Provides that school aid for prior years may be paid from funds for the general support for schools after deduction of excess payments that have been made

Section 2: Directs the State Education Department to make payment to the Fredonia central school district pursuant to subparagraph 1 of paragraph c of subdivision 5 of section 3604 of the education law in the 2016-17 school year.

Section 3: Sets forth the effective date.

Justification

In an effort to ease burdens on school districts within the state, Section 31 of Chapter 57 of the Laws of 2012 made school districts that filed late final cost reports eligible for a restoration of aid, net a penalty reflecting the amount of aid that would have been paid during the years the final cost report was late. The restoration of this aid for each eligible claim is to be paid out in the order that it was approved by the Commissioner of Education. However, timetables for how and when this aid will be reimbursed has not yet been developed.

Certain school districts, subsequent to an audit by the State Education Department, may be determined to have projects from several years prior that are deemed, in part, to not be aidable, requiring the repayment of aid that had been disbursed. For many school districts, particularly those in rural and/or economically challenged areas, this represents a significant burden since they may not have the reserves or tax levy capacity to meet the obligation.

Allowing these school districts to pay this aid takeback out of funds owed them by SED by essentially crediting to them from what is owed as a result of reimbursement as per Chapter 57 of the Laws of 2012, would provide significant relief and fiscal stability to tax payers in these districts.

The Fredonia Central School District, located in Chautauqua County, is one example of this issue. The District is eligible for an aid restoration in the amount of $478,119. However, due to the undetermined timeline for this restoration, the school district has not yet been informed on the manner and timing of the reimbursement.

In February 2016, the District was audited by SED for a $33 million Main Street Capital Project from 1999. SED auditors determined that 1 percent of the original scope of this project was deemed to be not aidable by the state, and notified the District that the state is owed back $395,485 immediately for the state aid overpayment on this project.

The immediate takeback of this aid is confounding because the school is owed more from SED for the other project than it is being required to pay back, and yet, they have been told, incredulously, that they may not get the funds SED owes them for upwards of 15 years.

This bill would allow school districts to be credited for aid takebacks out of an aid reimbursement they are owed by the State, alleviating a significant, undue burden on school districts as well as local taxpayers. School Districts and taxpayers in New York State deserve certainty with their finances.

For Fredonia, this would result in a net of $82,634 being owed to the District, rather than requiring the district to pay the full amount of the takeback while not having any timetable for disbursement of its aid restoration.

This bill also requires SED to make payment to the Fredonia Central School District of the aid restoration owed to the District during the 2016-17 aid year.

Legislative history

New Bill.

Fiscal implications

None.

Effective date

This act shall take effect immediately.