Executive Budget includes raid $1.75 billion on NYSIF reserves
January 25, 2013
Hidden on page 241 of the 286 page 2013-14 New York State Executive Budget Public Protection and General Government Article VII bill is a proposal that would transfer $1.75 billion out of the New York State Insurance Fund's reserves into state coffers and require NYSIF policyholders to start paying assessments to the State Workers' Compensation Board.
According to the proposal, Gov. Andrew Cuomo proposes to transfer money that NYSIF has charged through its rates to pay for second-injury claims and reopened claims for general state purposes. According to the bill, on April 1 $250 million would be transferred from NYSIF reserves to the state general fund and $500 million to the Transformative Capital Fund, which pays for construction projects. In 2014 NYSIF would again be required to transfer an additional $500 million to the state general fund, followed by $250 million in 2015 and $250 million in 2016. If any money is left in NYSIF's assessment reserves after that point, that money, too, would be transferred to the state general fund.
In related news, Cuomo’s budget also proposes to combine all five of New York State Workers' Compensation Board's assessments on employers into a single assessment, close the Reopened Case Fund and repeal a statute that requires insurers to make contributions to the Aggregate Trust Fund to cover future indemnity benefits when a claimant receives a permanent disability rating. The governor claims his proposal will save New York employers $900 million. NYSIF policyholders would also be included in the assessments now levied by the State Workers' Compensation Fund to pay for second injuries and reopened claims. Although the Special Disability Fund was closed to new claims in 2011, it remains in existence as existing claims are paid. The legislation would close the Reopened Claims Fund on Jan. 1, 2014.
The governor's plan would also allow the carrier to invest up to 15 percent of its surplus in holdings, such as foreign securities, that are not now allowed under the state's insurance code. If approved by the Legislature, the proposed transfer of funds from NYSIF would be the most vast of several raids on surpluses held by state funds in the past several years. The budget bill language starts on page 241 of this bill.