PRESS RELEASE: New York State Takes Control of Finances in Yonkers

YONKERS, N.Y. — A state board today assumed control of Yonkers' finances and threatened defiant City Council members with criminal charges in an effort to force them to accept a court-ordered desegregation plan.

"In short, our goal is to save Yonkers from itself," said Secretary of State Gail Shaffer, head of the Yonkers Emergency Financial Control Board. The board voted 5 to 1 to impose a wage and hiring freeze and made council members who refuse to obey rules for fiscal responsibility subject to misdemeanor charges.

The four council members who voted against the desegregation plan ordered by U.S. District Judge Leonard Sand already are paying fines and face a threat of imprisonment beginning Thursday on Sand's contempt of court citation.

The U.S. 2nd District Court of Appeals today said it would rule on a city request to stay $500-a-day fines against the councilmen and bankrupting fines against Yonkers. The panel did not say when it would rule.
UPDATE: The current board, which was created by emergency statute in 1984, when Yonkers was so short of funds it risked having to shut its schools, consists of seven members. Its chairwoman is Gail S. Shaffer, New York's Secretary of State.
The board is largely an oversight body or watchdog agency that takes steps only when the city is deemed to be causing serious damage to its financial well-being, according to William Brown, a spokesman for the Department of State. But the board is also empowered to control the city's finances and could at any time stop payments by the city to prevent it from incurring further debt.

It was in exchange for state aid in 1984, which saved the Yonkers school system from closing, that the city agreed to allow the Emergency Financial Control Board to oversee its finances. Preserving the City's Assets.

It was in 1975 that Yonkers neared bankruptcy and was first placed under the state Emergency Financial Control Board - much the way New York City was during its fiscal crisis in the mid-1970's. 

The board pulled out in 1980, and for about four years Yonkers struggled to regain its financial stability. In April 1984, the city was faced with a projected $40 million deficit. The city's Board of Education, which is dependent on the city for financing, had a $12 million budget deficit and threatened to shut the school system unless the city provided the necessary funds.

To avert the closing, the city obtained a $9 million loan from the state in exchange for allowing yet another state board to oversee its fiscal affairs.

That same board is now overseeing the city's fiscal affairs. 
NOTE: More Updates Bellow 


Details:


The New York State Emergency Financial Control Board (E.F.C.B.) for the City of Yonkers was created in 1975 (Ch. 871) to oversee the financial recovery of the then nearly bankrupt city of Yonkers -- With the approval of the board, the city developed a financial plan to cope with the crises. The act of 1975 gave the E.F.C.B. the right of approval and disapproval of all contracts and loans entered into by the city. 

The members of the E.F.C.B. consisted of the State Comptroller, the Mayor and City Manager of Yonkers, the Secretary of State and three members appointed by the Governor, with the consent of the Senate. The State Comptroller was the chairman of the Board.



NEW YORK STATE FINANCIAL EMERGENCY ACT OF NINETEEN HUNDRED EIGHTY-FOUR 
                           FOR THE CITY OF YONKERS
  Section
       1. Short title
       2. Definitions
       3. Legislative declaration of financial emergency
       4. General rights and prohibitions
       5. Power   of   city  or  covered  organization  to  determine  the
            expenditure of available funds
       6. New York state emergency financial control board for the city of
            Yonkers; created
       7. Administration of the board
       8. Functions of the board
       9. Development of the financial plan
      10. Establishment and application  of  emergency  financial  control
            board fund for the city of Yonkers
      11. Authorization for wage freeze
      12. Prohibitions; penalties
      13. Indemnification
      14. Termination

    Section  1.  Short  title. This act shall be known and may be cited as
  the  "New  York  State  Financial  Emergency  Act  of  Nineteen  Hundred
  Eighty-four for the City of Yonkers".
    §  2.  Definitions. As used in this act, the following words and terms
  shall have the following meanings  unless  the  context  shall  indicate
  another or different meaning or intent.
    1.  "Available  funds" means at any date the amounts in the fund which
  are then available, as determined by the board, to  be  applied  to  the
  purposes stated in paragraph (iii) of subdivision four of section ten of
  this act after provision has been made for the application of amounts in
  the  fund  for  the  purposes  stated  in  paragraphs  (i)  and  (ii) of
  subdivision four of section ten of this act.
    2. "Board" means the governmental agency created  by  section  six  of
  this act.
    3. "City" means the city of Yonkers.
    4. "City manager" means the city manager of the city of Yonkers.
    5. "Comptroller" means the comptroller of the state of New York.
    6.  "Covered  organization"  means  any  governmental  agency,  public
  authority or public benefit corporation which receives  or  may  receive
  moneys directly, indirectly or contingently, (other than moneys received
  for the sale of goods or the rendering of services or the loan of moneys
  to  the  city)  from  the  city,  and  in  any  event  includes, without
  limitation, the board of education of the city school  district  of  the
  city of Yonkers.
    Notwithstanding  the  foregoing,  the  board, by order made on its own
  motion or on application of  a  covered  organization  may  specifically
  exempt the organization from inclusion as a covered organization after a
  finding  by  the  board that an exemption does not materially affect the
  ability of the city to adopt and  maintain  a  budget  pursuant  to  the
  provisions  of  this  act;  provided  that at the time of and during the
  period of the exemption there is supplied to the board, an annual  audit
  by  an  independent  certified  public  accounting  firm (or by a public
  accountant licensed by the state of New York to conduct such audits)  of
  the  organization's  financial  statements  performed in accordance with
  generally accepted auditing  standards  and  a  report  thereon  by  the
  auditor  which includes an opinion that the audited financial statements
  have been prepared in  accordance  with  generally  accepted  accounting


