BILL NUMBER: S7524
SPONSOR: MARTINEZ
 
TITLE OF BILL:
An act to amend the local finance law, in relation to authorizing school
districts to borrow against certain reserve funds; and to amend the
general municipal law, in relation to making a technical correction
thereto
 
PURPOSE:
The purpose of this bill is to allow a school district to borrow money
from certain reserve funds including the workers compensation reserve,
unemployment insurance reserve, repair reserve, insurance reserve fund,
property loss reserve, employee benefits and accrued liabilities
reserve, and reserve for tax reduction.
 
SUMMARY OF PROVISIONS:
Section 1. amends the local finance law by adding a new section 25.11
Section 2. amends section 6-j of the general municipal law to update the
language from workmen's to workers'.
Section 3. is the enacting clause
 
JUSTIFICATION:
School districts may need funding for various reasons such as reno-
vations or addressing a budget shortfall. When school districts issue a
tax anticipation note to receive that funding, it typically involves
repayment with interest which is a factor school districts must account
for in the amount they choose to borrow. The burden of interest payments
can divert funds away from other school priorities and create a finan-
cial burden on the school.
This bill allows school districts to avoid relying on tax anticipation
notes and revenue anticipation notes, and it will temporarily bridge the
cash flow gap between the need for funds and the arrival of expected
revenues. The bill provides limitations on the amount of money a school
district can borrow from a reserve fund as well as requirements for
repayment of borrowed funds. This bill eliminates the problems involving
interest payments with anticipation notes and creates a more efficient
way to financially support school districts.
 
FISCAL IMPLICATIONS:
None to the State.
 
EFFECTIVE DATE:
This act shall take effect the first of July next succeeding the date on
which it shall have become a law.

Statutes affected:
S7524: 6-j general municipal law