Valley Stream school districts’ reserve funds exceed limit


Two of Valley Stream’s four school districts overfilled their unassigned reserve funds in the past school year, according to financial statements filed with the state.

State education law permits school districts to hold as much as 4 percent of their annual budgets as unassigned or unrestricted funds, which cover un-foreseen expenses that might arise during the school year. The funds are accumulated through budgetary surpluses, as well as accrued interest or dividends, and are often rolled over from one year to the next.

Districts may have as many as 16 reserve funds, including restricted funds for debt service, pensions and a variety of unfunded mandates, according to State Department of Education guidelines.

District 13 held $11.6 million in total reserve funds at the end of the 2017-18 school year, or roughly 23 percent of the district’s $49.8 million budget. According to state documents, 6.4 percent was held in the district’s unassigned funds, or 2.4 percent more than the limit.

Gerard Antoine, the district’s assistant superintendent for business and human resources, said that the reserves were established according to Board of Education policy 6250. That policy states, “The district’s unassigned general fund balance will be maintained to provide the district with financial stability and a margin of safety to fund unanticipated contingent expenditures that may occur unexpectedly during the fiscal year.”

District 30 also overfilled its unassigned reserves in the same period. State financial documents show that last year, the district held about $16.3 million in total reserve funds, with roughly 4.7 percent in unassigned funds. However, district officials said that the district only held about $12.8 million in total reserves, with an additional $1.6 million in unassigned funds — slightly more than the 4 percent limit.

Despite its reserves, District 30 voted to raise the tax levy for the 2018-19 school year by 13.7 percent — one of the highest single-year increases in the state.

“The form is being changed to reflect the $14.7 million fund balance amount,” said Brian Phillips, assistant superintendent for business. “It will show an adjusted restricted fund balance amount of $13.1 million and $1.6 million in adjusted unrestricted fund balance.” According to Phillips, the state counted the $1.6 million adjusted unrestricted funds twice in arriving at its figure of $16.3 million.

Phillips said that large reserve funds are necessary to “hedge against future financial uncertainty,” and that they could be used to offset the tax burden on residents, “but it has to be weighed with the district’s ability to maintain the reduction over time.”

“Reserves allow the district to operate over the long term,” he said. “Additionally, if urgent needs or new mandates have to be funded immediately, reserves allow the district to respond.”

In addition to unassigned reserve funds, school districts may use budget surpluses to fund expenses such as health care and retirement benefits. District 30’s largest reserve fund last year was its tax certiorari reserve, with $1.86 million. That fund is used to compensate for shortfalls in the tax levy due to grievances; the fund balance should not “exceed the amount which might reasonably be deemed necessary to meet anticipated judgments and claims,” according to state education law. The law also states that any funds that have

not been used must be returned to the general fund.

Meanwhile, state financial documents show that the Valley Stream Central High School District and Valley Stream School District 24 complied with the state’s 4 percent law. The Central High School District had $28.9 million in total reserve funds last year, with exactly 4 percent of the district’s $113.4 million budget in its unassigned fund. District 24 had about $5.3 million in total reserves last year, exactly 4 percent of which was in its unassigned fund.

“We know it’s going to get assigned,” said Jack Mitchell, director of finance and operations.

Correction: The story was edited on Oct. 3 at 12:18 p.m. An earlier version of this story incorrectly said that District 30 increased taxes by 13.7 percent, not the tax levy. We apologize for the error.