  principles  and  any other information as the auditor deems appropriate;
  provided further however, that the board  may  terminate  the  exemption
  after  a  determination  that the circumstances upon which the exemption
  was granted are no longer applicable.
    In  no  event  however,  shall the term "covered organization" mean or
  include any governmental agency which is (i) a state public authority as
  defined in section two hundred one of the civil service law, or  (ii)  a
  governmental agency, authority, commission or instrumentality created by
  compact  or agreement between the state of New York and another state or
  states, or (iii) a subsidiary corporation of an agency described in  (i)
  or (ii) hereof.
    7. "Emergency period" means the period of time from the effective date
  of  this  act  until  the  date  when  the board determines that (a) the
  operating and capital funds of the city shall have been in  balance  for
  three  fiscal years in accordance with the accounting methods prescribed
  for the city's budget by  the  state  comptroller  pursuant  to  section
  thirty-six  of  the  general  municipal law, (b) the amount of all loans
  made by the state to the city to fund the operating deficit incurred  by
  the  city  in  its  fiscal  year ending June thirtieth, nineteen hundred
  eighty-four or any fiscal year thereafter has been repaid in  full,  and
  (c)  the city has presented a financial plan that projects operating and
  capital fund balance  for  the  four  years  covered  by  such  plan  in
  accordance  with the accounting methods prescribed for the city's budget
  by the state comptroller pursuant to section thirty-six of  the  general
  municipal law.
    8.  "Financial  plan"  means  the  financial  plan of the city and the
  covered organizations to be developed pursuant to section nine  of  this
  act, as from time to time modified.
    9.  "Fund"  means  the  emergency financial control board fund for the
  city of Yonkers established pursuant to subdivision one of  section  ten
  of this act.
    10.  "Revenues"  mean  all  taxes, federal and state aid, rents, fees,
  charges, payments, all proceeds from borrowings  and  other  income  and
  receipts paid or payable to or for the account of the city or any of the
  covered  organizations,  subject  to  the  requirements  imposed  by the
  special fiscal act.
    11. "Special fiscal act" means the special local  finance  and  budget
  act  of  the  city  of  Yonkers,  as  enacted  by  chapter  four hundred
  eighty-eight of the laws of nineteen hundred seventy-six.
    12. "Mayor" means the mayor of the city of Yonkers.
    § 3. Legislative declaration of financial emergency.  The  legislature
  hereby  finds  and  declares  that a state of financial emergency exists
  within the city of Yonkers.
    § 4. General rights and prohibitions. 1.  Neither  the  city  nor  any
  covered  organization  shall borrow or expend any moneys, or in any way,
  directly or indirectly, expressly or implicitly engage its credit during
  the emergency period except in compliance with the  provisions  of  this
  act and the special fiscal act.
    2.  Nothing contained in this act shall limit the right of the city or
  any covered organization to comply with the provisions of  any  existing
  contract with or for the benefit of the holders of any bonds or notes of
  the  city  or  such  covered  organization or with the provisions of the
  special fiscal act.
    3. Nothing contained in this act shall  be  construed  to  impair  the
  right of employees to organize or to bargain collectively.
    §   5.  Power  of  city  or  covered  organization  to  determine  the
  expenditure of available funds. Nothing contained in this act  shall  be
  construed  to  limit  the power of the city or a covered organization to


