BILL NUMBER: S299
SPONSOR: OBERACKER
 
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.

Statutes affected:
S299: 3651 education law