October 22, 2008
Schools overfund employee benefit fund
Instead of reducing property taxes, school districts stockpiled an extra $407 million in a restricted employee benefit fund, according to the state comptroller.
"We're in a fiscal crisis," says Comptroller Thomas DiNapoli. "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."
The Employee Benefit Accrued Liability Reserve (EBALR) legally can be used only to pay employees for unused sick and vacation days and other cumulative benefits paid when employees retire or resign. It cannot be used for retiree health insurance, the audit said.
The audit found that 251 school districts had $407 million more than they need in their EBALR accounts. For example, Levittown increased its tax levy by $24 million, or 30 percent, during a period it had $15.9 million in excess funds in its EBALR account.
The NYS School Board Association disputes the audit's contention that the funds cannot be transferred to other reserve funds.
Of significant concern is that the Comptroller indicates that these funds cannot be removed from these accounts to pay operating expenses, return to the taxpayers, or pay down debt without legislative action. Under existing law, districts may transfer funds to other reserves by board action.
Our organizations will work with the Comptroller to pursue legislation to permit districts to use excess EBALR funds for other purposes.
(Related stories: here, here, here and here.)
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