  determine, from time to time, within available funds for the city or for
  such covered organization, the purposes for which expenditures are to be
  made by the city or such covered organization and the  amounts  of  such
  expenditures,  consistent with the aggregate expenditures then permitted
  under the financial plan for the city or such covered organization.
    § 6. New York state emergency financial control board for the city  of
  Yonkers;  created.  There is hereby created the New York state emergency
  financial control board for the city of Yonkers. The board  shall  be  a
  governmental  agency  and instrumentality of the state and it shall have
  such powers and functions as are set forth in this act.
    § 7. Administration of the board. 1. The membership of the board shall
  be the secretary of state, the comptroller (pursuant to his authority to
  supervise the accounts of any political subdivision of the  state),  the
  mayor  and  four  members  appointed by the governor with the advice and
  consent of the  senate.  Such  appointed  members  shall  serve  at  the
  pleasure  of  the governor. The secretary of state shall be the chairman
  of the board and  he  or  his  representative  shall  preside  over  all
  meetings  of  the  board.  The  board  shall act by majority vote of the
  entire board. The board shall maintain a record of  its  proceedings  in
  such form as it may determine, but such record shall indicate attendance
  and  all  votes  cast  by  each  member.  The  secretary  of  state  and
  comptroller shall be entitled to designate a representative  to  attend,
  in  his place, meetings of the board and to vote or otherwise act in his
  behalf. Written notice of such designation shall  be  furnished  to  the
  board  by  the  designating  member prior to any meeting attended by his
  representative. Any representative shall serve at the  pleasure  of  the
  designating  member.   No representative shall be authorized to delegate
  any of his duties or  functions  to  any  other  person.  The  temporary
  president of the senate, speaker of the assembly, minority leader of the
  senate  and  minority  leader  of the assembly shall each be entitled to
  appoint a representative to the  board,  the  county  executive  of  the
  county  of Westchester shall be entitled to appoint a county official as
  a representative to the board and the board shall be entitled to appoint
  a representative to the board to represent the employees of the city  of
  Yonkers. Each such representative shall be entitled to receive notice of
  and  to  attend  all  meetings of the board but shall not be entitled to
  vote. Each representative shall serve at the pleasure of the  appointing
  official  or  body,  shall be eligible for reappointment, and shall hold
  office until his successor has been appointed.
    2.  Notwithstanding  any  inconsistent  provisions  of  law,  general,
  special  or  local,  no  officer  or employee of the state, or political
  subdivision of the state, any governmental entity operating  any  public
  school  or  college or other public agency or instrumentality or unit of
  government which exercises governmental powers under  the  laws  of  the
  state,  shall  forfeit  his  office  or  employment  by  reason  of  his
  acceptance or appointment as a member, representative, officer, employee
  or agent of the board nor shall service as such member,  representative,
  officer,  employee  or  agent  of the board be deemed incompatible or in
  conflict with such office or employment.
    3. The members  of  the  board  appointed  by  the  governor  and  all
  representatives  designated  by members of the board shall serve without
  salary or per diem allowance but shall be entitled to  reimbursement  by
  the  city  for actual and necessary expenses incurred in the performance
  of official duties under this act, provided, however, that such  members
  and  representatives  are  not,  at the time such expenses are incurred,
  public employees otherwise entitled to such reimbursement.
    4. The board may delegate to one or more of its officers, employees or
  agents, such powers and duties as the board may deem proper, except  any


  duties  inconsistent  with  the  duties  and functions prescribed by any
  other office or position any such person may hold.
    §  8.  Functions of the board. 1. In carrying out the purposes of this
  act, the board shall perform the following functions:
    a. As set forth in section nine of  this  act,  the  board  shall  (i)
  consult  with  the city and the covered organizations in the preparation
  of the financial plan, and certify to the  city  the  revenue  estimates
  approved  therein, (ii) prescribe the form of the financial plan and the
  supporting information  required  in  connection  therewith,  and  (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.
    b.  As set forth in section ten of this act, the board shall establish
  and adopt procedures with respect to the deposit of revenues of the city
  and the covered organizations in the fund and the disbursement of moneys
  from the fund.
    c. The board shall, from time to time  and  to  the  extent  it  deems
  necessary  or desirable in order to accomplish the purposes of this act,
  (i) review the operations, management, efficiency  and  productivity  of
  such  city  operations  and  of  such  covered organizations or portions
  thereof as the board may determine, and make reports thereon; (ii) audit
  compliance with the financial plan  in  such  areas  as  the  board  may
  determine;  (iii)  recommend  to  the city 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  act;  and  (iv)  obtain
  information  on  the  financial  condition and needs of the city and the
  covered organizations. Nothing herein shall diminish the powers  of  the
  comptroller  otherwise  provided  by  law  and the board may request the
  assistance of the comptroller in the performance of the above functions.
    d. The  board  shall  (i)  receive  from  the  city  and  the  covered
  organizations  and  from  the  comptroller,  and  review, such financial
  statements  and  projections,  budgetary  data  and   information,   and
  management  reports  and  materials  as  the  board  deems  necessary or
  desirable to accomplish the purposes of this act, and (ii) inspect, copy
  and  audit  such  books  and  records  of  the  city  and  the   covered
  organizations  as  the  board deems necessary or desirable to accomplish
  the purposes of this act.
    e. All contracts entered into by the city or any covered  organization
  must  be consistent with the provisions of this act and must comply with
  the requirements of the financial plan as approved by  the  board.  With
  respect  to all contracts or other obligations to be entered into by the
  city or any covered  organization  after  May  first,  nineteen  hundred
  eighty-four, requiring the payment of funds or the incurring of costs by
  the city or any covered organization:
    (i)  Within  twenty  days  from  May  2,  1984, the city manager shall
  present to the board proposed regulations respecting the categories  and
  types  of contracts and other obligations required to be reviewed by the
  board pursuant to this subdivision. Within thirty days from May 2, 1984,
  the board shall approve or modify and approve such proposed  regulations
  or  promulgate  its  own in the event that such proposed regulations are
  not submitted to it within the twenty days as provided for herein.  Such
  regulation  may thereafter be modified by the board from time to time on
  not less than thirty days notice  to  the  city  manager  on  or  before
  December  31,  1991 and thereafter to the mayor and the city manager, or
  mayor, respectively, may from time to time propose modifications to  the
  board.  Unless  expressly  disapproved  or  modified by the board within
  thirty days from the date of submission by the city  manager  or  mayor,


