First published in print: Sunday, October 26, 2008
Homeowners wondering whether their school property taxes really need to be so high have finally gotten an answer: Apparently not.
It turns out districts have squirreled away an estimated $407 million. And not legally, according to a report from state Comptroller Thomas DiNapoli.
The news must surely have state lawmakers and critics of New York's onerous school taxes salivating. And who could blame them, with the state facing a budget gap of $2 billion right now and $8 billion next year, and New York boasting the highest local property taxes in the nation?
How nice it would be to, say, shave $400 million off the state's school aid bill. Or cut taxes or issue rebates to homeowners. Or pay off some local debt, which would cut annual debt payments and in turn reduce taxes long term.
All good ideas. But there are a few big ifs: if the money really exists, and if it really is a surplus. In fact, Mr. DiNapoli's audit covered only 19 of the state's 698 districts. So the $407 million is just an estimate. His audit found that the districts have been putting extra money into a fund reserved for future payments of accrued leave, which employees can cash out when they retire or resign.
The districts used the fund for other future costs, namely, health and insurance benefits that they'll soon have to pay a rapidly growing number of baby boom retirees.
The trouble is, that's not what the reserve accounts legally are for.
Districts could keep the extra money in an unreserved fund balance, but those accounts are limited to 4 percent of school budgets. It might also be worth noting that citizens can easily find the fund balance in their budgets. These benefit accounts are tucked away in audits, and in reports to the state.
The one good thing here for certain is that the money is stuck where it is for now. By law, districts can't withdraw the money for anything except accrued leave payments. State legislation would be needed to free it up. Which gives everyone time to take a deep breath and weigh this issue carefully. Mr. DiNapoli's audit didn't determine just how much districts will have to pay in future years for those health and insurance benefits.
Is the extra money they improperly stashed away too little, too much, or just enough to pay those bills? That's important to know before spending a dime of it. One has only to look at the uncertainly over how this nation will fund Social Security in the future to appreciate the need to plan wisely. This money could save taxpayers from a big hit.
That said, if there's extra money in this big kitty, state lawmakers should keep their hands off of it. It should go back to the local taxpayers who paid it, in whatever way they and their local school boards decide.
The Issue:
School districts improperly hoarded an estimated $407 million.
The Stakes:
Rushing to spend it now may not be the wisest move.
The tax payers will never see a dime of that money as NYS will grab onto it to pay their budget shortfall.
Exactly! Money that the taxpayer paid, thinking it was going to their local school, will be sucked into the state budget to cover their mis-management of our already tax money.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
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