What's happening
This bill allows certain low-wealth school districts in New York to establish tax cap reserve funds and use them without voter approval.
Why it matters
Gives financially disadvantaged (low combined wealth ratio) school districts a new tool to manage budget pressures. allowing them to set aside money in a “tax cap reserve fund” to help smooth out future expenses that could otherwise force them to exceed state-imposed tax levy limits.
Enables these districts to respond more flexibly to financial emergencies or unexpected costs. by letting them use reserve funds without the delay or uncertainty of seeking voter approval, which can be a barrier in low-wealth districts.
Includes safeguards to prevent abuse. , such as capping the reserve at an amount “reasonably needed” for anticipated increases and requiring that unneeded funds be returned to the general fund within four years, promoting fiscal responsibility while providing flexibility.
May help maintain educational services and avoid sudden tax increases or program cuts. in districts with limited tax bases, potentially reducing volatility for students, families, and staff in economically challenged communities.
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Who cares
School districts with combined wealth ratios of 0.35 or less
They could establish reserves to cover future expenditures that would otherwise cause them to exceed their tax levy limits.
School boards in eligible districts
They could establish and spend from these reserves without voter approval, but balances could not exceed reasonably anticipated needs.
Voters in eligible school districts
They would not have approval authority over the creation of these reserves or spending from them.
School district budget officials
They would need to return deposits not reasonably needed for tax-cap compliance to the general fund by the first day of the fourth fiscal year following deposit.
Headline styles
Let Poor Districts Save
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to education
- Referred to education
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4837
2019-2020 Regular Sessions
IN SENATE
March 27, 2019
Introduced by Sen. SEWARD -- read twice and ordered printed, and when printed to be committed to the Committee on Education
AN ACT to amend the education law, in relation to authorizing school districts with low combined wealth ratios to establish tax cap reserve funds
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 3651 of the education law is amended by adding two new subdivisions 1-c and 3-b to read as follows:
1-c. Notwithstanding the provisions of subdivision one of this section, any school district having a combined wealth ratio, as defined in paragraph c of subdivision three of section thirty-six hundred two of this title, which is thirty-five one-hundredths or less, may establish a reserve fund for the payment of school district expenditures for any school year to the extent the expenditure of monies therefor would cause such school district to exceed its tax levy limit pursuant to section two thousand twenty-three-a of this chapter, without approval by the qualified voters of the district; provided, however, that the total of the monies held in such reserve fund shall not exceed that amount which might reasonably be deemed necessary to meet anticipated increased expenditures by the school district in future school years. Any monies deposited to such reserve fund which will not reasonably be required to be expended for the purpose of complying with the district's tax levy limit shall be returned to the general fund on or before the first day of the fourth fiscal year following the deposit of such monies to said reserve fund.
3-b. Notwithstanding the provisions of subdivision three of this section, any school district which establishes a reserve fund in accordance with subdivision one-c of this section may make expenditures from such fund for the purposes specified in such subdivision without authorization of the voters.
§ 2. This act shall take effect immediately.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03740-01-9
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the education law, in relation to authorizing school districts with low combined wealth ratios to estab- lish tax cap reserve funds
Purpose
To allow school districts with a low combined wealth ratio to establish reserve funds for the payment of school district expenditures.
Summary of provisions
Section 1 amends Section 3651 of the Education Law by adding two new subdivisions 1-c and 3-b.
Existing law
Under the current law, no specific provisions allow districts with low combined wealth ratios to establish a reserve fund for the payment of school district expenditures.
Justification
Many small, rural school districts face financial hardships. They raise limited new revenue when raising the tax levy to the two-percent cap, while districts with higher combined wealth ratios (CWRs) may see a significant increase in revenue through a similar two-percent levy increase. Many of these low wealth districts rely heavily on state aid to make up for the limitations of their local tax levies.
The bill will help ensure academic program stability by allowing a poor school district with a low CWR to establish a reserve fund for the payment of school district expenditures for any school year, to the extent that such expenditures would cause the school district to exceed its tax levy limit. Schools will be able to use the reserve fund to mitigate program cuts that could ensue if the tax levy is not able to meet budget needs.
Reserve funds are necessary for a variety of purposes, such as to protect against difficult, changing financial circumstance. Enabling school districts to establish tax cap stabilization reserve funds would help them meet anticipated increased expenditures in future years while also ensuring compliance with the tax cap.
Legislative history
2017, 2018: S.826 - Referred to Education 2015, 2016: S.5318 - Referred to Education
Fiscal implications
None.
Effective date
Immediate.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.