  any  such proposed regulations or modifications shall be deemed approved
  by the board;
    (ii)  Prior  to entering into any contract or other obligation subject
  to review of the board under its regulations, the city  or  any  covered
  organization shall submit a copy of such contract or other obligation to
  the  board  accompanied  by  an  analysis of the projected costs of such
  contract or  other  obligation  and  a  certification  that  performance
  thereof  will be in accordance with the financial plan, all in such form
  and with such additional information as the  board  may  prescribe.  The
  board  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  board  shall,  by  order, disapprove any contract or other
  obligation  reviewed  by  it  only  after  enactment  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 city or covered organization shall not  enter  into  such
  contract or other obligation;
    (iv)  If  the board approves the terms of a reviewed contract or other
  obligation, the  city  or  covered  organization  may  enter  into  such
  contract  or  other  obligation  upon  the terms submitted to the board.
  Failure of the board to notify the city or covered  organization  within
  thirty  days (or such additional time, not exceeding thirty days, as the
  board shall have notified the  city  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 board approval
  thereof.
    f. The board shall review the terms of  each  proposed  long-term  and
  short-term  borrowing  by  the  city  and any covered organization to be
  effected during the emergency period after May first,  nineteen  hundred
  eighty-four, and no such borrowing shall be made unless it complies with
  the  provisions  of the special fiscal act and is approved by the board.
  The board shall consult and coordinate with the comptroller with respect
  to the borrowings of the city and any  covered  organization  and  shall
  receive  reports from the comptroller on his review of borrowings by the
  city. No covered organization shall be prohibited from issuing bonds  or
  notes to pay outstanding bonds or notes.
    g.  The  board  shall  receive  quarterly reports from the comptroller
  setting forth the debt service requirements on all bonds  and  notes  of
  the city and covered organizations for the following quarter.
    h.  The board shall issue, to the appropriate official of the city and
  the  covered  organization,  such  orders  as  it  deems  necessary   to
  accomplish  the  purposes  of  this  act,  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 section twelve of this act.
    i. The board shall coordinate with the comptroller with respect to the
  performance   of   its   review  and  monitoring  of  the  revenues  and
  expenditures of the city and covered organizations.
    2. In carrying out its functions under this act, including making  its
  determination  whether  to  approve  or  disapprove  a financial plan or
  financial  plan  modification  of  the  city,  the  board  shall  ensure
  compliance  by  the  city  with  the requirements imposed by the special
  fiscal act, and all the requirements  of  such  act  shall  apply  to  a
  financial  plan  of  the  city.  Nothing  contained in this act shall be
  construed to amend, repeal, be inconsistent with, less stringent or less


  restrictive than the special  fiscal  act.  If  any  inconsistencies  or
  conflicts  between this act and the special fiscal act shall result from
  the operations of the board or otherwise, the provisions of the  special
  fiscal  act  shall  control  as  provided  in subdivision (F) of section
  fourteen of the special fiscal act.
    3. a. Notwithstanding  the  provisions  or  limitations  of  any  law,
  general, special or local, including the charter of the city of Yonkers,
  an  impasse panel, arbitrator, collective bargaining board, fact finding
  or similar type of panel, body or  individual  which  is  authorized  to
  recommend  or  award  an  increase  in  wages  or fringe benefits to any
  employee of the city or  covered  organization  shall,  in  addition  to
  considering  any  standard  or  factor  required  to  be  considered  by
  applicable law, also take  into  consideration  and  accord  substantial
  weight  to  the financial ability of the city or covered organization to
  pay the cost of such increase in wages or fringe benefits.
    b. Any determination pursuant to article eight of the labor law or any
  agreement or stipulation entered into in lieu thereof which provides for
  an increase in wages or fringe benefits of any employee of the  city  or
  covered  organization  shall, in addition to considering any standard or
  factor required to be considered  by  applicable  law,  also  take  into
  consideration  and accord substantial weight to the financial ability of
  the city or covered organization to pay the cost  of  such  increase  in
  wages or fringe benefits.
    c.  Any  party  to  a proceeding before a panel, body or individual as
  described in paragraph a or b of this subdivision may commence a special
  proceeding in the appellate division, second department, supreme  court,
  state of New York, to review the determination as to the city or covered
  organization's  financial  ability  to  pay.  Such  proceeding  shall be
  commenced not later than thirty days after the final  determination  has
  been  made  by the panel, body or individual. Such proceeding shall have
  preference over all other cases in such appellate division,  other  than
  cases relating to the election law.
    d.  The court shall make a de novo review of the record solely for the
  purpose of determining whether an award  of  an  increase  in  wages  or
  fringe   benefits  was  within  the  city's  or  covered  organization's
  financial ability to pay. The court's findings as to such issue shall be
  based upon a preponderance of all the evidence set forth in the  record.
  Unless the parties stipulate otherwise, arguments or submission shall be
  had within fifteen days after commencement of the special proceeding and
  the  court shall render its decision within fifteen days thereafter. All
  questions, other than the question relating to the determination,  shall
  be  reviewed  by  the  appellate  division in the same proceeding in the
  manner provided by article seventy-five or seventy-eight  of  the  civil
  practice  law  and rules as may be appropriate, notwithstanding that the
  issue would otherwise have been cognizable in the first instance  before
  a  special  or  trial  term  of  the  supreme  court. If an appeal shall
  otherwise lie from such determination of the appellate division  to  the
  court  of  appeals,  notice  of such appeal shall be filed within thirty
  days after the entry of the final order or  judgment  of  the  appellate
  division if such appeal is of right or within ten days after entry of an
  order  granting  leave  to appeal, and such appeal shall have preference
  over all other appeals other than appeals relating to the election law.
    e. At any stage of any proceeding under paragraph a, b or c hereof  or
  any  appeal  from an order or judgment therefrom the board may intervene
  as a party on the issue of the financial ability of the city or  covered
  organization to pay the cost of an increase in wages or fringe benefits.
    f.  For  the  purposes  of  this subdivision, financial ability to pay
  shall mean the financial ability of the city or covered organization  to


