Ed Management Services

Debt Limit

Debt Limit for NYS School Districts

Article 8, Section 4, Paragraph (h) of the State Constitution and by Local Finance Law section 104.00(c) allow any school district in a city, for education purposes, to increase the indebtedness of the school district under the provisions of the State Constitution and the Local Finance Law. The State Constitution requires that any increase in the constitutional limit on local indebtedness for a school district wholly or partly within a city of less than 125,000 inhabitants receive: (1) the approving vote of 60 percent or more of the duly qualified voters; (2) the consent of the Regents; and (3) the consent of the State Comptroller.
School districts in New York State have debt limit restrictions. The restrictions vary depending on the type of district. For common, central, union free, and small city school districts (districts whose territory lies partially or wholly within the limits of a city having a population of less than 125,000 inhabitants), the process to exceed the debt limit includes seeking consent of the Board of Regents.
Almost exclusively, it is applications from small city school districts that come before the Board of Regents. There are two (2) significant differences with the restrictions for a small city school district. First, a small city’s debt limit is 5% of the average full value of the last five years’ tax rolls as opposed to 10% of the full value of the most recent tax roll for a common, central or union free school district. Secondly, and perhaps more significantly, a small city school district may not deduct estimated state aid on the projects to be bonded when computing the limit whereas the others may.
Specific rules apply for city school districts* who request to exceed their debt limit. After completing their initial steps for approval, a city school district making this request must submit an application for review to the New York State Education Department Office of Educational Management Services and receive approval from the State Comptroller, as well as the Board of Regents. The Office of Educational Management Services will review the application and confirm that specific protocol and requirements have been met by the city school district. The Board of Regents is required to give consent for such petitions prior to the petition being forwarded to the State Comptroller for final consideration.

*In certain circumstances, there are Central School Districts who also qualify for the request to exceed their debt limit.

Protocol for Review of a Request to Exceed Constitutional Debt Limit

• Confirm that the wording of propositions and resolutions match with the newspaper. The advertisement should include dates, reason, and cite debt limit extension.
• Confirm that the wording referencing the exceeding of the constitutional debt limit and that the proposition was ultimately approved by at least 60% of those who voted.
• Confirm that the events occurred in appropriate chronological order. The events required are similar to a budget vote and could require public hearings, advertising, etc. Local counsel for each district submitting the request is responsible for their exact methods.
• Confirm that a board meeting regarding the request occurred and that the board approved.
• Confirm that the proposed numbers are accurate.

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There are three separate debt limit restrictions depending upon the type of district. They are described below:

Small City School Districts

These are districts whose territory lies partially or wholly within the limits of a city having a population of less than 125,000 inhabitants. The debt limit for these school districts is 5% of the average full value of last five years’ tax rolls. Building aid on the projects bonded may not be deducted in computing the limit.  The debt limit for these bonds is contained in Article 8 of the New York State Constitution and may be exceeded if authorized by 60% of the voters and approved by the board of Regents and the State Comptroller.

Central, Union Free, and Common Districts

The debt limit for these districts is contained in Section 104.00 of the Local Finance Law. The limit is 10% of the full value on the most recent tax roll. State building aid on the projects bonded may be deducted in computing the limit. The debt limit for these districts may be exceeded if authorized by 60% of the voters and approved by the board of Regents and the State Comptroller. For districts wholly or partially within the Adirondack Park, consent of the Commissioner and the State Comptroller is  required.

Big 5 School Districts

The debt limit for these districts is also contained in Article 8 of the New York State Constitution. The districts are a part of city government for purposes of computing the debt limit, since only the legislative body of the city has the power to issue obligations. Therefore, the limits which follow are for both municipal and school purposes.

City % of 5 years full value

New York 10%

Buffalo 9%

Rochester 9%

Yonkers 9%

Syracuse 9%

State building aid may not be deducted in calculating the debt limit for the big 5 cities. Bonds defeased in connection with advanced refunding of debt need not be included in computing the constitutional debt limit.

Last Updated: July 24, 2018