BILL NUMBER: S9107A
SPONSOR: MAYER
 
TITLE OF BILL:
An act to amend the education law, in relation to reserved funds for
special educational services for certain children with disabilities
 
PURPOSE:
To ensure interest earned on reserve funds of special act school
districts is not treated as offsetting revenue for purposes of determin-
ing their tuition rate.
 
SUMMARY OF PROVISIONS:
Section one amends subparagraph (ii) of paragraph (k) of subdivision 4
of section 4405 of the education law to ensure that interest earned on
funds held by special acts in reserve, as allowed by the statute, are
not counted against future disbursements from the State.
Section two provides for the effective date.
 
JUSTIFICATION:
Chapter 56 of the laws of 2021 authorized special act school districts
to establish reserve funds, correcting decades of differential treatment
between special act school districts and traditional school districts.
However, special act school districts have been docked for interest
earned on those carrying reserve funds when the state calculates future
aid disbursements. The state has treated this interest as offsetting
revenue for purposes of calculating their tuition rate for the following
year.
Special act school districts do not have a dedicated tax base. They are
funded entirely through the state via a tuition methodology. Reserve
funds are a critical tool to allow for unexpected adjustments and budg-
etary surprises. This legislation would correct this error, allowing
districts to keep a modest percentage in reserve year to year and earn
interest without jeopardizing their tuition rate.
 
LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
None to the State.
 
EFFECTIVE DATE:
Immediately.

Statutes affected:
S9107: 4405 education law, 4405(4) education law
S9107A: 4405 education law, 4405(4) education law