  pay  the  cost  of  any  increase  in  wages  or fringe benefits without
  requiring an increase in the level of city  taxes  as  approved  in  the
  financial  plan of the city in effect at the time of the commencement of
  a proceeding under paragraph a or b hereof.
    §  9. Development of the financial plan. 1. Pursuant to the procedures
  contained in subdivision two of this section, each year the  city  shall
  develop,  and  may  from  time  to time modify, with the approval of the
  board, a four year financial plan covering  the  city  and  the  covered
  organizations.  Each such financial plan and financial plan modification
  shall conform to the requirements of subdivision three of  this  section
  and  shall  (a) provide that the operating and capital funds of the city
  will be balanced in accordance with the accounting system and procedures
  prescribed by the comptroller pursuant  to  section  thirty-six  of  the
  general  municipal  law,  and  (b)  comply  with the requirements of the
  special fiscal act.
    2. The financial plan shall be developed and approved,  and  may  from
  time  to time be modified, with the approval of the board, in accordance
  with the following procedures:
    a. Commencing with  the  city's  fiscal  year  beginning  July  first,
  nineteen hundred eighty-four, and not later than fifty days prior to the
  beginning  of  such fiscal year and each fiscal year thereafter, or such
  other date as the board may approve at the request of the city, the city
  shall prepare and submit a financial plan to the board covering the four
  year period beginning with such fiscal year. On such  dates,  the  mayor
  shall also submit to the board the city's proposed operating and capital
  budgets  for  the  ensuing  fiscal  year  and a certificate of the mayor
  stating that  such  budgets  are  consistent  with  the  financial  plan
  submitted  therewith,  that  the  budgets conform in all respects to the
  requirements of the special fiscal act, and that  operation  within  the
  budgets is feasible.
    b.  Not more than forty-five days after submission of a financial plan
  or  more  than  thirty  days  after  submission  of  a  financial   plan
  modification,  the  board  shall determine whether the financial plan or
  financial plan modification is complete and complies with the provisions
  of subdivision one of this section and shall approve or  disapprove  the
  financial  plan  or  financial  plan modification in accordance with the
  provisions of this section.
    c. If the board determines that the financial plan or  financial  plan
  modification  is  complete  and complies with the standards set forth in
  subdivision one of this section, the board shall approve  the  financial
  plan or financial plan modification. Upon making such determination, the
  board  shall  make  a  certification  to  the city setting forth revenue
  estimates approved by the board in accordance with such determination.
    d. The board shall  disapprove,  by  resolution,  the  financial  plan
  proposed by the city if, in the judgment of the board, such plan:
    (i) is incomplete;
    (ii)  fails  to  contain projections of revenues and expenditures that
  are based on reasonable  and  appropriate  assumptions  and  methods  of
  estimation;
    (iii)  fails  to  provide  that operations of the city and the covered
  organizations will be conducted  within  the  cash  resources  available
  according to the board's revenue estimates; or
    (iv)  fails  to  comply with the provisions of subdivision one of this
  section.
    e. In disapproving a financial plan  or  financial  plan  modification
  proposed   by  the  city,  the  board  may  direct  that  the  aggregate
  expenditures in  any  period  be  reduced  to  conform  to  the  revenue


