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Recommendation: Watch Core Thesis: Maintain a Watch posture on the State of New York Series 2025A Tax-Exempt Bonds, Series 2025B Taxable Bonds, and Series 2025C Tax-Exempt Refunding Bonds. The bonds are classified as General Obligation, which is supportive from a security-pledge perspective, and the latest reported fiscal 2025 fund balance and unrestricted reserves are each $60.0 billion. However, the latest annual financial trend row shows a material adjusted recurring deficit of $29.438 billion, with fiscal 2025 total revenue / recurring revenue of $68.408 billion versus total expenses of $97.846 billion. The rule-based recommendation is Watch, with a total score of 64, and analyst review is required due to unresolved red flags around adjusted recurring deficits, possible temporary funding used for operating support, and a high-risk temporary funding reference requiring review. Why This Bond May Be Attractive: - Bonds are classified as General Obligation bonds. - Latest reported fiscal 2025 fund balance is $60.0 billion. - Latest reported fiscal 2025 unrestricted reserves are $60.0 billion. - Fund balance and unrestricted reserves increased from $50.381 billion in fiscal 2024 to $60.0 billion in fiscal 2025. - Temporary funding is reported as $0 in fiscal 2023, fiscal 2024, and fiscal 2025 annual trend rows. - Latest temporary funding as a percentage of revenue is 0.0%. - Rule-based temporary funding dependency is classified as Low. - Temporary Funding Dependency score component is 20. - Economic Resilience score component is 14. - Debt Burden / Coverage score component is 15. - Reported fiscal 2025 surplus and adjusted fiscal 2025 surplus are both negative $29.438 billion, indicating no quantified adjustment for temporary funding in the latest annual trend row. Why This Bond Requires Caution: - Latest-year adjusted recurring results show a deficit of $29.438 billion. - Fiscal 2025 total expenses of $97.846 billion materially exceed total revenue / recurring revenue of $68.408 billion. - Fiscal 2024 also shows expenses exceeding revenue, with total revenue / recurring revenue of $93.855 billion versus total expenses of $115.820 billion. - Fiscal 2023 row shows total revenue / recurring revenue of $10.320 billion versus total expenses of $92.800 billion, and the row notes that it uses the cash/budgetary basis and may not perfectly match the 2024 and 2025 rows. - All three annual financial trend rows are not analyst-approved. - Debt service is reported as $0 in all three annual trend rows, limiting coverage analysis from the provided data. - Rule-based red flags include: - “Latest-year adjusted recurring results show a deficit.” - “Possible temporary funding used for operating support.” - “High-risk temporary funding reference requires analyst review.” - Governance / Disclosure Quality score component is 8. - Bond Structure Protections score component is 5. - Multiple temporary/artificial funding findings are not analyst-approved. - Findings include reimbursement funding, capital-only funding, operating support, temporary funding, and unclear items requiring analyst review. - One high-risk reimbursement funding finding references General Debt Service funds, proceeds of State bonds and notes, reimbursements from the Public Authorities Fund, and use of a cash reserve for debt service and related expenses. - Review status is Preliminary and workflow stage is Draft. - CUSIP is not provided. Temporary Funding / Artificial Support Analysis: The annual financial trend rows do not show quantified temporary funding dependency. Temporary funding is reported as $0 in fiscal 2023, fiscal 2024, and fiscal 2025, and the latest temporary funding percentage of revenue is 0.0%. On the annual trend data alone, temporary funds do not appear to numerically inflate the latest reported financial result, because reported fiscal 2025 surplus and adjusted fiscal 2025 surplus are both negative $29.438 billion. However, the findings create unresolved qualitative risk: - Reimbursement Funding: Several findings reference reimbursements, including miscellaneous receipts exceeding estimates due partly to reimbursements, FEMA reimbursements for previously incurred pandemic-related expenses, Medicaid federal share-related reimbursements, and reimbursements from public authorities, the Department of Health Income Fund, or the federal government. Risk levels range from Low to High. The high-risk finding requires particular review because it references