BILL NUMBER: S8174A
SPONSOR: MARTINEZ
 
TITLE OF BILL:
An act to amend the insurance law, in relation to authorizing the New
York Liquidation Bureau to establish a reimbursement program for eligi-
ble local educational agencies
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to authorize the New York Liquidation Bureau
to establish a reimbursement program for local educational agencies
(LEAs) facing financial liabilities resulting from civil claims brought
under the Child Victims Act, in cases where the LEAs' liability insurers
have become insolvent. The bill aims to ensure that public schools
impacted by such claims are able to access relief through the estates of
these defunct insurers, or through alternative funding mechanisms, to
mitigate financial hardship and support victims' restitution.
 
SUMMARY OF PROVISIONS:
Section 1. States the Legislative Findings and intent.
Section 2. The Insurance law is amended by adding a new section 7438 to
authorize the Superintendent of Financial Services to create and admin-
ister a reimbursement program for school districts facing civil liabil-
ity under the Child Victims Act. Eligible districts must have held
insurance policies with insurers that are now insolvent and unable to
cover claims related to past abuse. The Superintendent may use funds
from the estates of insolvent insurers, or other funds under the Liqui-
dation Bureau's management where legally permissible, to provide
reimbursement. The section further authorizes the Superintendent to
promulgate rules and regulations necessary for the implementation and
oversight of the program.
Section 3. Establishes the enacting clause.
 
JUSTIFICATION:
This legislation supports the continued implementation of the Child
Victims Act (CVA) by providing a pathway for school districts to resolve
outstanding claims in situations where their former insurance carriers
have since entered liquidation. When the CVA lookback window was
enacted, it was designed to provide long-overdue justice for survivors
of childhood sexual abuse. However, some school districts are facing
significant challenges in meeting their obligations under the law due to
the insolvency of the insurers that covered them at the time the abuse
occurred. As a result, these districts are left without access to the
coverage they once held, even as survivors have received valid legal
judgments or entered into good faith settlements.
In these cases, the lack of available insurance has shifted the finan-
cial responsibility onto school districts that may not have the
resources to pay claims without making serious budgetary tradeoffs.
Districts have been forced to consider using reserve funds, bonding to
cover settlement costs, delaying capital projects, reducing programs, or
limiting staff hires. These choices can have a direct and lasting impact
on students, faculty, and the broader school community. While there is
technically a path to restitution, it is not readily accessible and
comes at the significant cost of weakening the core services school
districts provide today.
To address this issue, this legislation authorizes eligible school
districts to apply for funds held by the New York Liquidation Bureau in
scenarios where their insurer has been declared insolvent and that
insolvency has directly blocked the payment of a CVA judgment or settle-
ment. This measure does not create a new appropriation or entitlement.
Instead, it allows the Bureau, which already manages and distributes
assets from failed insurers, to evaluate and process applications from
impacted school districts under its existing structure and authority.
By establishing a clear process to access the appropriate liquidation
funds, this legislation helps close a gap in the CVA framework that has
left some survivors without a viable path to resolution. It also ensures
that school districts are not forced to choose between honoring legal
judgments and maintaining the educational services they provide to
current students. This approach offers a balanced and practical solution
that respects the rights of survivors while supporting the long-term
strength and stability of school communities.
 
PRIOR LEGISLATIVE HISTORY:
None.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date upon which it shall have become a law.