  estimates  certified by the board to achieve the objectives set forth in
  subdivision one of this section.
    f.  In the event that the city shall, for any reason, fail to submit a
  financial plan, as required pursuant to paragraph a of this subdivision,
  or to adopt a financial plan approved by the board, or in the event that
  the board has not, for any reason permitted under this act,  approved  a
  financial  plan  submitted  by the city, the board, after enactment of a
  resolution so finding, shall formulate and adopt a financial plan to  be
  effective  until  the  board  approves a financial plan submitted by the
  city. All budgets and operations of the city or a  covered  organization
  shall  be  in conformance and compliance with the financial plan then in
  effect.
    g. After the initial adoption  of  the  financial  plan,  the  revenue
  estimates  certified  by  the  board  and  the  financial  plan shall be
  regularly reexamined by the board in consultation with the city and  the
  covered  organizations  and  the city shall provide a modified financial
  plan in such detail and  within  such  time  period  as  the  board  may
  require. In the event of reductions in such revenue estimates, or in the
  event  the  city  or a covered organization shall expend funds at a rate
  that would exceed the aggregate expenditure limitation for the  city  or
  covered  organization  prior  to  the expiration of the fiscal year, the
  city  shall  submit  a  financial  plan  modification  to  effect   such
  adjustments in revenue estimates and reductions in total expenditures as
  may  be  necessary  to  conform  to  such  revised  revenue estimates or
  aggregate expenditure limitations. If, within a time period specified by
  the board, the city fails to make such modifications after reductions in
  revenue estimates, or to provide a modified plan in  detail  and  within
  such  time period required by the board, the board, after enactment of a
  resolution so finding, may formulate and adopt such modifications to the
  financial  plan,  such  modifications  to  become  effective  on   their
  adoption.
    h.   The   city   may,  from  time  to  time,  submit  financial  plan
  modifications for review by the board.  The  board  shall  approve  such
  modifications  unless,  in the judgment of the board, such modifications
  would constitute grounds for disapproval of a financial plan pursuant to
  paragraph d of this subdivision.
    3. The financial plan shall be in such form  and  shall  contain  such
  information  for  each year during which the financial plan is in effect
  as the board may specify, shall include the city  and  all  the  covered
  organizations,  and  shall, in such detail as the board may from time to
  time prescribe, include statements of all estimated revenues and of  all
  expenditures  and  cash  flow  projections  of  the city and each of the
  covered organizations.
    4. The financial plan shall, except to the extent waived by the  board
  with  respect  to  any limited period, include any information which the
  board may request  to  satisfy  itself  that  (i)  projected  employment
  levels,  collective  bargaining  agreements and other action relating to
  employee costs, capital construction and such other matters as the board
  may  specify,  are  consistent  with  the  provisions  made   for   such
  obligations  in  the  financial  plan,  (ii)  the  city  and the covered
  organizations are taking whatever action is necessary  with  respect  to
  programs  mandated  by state and federal law to ensure that expenditures
  for such programs are limited to and covered by the expenditures  stated
  in  the  financial  plan,  and  (iii)  adequate reserves are provided to
  maintain  essential  programs  in   the   event   revenues   have   been
  overestimated or expenditures underestimated for any period.
    5.  For  each  financial  plan  and  financial plan modification to be
  prepared and submitted  by  the  city  to  the  board  pursuant  to  the


  provisions  of  this  section, the covered organizations shall submit to
  the city such information with respect to their projected  expenditures,
  revenues  and cash flows for each year covered by such financial plan or
  modification  as  the  city  shall  determine. Notwithstanding any other
  provision of law limiting the authority of the city with respect to  any
  covered organization, the city, in the preparation and submission of the
  financial plan and modifications thereof, shall (except for debt service
  or  for  other  expenditures  to  the  extent that such expenditures are
  required by law) have the power to determine the aggregate  expenditures
  to  be  allocated  to any covered organization in the financial plan and
  any modifications thereto.
    § 10. Establishment and application  of  emergency  financial  control
  board  fund  for  the  city of Yonkers. 1. There is hereby established a
  fund designated the emergency financial control board fund for the  city
  of  Yonkers.  Commencing  on the effective date of the initial financial
  plan approved by the board and for the duration of the emergency period,
  all revenues received or to be received  by  the  city  or  any  covered
  organization  shall,  unless  exempted  by  order of the board or to the
  extent otherwise required by the special fiscal act, be revenues of  the
  fund  and  shall  be  for  the  account  of the city and the appropriate
  covered organizations, but disbursement from the fund shall be  made  by
  the  board in accordance with the approved financial plan, except to the
  extent  otherwise  required  by  the  special  fiscal   act,   expressly
  prohibited  by  federal  law  or  where such revenues are pledged to the
  payment of any outstanding bonds, notes or other obligations of  covered
  organizations.  Notwithstanding the foregoing, the board shall authorize
  the city to make all disbursements of city revenues from the board fund,
  which disbursements shall  be  made  in  accordance  with  the  approved
  financial plan; provided, that the board may withdraw such authorization
  if  it  determines  that (a) any disbursements made or to be made by the
  city have not been or are likely  not  to  be  in  compliance  with  the
  approved  financial plan, (b) the city has violated any other provisions
  of this act or the special fiscal act, or (c) the city has  violated  an
  agreement  with  any holder or guarantor of bonds or notes issued by the
  city or a state financing agency. Commencing on the  effective  date  of
  the  initial  financial plan approved by the board, and for the duration
  of  the  emergency  period,  all  funds  and  accounts  established   or
  thereafter  established  by the city of the covered organizations shall,
  unless exempted by order of the board, thereafter be funds and  accounts
  of  the  fund  except  to  the  extent otherwise required by the special
  fiscal act, expressly  prohibited  by  federal  law  or  to  the  extent
  prohibited by covenants or agreements relating to any outstanding bonds,
  notes  or  other obligations of covered organizations. All such accounts
  of the board shall have such captions and entries  as  the  board  shall
  determine  to be necessary to credit the foregoing revenues and receipts
  to the fund. The moneys of the fund shall not be deemed to be  money  of
  the state or money under its control.
    2. The deposit of revenues into the fund and the investment or deposit
  of  moneys  therein  shall  be  made  in accordance with and pursuant to
  procedures established by the board and the special fiscal act.
    3. In order to assure compliance with the financial  plan,  the  board
  shall from time to time adopt procedures controlling the disbursement of
  moneys from the fund.
    4.  If  at  any time the board determines that the amount then held in
  the fund or the amount estimated by the board to be held in the fund  is
  or  will  be insufficient to meet the expenditures in the amounts and at
  the times required by  the  financial  plan,  the  board  shall  require
  disbursements  from  the  fund  to  be  made  in  the following order or


