More than $400 million of local taxpayer money is sitting unused and inaccessible in school districts’ reserve accounts across the state, according to an audit released today by state Comptroller Thomas P. DiNapoli.
School districts statewide set aside about $407 million more than necessary to pay for leave time accruals for departing school district employees.
“School districts may have thought they were planning prudently for long-term costs,” DiNapoli said. “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.''
He continued: ``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.”
DiNapoli noted that legislation is needed to allow school districts to use the excess EBALR funds to potentially lower property taxes or to avoid expensive borrowing by paying for one-time expenses.
An analysis of school district data that is reported annually to the Comptroller’s office found that 251 school districts cumulatively set aside an estimated $407 million 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.
Under General Municipal Law, EBALR funds can only be used for employees’ accumulated leave benefits that are paid directly to employees when they no longer work for the school district and administrative costs associated with these payments. School districts cannot use EBALR funds to pay for FICA, Medicare taxes or other post-employment benefits, such as health insurance or life insurance.
DiNapoli’s analysis projected the cumulative EBALR liability for the 251 school districts statewide at approximately $199 million. The 251 districts set aside $605.8 million in EBALR funds, which is $406.8 million, or 204 percent, more than necessary.
DiNapoli’s audit also found the 19 audited school districts increased their EBALR funds by $100 million from June 2003 to June 2007, while they raised taxes by about $243 million in the same period. In addition, auditors noted that five school districts reported EBALR balances that were $10 million more than their reported liabilities.
The audit found the reasons school districts set aside excess funds in EBALRs varied, including they:
did not properly calculate how much money is needed to pay staff for compensated leave benefits;
transferred surplus funds at year-end into the EBALR fund; and
did not use EBALR funds to pay for the leave benefits paid out.
DiNapoli recommends that district officials determine how the surplus EBALR funds could be used more productively to benefit taxpayers and pay compensated leave benefits to employees from the district’s EBALR and not from operating funds. The audit also noted legislation would be needed to allow school districts to use the funds for other post-employee benefits, as recommended by the State Comptroller’s office in the past.
Listed below are several area school districts and the amount they have stranded in EBALR accounts.
Greene $1,444,135
Norwich 1,828,828
Andes 710
Downsville 566,176
Franklin 259,822
Hancock 762,305
Margaretville 177,397
Roxbury 988,544
Sidney 1,357,332
S.K. 163,500
Stamford 127,978
CV-S 415,424
Cooperstown 252,098
Edmeston 375,740
G-MU 1,754,428
Morris 390,259
Schenevus 172,130
Worcester 435,381
C-R 414,672
G-C 231,051
inactive
October 21, 2008
Millions locked in school accounts
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Motorist rolls truck, charged with drunken driving
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3 area lawyers say Kagan likely to be confirmed
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3 area lawyers say Kagan likely to be confirmed
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Kagan, the nations solicitor general and a former dean of Harvard Law School, is President Barack Obamas choice to succeed retiring Justice John Paul Stevens. -
Outdoor biking program starts in city
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The group meets at the Brenner Recreational Center near Hodges Pond in Neahwa Park at 5 p.m. -
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Motorist rolls truck, charged with drunken driving
