Reserves

On Monday, the Senate and Assembly introduced a bill that would allow school districts to transfer funds from the Employee Benefits Accrued Liability Reserve (EBALR) to the general fund. According to the bill, boards would have the authority to authorize, during the 2010-2011 school year, a transfer of EBALR funds to the general fund in an amount limited to the lessor of (1) the Board determined fund excess amount or (2) the Gap Elimination Adjustment as proposed in the 2010-11 Executive Budget.  read more »

As business officials struggle to perform "budget magic" for their districts, one frequent question we get is regarding the status of efforts to allow school districts access to money in the Employee Benefit Accrued Liability Reserve (EBALR/GML 6p) that is in excess of legal liabilities for the reserve. In many cases, excesses are the result of districts using the reserve to start funding OPEB liabilities consistent with GASB 34.  read more »

Now that all school district audits mandated by the “5 Point Plan” have been completed, the Office of the State Comptroller on Tuesday issued a report summarizing its findings. Key features of the report include:

1. Details regarding how many school districts failed to sufficiently provide policies and controls OSC believe are necessary for proper financial oversight;
2. The statement that many districts have engaged in budgeting practices that have inappropriately built-up district reserves beyond demonstrable liabilities ($880 million) and therefore, have overtaxed the local community; and
3. Policy recommendations for school districts and policymakers that the Comptroller believes will improve business practices and provide “relief without sacrificing good internal controls.”

NYSASBO recommends that all school business officials read the Comptroller's report.

The policy recommendations are mixed. While recommending additional flexibility through the creation of new reserves (tax stabilization, TRS, bonded indebtedness), the Comptroller also advocates for additional bureaucratic requirements (notice of planned use of reserves and board authorization to increase funding of any reserve). Other recommendations appear to provide greater flexibility regarding operations including establishing a deputy claims auditor, allowing large districts to audit only a sample of claims, increasing the enrollment threshold requiring an internal audit function from 300 to 1000 students, and expanding the use of “back office” functions of BOCES.

The judgment that school districts have built up reserves at the expense of taxpayers is a clear challenge to the professional decisions school business officials, superintendents, and boards have made on behalf of the students and taxpayers in their respective school districts. How do you feel about the Comptroller's report? Do you challenge the Comptroller's assessment that school districts have overfunded reserves? If so, what rationale do you put forward to challenge the claim that districts are willfully shortchanging taxpayers? Please add your comments below. Your input will help shape NYSASBO's response to this report.

OSC Proposal to Mitigate Projected ERS Contribution Rate Increases  read more »

The 2008-2009 NYSASBO Policy Agenda includes the following provisions.

Reserves and Fund Balance  read more »

A.1910A - Allows a school board to liquidate a surplus in a reserve for the purpose of providing property tax relief. This is similar to the proposal included in the Governor's 2009-2010 Executive Budget proposal and was introduced in direct reaction to the Comptroller's EBALR Audit. STATUS: In Assembly Education Committee

A961 - This bill would allow school districts to create an energy reserve fund, which would allow school districts to accumulate funds to pay for the excess costs of energy from this fund.