  priority unless otherwise required  by  law  of  the  United  States  of
  America:  (i)  the  payment  of amounts from the fund to comply with the
  provisions of  the  special  fiscal  act,  (ii)  the  payment  of  other
  liabilities  having  statutory  or  contractual  priority over remaining
  liabilities of the city and the covered organizations whose  moneys  are
  included  in  the fund, and (iii) the payment of other obligations on an
  allocated basis as specified by the city for expenditures in  accordance
  with  the financial plan provided that, in the event that the city fails
  to so specify, the board may withhold  payment  of  any  of  such  other
  obligations or may direct their payment pro rata.
    5. The board shall cause to be performed such pre-audit and post-audit
  reviews of the fund and disbursements therefrom as it may determine.
    §  11.  Authorization  for wage freeze. 1. Upon a finding by the board
  that a wage freeze is essential to the adoption or maintenance of a city
  budget that is in compliance with this act, the board,  after  enactment
  of  a  resolution  so  finding, may declare a fiscal crisis. Upon making
  such a declaration, the board shall  be  empowered  to  order  that  all
  increases  in  salary or wages of employees of the city and employees of
  covered organizations which will take effect after the date of the order
  pursuant  to  collective  bargaining  agreements  or   other   analogous
  contracts,  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, shift differentials, salary adjustments according to plan
  and  step-ups  or  increments for employees of the city and employees of
  covered organizations which will take effect after the date of the order
  pursuant  to  collective  bargaining  agreements  or   other   analogous
  contracts  requiring  such  increased payments as of any date thereafter
  are, in the same manner, suspended. 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 board  that  a  continuation  of  such  suspensions,  to  a  date
  specified  by the board, is necessary in order to achieve the objectives
  of the financial plan, such suspensions shall be continued to  the  date
  specified  by such board, which date shall in no event be later than the
  end of the  emergency  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
  board pursuant to subdivision two of this section.
    2.  This  section  shall not be applicable to employees of the city or
  employees of a covered organization covered by a  collective  bargaining
  agreement  or  an  employee  of  the  city 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 board as being an acceptable  and  appropriate
  contribution  toward alleviating the fiscal crisis of the city. 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.
    3. The board 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.
    §  12.  Prohibitions; penalties. 1. During the emergency period (i) no
  officer or employee of the city 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 city or of any of the covered
  organizations shall involve the city 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 board  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.
    2. No  officer  or  employee  of  the  city  or  any  of  the  covered
  organizations  shall  take any action in violation of any valid order of
  the board 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 for the board 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 board or its agents thereof.
    3.  In  addition  to any penalty or liability under any other law, any
  officer or employee of the city or any of the covered organizations  who
  shall violate subdivision one or two of this section 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 mayor; and any officer or employee
  of the city or any of the covered organizations who shall knowingly  and
  willfully  violate  subdivision  one  or two of this section shall, upon
  conviction, be guilty of a misdemeanor.
    4. In the case of a violation  of  subdivision  one  or  two  of  this
  section  by  an  officer  or  employee of the city or any of the covered
  organizations, the mayor or the chief executive officer of such  covered
  organization  shall  immediately report to the board all pertinent facts
  together with a statement of the action taken thereon.
    § 13. Indemnification. 1. The state shall save harmless and  indemnify
  members, officers and employees of and representatives to the board, all
  of whom shall be deemed officers and employees of the state for purposes
  of  section  seventeen  of  the  public officers law, against any claim,
  demand, suit, or judgment arising by reason of any act  or  omission  to
  act by such member, officer, employee or representative occurring in the
  discharge of his duties and within the scope of his service on behalf of
  such  board  including  any  claim,  demand,  suit  or judgment based on
  allegations  that  financial  loss  was  sustained  by  any  person   in
  connection with the acquisition, disposition or holding of securities or
  other  obligations.  In  the  event  of  any such claim, demand, suit or
  judgment, a member, officer or employee  of  or  representative  to  the
  board  shall  be  saved  harmless  and  indemnified, notwithstanding the
  limitations of subdivision  one  of  section  seventeen  of  the  public
  officers  law,  unless  such  individual  is  found  by a final judicial
  determination not to have acted, in good faith, for a purpose  which  he
  reasonably  believed  to  be in the best interest of the board or not to
  have had reasonable cause to believe that his conduct was lawful.
    2. In connection with any such claim, demand, suit, or  judgment,  any
  member,  officer  or employee of or representative to the board shall be
  entitled to representation by private counsel of his choice in any civil
  judicial proceeding whenever the attorney general determines based  upon
  his  investigation and review of the facts and circumstances of the case
  that representation by the attorney general would be inappropriate.  The


