As the Levittown Board of Education has previously advised the residents of the school district, the New York State Comptroller's Office audit of reserves held by a sample of 19 school districts throughout New York State has indicated that the Levittown School District currently has a substantial amount of funds in a reserve account for compensated absences, for which the district no longer maintains authority for doing so.
"School districts may have thought they were planning prudently for long-term costs," State Comptroller Thomas P. DiNapoli said in an Oct. 21 press release. "But they actually were stranding more than $400 million that could have been used to reduce property taxes. The districts had good but misguided intentions. We're in a fiscal crisis. Every dime counts and $407 million counts an awful lot, especially when all levels of government are trying to bring property taxes under control. This is taxpayer money that's just stuck in these accounts. It should be unstuck and used to provide property tax relief, mitigate the impact of lower state aid payments, or pay one-time expenses."
According to the state comptroller, the Levittown School District set aside an estimated $15,878,600 more than necessary in reserve funds to pay for employee benefits accrued liabilities. Once this money is placed in an employee benefits accrued liability reserve (EBALR), it legally only can be used for that purpose. The excess reserve funds are "stranded" in EBALR.
The Levittown School District stopped this practice last year.
The Levittown Board of Education has previously identified this problem, and has been attempting to return these monies to the taxpayers of the district through special legislation, which would give the district the authority to do so.
The comptroller's audit agrees with the district's desire to return these funds to its taxpayers, and recognizes that school districts are currently prohibited from transferring reserve funds to the general fund for the purpose of tax stabilization.
The comptroller's audit recommends special legislation that would allow school districts to transfer excess, obsolete, or unauthorized funds from reserves to the general fund for the purpose of tax relief. The Levittown Board of Education wholeheartedly endorses such legislation, and urges the New York State legislature and governor to take prompt action on such a bill.
The audit made the general observation that the practice of maintaining reserves may have led to higher school taxes than necessary. In Levittown, however - due to the use of reserves as revenue and the fact that maintaining reserves had for many years eliminated the need to borrow funds such as tax-anticipation-notes - the reserves have actually enabled the district to keep taxes considerably lower each year than they would otherwise have been.
The Levittown School District stated it is currently in compliance with all of the findings and recommendation of the comptroller's audit of reserves, and eagerly awaits the approval of the legislation recommended by the comptroller allowing the return of certain reserve funds to the district' taxpayers.
For the full audit, visit http://www.osc.state.ny.us/press/releases/oct08/102108.htm and see links at bottom of page.
- Compiled by Jaime L. Tomeo