What's happening
This bill allows low-wealth school districts in New York to create tax cap reserve funds and spend from them without voter approval.
Why it matters
Gives low-wealth school districts more flexibility. to manage their budgets by allowing them to set aside funds for years when they might exceed the tax levy cap, potentially helping them cope with unexpected expenses or fluctuating state aid.
Removes the requirement for voter approval to spend from these reserves. , which could help low-wealth districts act more quickly and efficiently in response to urgent needs, but may also reduce direct community oversight of certain financial decisions.
Imposes limits and accountability measures. by capping the size of these reserve funds to “reasonably necessary” amounts and requiring unused funds to be returned to the general fund within four years, aiming to prevent stockpiling or misuse of funds.
Targets districts with the lowest combined wealth ratios. , focusing the benefits on communities with the fewest local financial resources, and potentially helping to level the playing field with wealthier districts that are less constrained by tax caps.
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Who cares
School districts with combined wealth ratios of 0.35 or less
The bill would let them establish reserves to cover future expenditures that would otherwise cause them to exceed their tax levy limits.
School boards and district budget officials
Eligible districts could create 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 establishing these reserves or spending money from them.
School district taxpayers
Deposits not reasonably needed for tax-cap compliance would have to return to the general fund by the first day of the fourth fiscal year following deposit.
Headline styles
Let Schools Save for Tax Cap
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
299
2025-2026 Regular Sessions
IN SENATE (Prefiled)
January 8, 2025
Introduced by Sens. OBERACKER, GALLIVAN -- 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.
LBD01132-01-5
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 establish 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 circumstances. 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
2022-2023 - S.1169
2021 - 2022: S.5366 - Referred to Education
2019 - 2020: S.4837 - Referred to Education
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.