Section 2TT. There is hereby established and set up on the books of the commonwealth a separate fund to be known as the Liability Management and Reduction Fund. The fund shall provide: (1) insurance coverage to state agencies by charging premiums to such agencies for the payment of judgments and settlements and the commonwealth's investigation and litigation costs in connection with tort claims under chapter 258; (2) services to reduce the number and size of claims against agencies including, but not limited to, risk reduction training programs and incentive payments of not more than $1,000 for effective risk reduction suggestions; and (3) such other services and activities as the comptroller shall determine are desirable to create financial and other incentives for agencies to reduce the commonwealth's tort and other monetary liability, including litigation costs. The fund shall consist of premiums charged to agencies, any amounts appropriated for the purposes of the fund and interest income from investments made by the state treasurer of amounts in the fund. Monies in the fund shall be expended by the comptroller under section 16 of chapter 7A, without further appropriation, for the purposes of the fund.

The comptroller shall submit not later than December 31 of each year to the house and senate committees on ways and means, the secretary of administration and finance and the attorney general a report of the activities of the fund. The report shall include a financial statement which accounts for the revenues, expenditures and changes in fund balance for the preceding fiscal year. The comptroller shall also submit to said committees and officials, not later than October 1 of each fiscal year, a financial plan presenting all expected and proposed revenues and other financial sources, expenditures and other financial uses, net gain or loss from operations and changes in fund balance. All such reports shall also specify the number and duties of employees of the fund, if any, the amount of any direct appropriation requested or expected and any other information relevant to the achievement of the purposes of the fund. The comptroller may at any time recommend in such reports statutory changes necessary to expand the scope of said section 16 of said chapter 7A and this section in order to cover claims other than those asserted under chapter 258.