  attorney  general  shall  notify  the  individual  in  writing  of  such
  determination that the individual  is  entitled  to  be  represented  by
  private  counsel.  The  attorney  general may require, as a condition to
  payment   of   the  fees  and  expenses  of  such  representative,  that
  appropriate groups of  such  individuals  be  represented  by  the  same
  counsel.  If  the  individual  or  groups  of individuals is entitled to
  representation by private counsel under the provisions of this  section,
  the  attorney  general  shall  so certify to the comptroller. Reasonable
  attorneys fees and litigation expenses shall be paid  by  the  state  to
  such  private counsel from time to time during the pendency of the civil
  action or proceeding, subject to certification that  the  individual  is
  entitled  to  representation  under  the  terms  and  conditions of this
  section by the chairman of the board, upon the audit and warrant of  the
  comptroller.  The provisions of this subdivision shall be in addition to
  and shall not supplant any indemnification or other benefits  heretofore
  or  hereafter  conferred  upon  members,  officers,  or employees of and
  representatives to the board by section seventeen of the public officers
  law, by action of  the  board  or  otherwise.  The  provisions  of  this
  subdivision  shall  inure only to members, officers and employees of and
  representatives to the board, shall not enlarge or diminish  the  rights
  of any other party, and shall not impair, limit or modify the rights and
  obligations of any insurer under any policy of insurance.
    §  14.  Termination. Six months after the end of the emergency period,
  the existence of the board and all other  provisions  of  this  act  not
  theretofore terminated shall terminate.



UPDATE #2: Former Yonkers mayor speculates return of financial control board possible





A former Yonkers mayor who served when the city was under the watchful eye of a financial control board says withthe current budget woes the board's return is possible.

Mayor Phil Amicone's three-year budget plan relies heavily on $200 million in new state aid for education. Currently, the city has alreadybeen forced to cut programs and staff in Yonkers schools due to a budget gap.

It's those budget troubles that have former Mayor Angelo Martinelli speculating about the possible return of a financial control board. In1974 and 1984, the city was under the watchful eye of a control board, but that all changed in 1998 when former mayor John Spencer took over.

But state Senator Nick Spano (R-Yonkers) says talk of a control board is premature. He says he would not be in favor of a control board. Assemblyman Mike Spano (R-Yonkers) agrees with his brother but says looking at the budget numbers for Yonkers, a control board is not out of the realm of possibilities.


UPDATE #3 - PRESS RELEASE: Yonkers Takes Albany’s Control Board to Court


YONKERS, NY – July 29, 2014 — The special counsel hired earlier this year by the Yonkers City Council has filed a lawsuit challenging the Constitutionality of what local lawmakers say was a process to institute a virtual control board of city finances while providing little to no financial assistance. This new budget review process was passed in the 2014 New York State Budget in a section referred to as the Deficit Act.

“As we noted earlier this year, Albany tried to give us a credit-card to borrow our way out of a deficit that was created in large part due to State under-funding, but attached strings that put the State Comptrollerand Education Commissioner in charge of the City budget,” Council President Liam J. McLaughlin said. “The Deficit Act is blatantly unconstitutional that was passed without the requisite home rule request from the City, and we expect it will be overturned by this lawsuit.”

The Deficit Financing Act contained a stand-alone provision which States that over the next ten years, the State Comptroller and Education Commissioner shall make recommendations to the City budget which the City Council must then implement. This could mean that Albany can mandate the City to adopt or abolish certain programs, or even raise taxes.

“The same Albany bureaucrats who are responsible for the error that created this mess were given even more power and control over the City budget at the expense of the elected City Council members whose job it is to craft the budget,” Majority Leader John Larkin said. “We cannot allow this to go unchallenged.”

The lawsuit says that in order to legally adopt the Deficit Act, Albany lawmakers should have followed the provision of the State Constitution that requires what is known as a “home rule request.” This is in essence a provision requiring a vote of by a local government granting permission for Albany to act before State lawmakers can take action that is not of statewide concern that affects a local government’s affairs and property.

“Albany has put into place a new system where the State reviews, analyzes and enforces recommendations that must be incorporated into the final approved budget by the Council, and this is not just simple oversight by the Comptroller or the Commissioner of Education,” McLaughlin said. “It’s one thing when the comptroller makes recommendations; it’s a very different thing when people tell us that we have to do something while not providing the funds to support those programs. Mandating programs to the city of Yonkers is not the way to go.”

The lawsuit was filed in State Supreme Court in White Plains on July 16th, 2014