. the Comptroller urges passage of this legislation.

BUDGET IMPLICATIONS:

This bill has no significant fiscal impact.

EFFECTIVE DATE:

This bill would take effect immediately and be deemed effective as of April 1, 1996.


Text

STATE OF NEW YORK ________________________________________________________________________ 4034 2013-2014 Regular Sessions IN SENATE March 5, 2013 ___________
Introduced by Sen. SEWARD -- (at request of the State Comptroller) -- read twice and ordered printed, and when printed to be committed to the Committee on Finance AN ACT to amend the workers' compensation law, in relation to the pre- audit of expenditures from the state insurance fund by the state comp- troller and to repeal certain provisions of such law relating thereto THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 88 of the workers' compensation law, as amended by chapter 6 of the laws of 2007, is amended to read as follows: S 88. Administration expenses. The entire expense of administering the state insurance fund shall be paid out of such fund WHICH SHALL NOT BE CONSIDERED AN AGENCY OR A FUND OF THE STATE FOR THE PURPOSES OF SECTION FOUR OF THE STATE FINANCE LAW. The portion of such expenses applicable and chargeable to the disability benefits fund [and the medical and hospital malpractice fund] shall be determined on an equitable basis with due allowance for the division of overhead expenses. Not later than the first day of November there shall be submitted to the director of the budget for his approval an estimated budget of expenditures for the succeeding calendar year having due regard to the business interests and contract obligations of the fund. There may not be expended for the state insurance fund for purposes of administration more than the amounts specified in such budget for each item of expenditure, except as authorized by the director of the budget. THERE SHALL BE SUBMITTED TO THE DIRECTOR OF THE BUDGET QUARTERLY FINANCIAL STATEMENTS ON A CALENDAR YEAR BASIS. In no case shall the amount of ADMINISTRATIVE expenditures so authorized for an entire year [for] FROM THE workers' compensation [insurance] FUND exceed twenty-five per centum of the earned premiums for such insurance for that year. In no case shall the amount of ADMIN- ISTRATIVE expenditures authorized for the disability benefits fund for an entire year exceed twenty-five per centum of the premiums earned by
that fund FOR SUCH INSURANCE FOR THAT YEAR. [In no case shall the amount of expenditures authorized for the medical and hospital malpractice fund for an entire year exceed twenty-five per centum of the premiums earned by that fund.] If there be officers or employees of the department whose duties relate partly to the general work of the department and partly to the work of the state insurance fund, and in case there is other expense which is incurred jointly on behalf of the general work of the depart- ment and the state insurance fund, an equitable apportionment of the expense shall be made and the part thereof which is applicable to the state insurance fund shall be chargeable thereto. The expenses of the department of audit and control incurred in connection with the pre-au- dit of expenditures of the state insurance fund, as required by section one hundred eleven of the state finance law, shall be a charge against and be paid out of the moneys of the state insurance fund and there shall be included in the annual estimate submitted pursuant to this section an amount sufficient to pay such expenses for the period covered by such estimate. Notwithstanding section four of the state finance law, the state comptroller is authorized to process or approve payments related to business taxes, various workers' compensation board assess- ments and assessments related to the workers' compensation rating board directly from the fund's accounts without explicit appropriation author- ity. The commissioner of labor shall include in his annual report to the legislature a statement of the commissioners showing the expense of administering the state fund for the preceding year. All appointments to positions in the state insurance fund shall be made subject to civil service requirements. S 2. Section 88 of the workers' compensation law, as amended by chap- ter 635 of the laws of 1996, is REPEALED. S 3. This act shall take effect immediately; provided, however that section one of this act shall be deemed to have been in full force and effect on and after April 1, 1996.

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