The New York State Financial Control Board was created by the State legislature in September 1975 pursuant to the New York State Financial Emergency Act of The City of New York (the "Act"). The Act gives the Control Board powers and responsibilities of review and oversight with respect to the financial management of the New York City government and certain related public authorities. Among other things the Act requires the City to prepare and submit a "rolling" four-year financial plan to the Control Board prior to the beginning of each City fiscal year and, to modify the plan as necessary from time to time to conform with standards set forth in the Act. Prior to July 1, 1986 all financial plans, financial plan modifications, and borrowings, together with certain contracts, were subject to the approval of the Control Board prior to implementation. However, on June 30, 1986 the Control Board determined and ordered that the control period terminate, at which time the Board's approval powers sunset.

During sunset, the Control Board must review the four-year financial plan at least quarterly, and must notify the City if a plan or modification to the financial plan does not conform to the Act's standards. In addition, the Control Board must make a determination annually whether a new control period, under which the suspended powers are reimposed, should be reinstated by the State Legislature. The Control Board reviews the following events in making the determination:

• the City fails to pay debt service on any of its obligations when due or payable;
  
• the City incurs an operating deficit of more than $100 million during a fiscal year;
  
• the City issues notes in violation of the Act;
  
• the City violates any provision of the Act which violation substantially impairs the ability to repay its notes or bonds or its ability to adopt or adhere to a balanced budget, or
  
• the State and City comptrollers cannot make the joint certification, described above, on the basis of existing facts.

This determination is usually made in July.

The Act also directs that the Control Board coordinate various of its activities with the Office of the State Deputy Comptroller ("OSDC"). The Act also directs the Control Board to coordinate with OSDC with respect to the Control Board's review and monitoring of revenues and expenditures.