Correction: Fitch Rates DASNY's $804MM Pledged Assessment Revs 'AA'.

NEW YORK -- (This is a correction of a release issued Oct. 15, 2009. It amends information in the second paragraph in reference to New York workers' compensation costs.)

Fitch Ratings assigns an 'AA' rating to $804 million Dormitory Authority of the State of New York (DASNY) pledged assessment revenue bonds, series 2009A. The rating is based on the mandatory nature of workers' compensation insurance in the state, which provides a stable base of secured revenues and very high collection rates. The rating also considers strong coverage of debt service, a tight legal structure which provides bondholders with a priority security pledge on all assessments, and a non-impairment pledge from the state. The bonds are expected to sell the week of Nov. 9, 2009. The Rating Outlook is Stable.

DASNY is issuing the bonds to settle claims related to the Special Disability Fund (SDF) in the state's workers' compensation program. The goal of the financing is to reduce the volatility and, ultimately, the cost of workers' compensation insurance coverage, which is mandatory for New York employers. For periods from the late-1980s through the middle of this decade, New York workers' compensation costs were among the highest in the nation; the 2007 Workers' Compensation Reform Act discussed below was passed to address the factors driving up these costs.

DASNY will issue approximately $804 million in bonds as the initial offering in a program currently authorized at $4.55 billion. Bond proceeds may be used to fund: a) 'lump sum' payments negotiated with claimants eligible for payment from the Special Disability Fund; 2) contracts to pay insurers who will assume liability for, as well as manage and settle claims in the Special Disability Fund; and 3) future anticipated liabilities of the Special Disability Fund.

The SDF was established in 1916 as a special fund to compensate insurers and self insurers for claims related to injuries suffered by employees in cases where the employees already suffered from a disability that made further work-related injuries more likely. The SDF funds its operations and claims paying resources by assessing private insurance carriers who underwrite workers' compensation coverage, the State Insurance Fund, and self-insured employers and groups. Workers' compensation costs have been driven up in part from the growth in claims to the SDF. The 2007 Workers' Compensation Reform Act, among other things, closed the SDF program for injuries occurring on or after July 1, 2007, although claims for injuries suffered prior to that date are being accepted through July 1, 2010.

The bonds are secured by assessments on workers' compensation insurers and self-insured employers. Assessments are billed at the greater of: (a) 150% of the prior year's operating costs (less the fund's prior year end balance) plus 100% of the current year's debt service expense; or (b) 110% of the current year's debt service. The assessment payer base is diversified among high quality private insurance carriers (43% of total 2009 assessments), the State Insurance Fund (21%); and self-insured entities, which includes political subdivisions (20%), companies which meet certain eligibility requirements (9%), and trade groups (7%).

Workers compensation is mandatory for nearly all employers in the state, with steep penalties for non compliance. Enforcement of collections is enhanced by the ability of the Workers Compensation Board to offset amounts owed by withholding payments due to insurers or employers. Therefore collection of assessments has historically been strong, over 98% since 1993. The payer mix is diverse, with New York State being the largest payer (28% of 2009 assessments) through the New York State Insurance Fund and as a self-insured employer.

There is a pledge by the state not to take any action that would impair the ability of the Workers Compensation Board to levy and collect assessments. Bondholders have a priority security pledge on revenues, the funds pass through a segregated account maintained by the New York State Dept of Taxation and Finance, and are not subject to bankruptcy risk of DASNY. Initial and expected coverage is very strong considering the historically high collection rate, but could theoretically be diluted down to 1.1 times debt service if the full authorization is issued by 2010 or if statutes are changed to increase the authorized level of debt.

Additional information is available at 'www.fitchratings.com'.

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