General Debt Service funds, State bond and note proceeds, reimbursements from the Public Authorities Fund, and a cash reserve for debt service and related expenses. - Capital-Only Funding: Some American Rescue Plan / Rescue Plan findings from the January 2025 cash-basis document are classified as Capital-Only Funding with Low risk and High confidence. - Operating Support: Several findings are classified as Operating Support, including unrestricted grants and other revenues used to pay the remaining “public benefit” portion of governmental activities. The fiscal 2025 finding references $122.6 billion in taxes and $27.5 billion in unrestricted grants and other revenues, including investment earnings. Fiscal 2024 findings reference $110.5 billion in taxes and $24.6 billion in unrestricted grants and other revenues. Fiscal 2023 findings reference $117.5 billion in taxes and $21.2 billion in unrestricted grants and other revenues. A fiscal 2023 COVID-related finding is also classified as Operating Support and references lower federal grants received by the State in the Unemployment Insurance Benefit Fund for claims related to the COVID-19 pandemic. - Temporary Funding: Fiscal 2023 findings tied to ARPA / American Rescue Plan / Rescue Plan state that federal grant revenue decreased due to a decline in ARPA funding to the General Fund for use in operations. These findings are classified as Temporary Funding with Medium risk and High confidence. - Unclear / Analyst Review Required: Multiple findings involving federal grants, stabilization funds, COVID-related Debt Reform Act suspension references, and cash-basis account detail are classified as unclear and require analyst review. Reported vs. Adjusted Credit View: In fiscal 2025, reported revenue equals recurring revenue at $68.408 billion, and reported surplus equals adjusted surplus at negative $29.438 billion. Because temporary funding is recorded as $0 in the latest annual trend row, removing temporary funding does not change the latest reported result. The adjusted view remains materially negative, driven by total expenses of $97.846 billion versus total revenue / recurring revenue of $68.408 billion. The key issue is therefore not a quantified temporary-funding adjustment in the annual trend rows. The key issue is whether the unapproved findings should change the interpretation of recurring operations, reimbursements, federal grant activity, COVID-related items, stabilization funds, reserves, or debt-service-related cash reserve mechanisms. Key Follow-Up Before Final Approval: - Confirm whether the fiscal 2023, fiscal 2024, and fiscal 2025 annual financial trend rows are complete and analyst-approved. - Reconcile the fiscal 2025 adjusted recurring deficit of $29.438 billion with management’s budgetary and cash-basis presentations. - Confirm the source, availability, and comparability of the $60.0 billion fiscal 2025 fund balance and unrestricted reserves. - Determine whether the reported reserves are available for recurring operations or subject to restrictions not captured in the trend rows. - Review the fiscal 2023 row methodology, given the note that it uses the cash/budgetary basis and may not perfectly match 2024 and 2025 rows. - Validate why debt service is reported as $0 in all three annual trend rows. - Obtain or confirm debt service and coverage metrics. - Review and approve or revise all temporary/artificial funding findings. - Determine which reimbursement findings are recurring, restricted, pass-through, timing-related, capital-related, or operating-related. - Resolve the high-risk reimbursement finding involving General Debt Service funds, State bond and note proceeds, Public Authorities Fund reimbursements, a cash reserve, and debt service-related expenses. - Review Operating Support findings tied to unrestricted grants and other revenues. - Determine whether ARPA / American Rescue Plan findings represent nonrecurring operating support, capital-only funding, timing items, or another classification. - Review federal grant findings classified as unclear and determine whether they are recurring, restricted, pass-through, or one-time. - Clarify COVID-related findings, including Debt Reform Act suspension references and unemployment insurance-related federal grant activity. - Review stabilization fund references and determine whether they affect available liquidity or recurring budget support. - Confirm final bond structure details and any security-specific protections not included in the current dataset. - Confirm CUSIP