QUESTIONS AND ANSWERS
REGARDING REVISIONS TO STATUTE AFFECTING
SCHOOL DISTRICT BUDGET VOTES
Chapter 436 of the Laws of 1997 amends various sections of law concerning authorization of expenditures in school districts. The provisions of the statute are further defined in Section 170.8 of the Regulations of the Commissioner of Education. The following list of QUESTIONs and ANSWERs is provided to assist school districts in understanding and implementing these new provisions.
THREE PART BUDGET IN 1998-99
QUESTION: How is the general fund budget to be structured for public presentation in connection with the annual budget vote and election?
ANSWER: The budget is to be divided into three components: an administrative component; a program component; and a capital component. Each must be separately delineated in accordance with regulations of the Commissioner of Education. The budget must categorize revenues, property taxes refunds, expenditures, budget transfers and fund balance information. This information is to be formatted to show changes in the data as compared with the previous year. The budget must be presented in plain language which best promotes public comprehension and readability.
QUESTION: What basis was used to determine the appropriations to be included in each of the three components?
ANSWER: Basically, the functional units prescribed by the Uniform System of Accounts for School Districts were used to divide appropriations among the three components. In most instances, whole functional units were used. In a few instances, however, the language of the law requires that a functional unit be split between or among the components. The specific functional units and accounts assigned to each of the components are listed in the regulation using the titles contained in the Uniform System of Accounts.
QUESTION: Which functional units are divided among the components?
ANSWER: The Employee Benefits Functional Unit (9000) is distributed over all three components so that the cost of benefits is included in the same unit as the salary of the employee entitled to the benefit. The Special Items Functional Unit (1900) is split so that the appropriations for judgments and compromised claims, including tax certiorari, are included in the capital component while the balance of appropriations for this functional unit is included in the administrative component. The District Transportation Services (5510) is included in the program component, except for the cost of bus purchases, which is included in the capital component. The Legal Service Functional Unit (1420) is split so that appropriations for legal service directly related to other functions contained in the program unit (such as the program for students with disabilities and tenured teacher hearings) is included in the program component and that other legal services be included in the administrative component.
QUESTION: Is it permissible to prorate administrative and supervisory salaries between the administrative and program components if the employee devotes a percentage of time to functions recorded in each component?
ANSWER: No. The administrative component shall include the salaries of certified administrators and supervisors who spend a majority (over 50 percent) of their time performing administrative or supervisory duties.
QUESTION: How are post-retirement benefits to be classified when dividing appropriations among the three components?
ANSWER: These appropriations are classified in the same manner as appropriations for employee benefits for active employees. They are included in the component where the salary was last paid prior to retirement.
QUESTION: When do the requirements with regard to budget format take effect?
ANSWER: The provisions of the law are effective for the budget pertaining to and presented for the 1998-99 school year. However, the new section also provides that each school district, for purposes of development of the budget for that year, shall separate its program, administrative and capital costs for the previous school year, 1997-98. This must be done in order to establish a basis for comparison with the proposed 1998-99 budget.
ADMINISTRATION OF BUDGET
QUESTION: Does the new section change the Uniform System of Accounts for School Districts as prescribed by the Office of the State Comptroller in accordance with the provisions of Section 36 of the General Municipal Law for accounting and reporting purposes?
ANSWER: No. The new law provides for a budget format to be used for purposes of presentation and to control of the size of the budget and the administrative component but does not alter the accounting system.
QUESTION: How do the provisions of Chapter 436 affect the ability of boards of education to make transfers between and among function- object appropriations?
ANSWER: Transfers may be made for teachers' salaries and ordinary contingent expenses. However, if the district is operating on a contingent budget, a transfer is prohibited and may not be made which would cause the limitation on the budget and/or on the administrative component to be exceeded, even if the transfer is for an ordinary contingent expense or for the salary of a certified employee.
BUDGET VOTE AND ELECTION OF BOARD OF EDUCATION MEMBERS
QUESTION: When are districts required to schedule their annual budget vote and election of board of education members?
ANSWER: The purpose of the ANNUAL MEETING is to conduct the annual election of board of education members and votes involving the budget and expenditures of money, and to authorize the levy of taxes. School districts must hold their vote (annual meeting) on the third Tuesday in May or, if a conflict exists due to religious observance, on the second Tuesday in May. School district(s) that are not divided into election districts and conduct their vote by hand or voice, shall hold their vote in the schoolhouse at seven-thirty in the evening, unless the hour and place have been fixed by voters at a previous district meeting. All other districts shall hold their vote during at least six consecutive hours after 6 A.M. in the morning, two hours of which shall be after 6 P.M. in the evening, as determined by the board of education.
QUESTION: May a school district hold an annual meeting for the purpose of presenting the budget?
ANSWER: No. Each school district must present their budget at the annual BUDGET HEARING (Education Law §§1608 & 1716). Such budget hearing shall be held not less than seven (7) or more than fourteen (14) days before the budget vote.
QUESTION: When must the budget statement be prepared and made available to the residents of the district?
ANSWER: The budget statement must be prepared and made available to the residents of the district seven (7) days before the budget hearing. Such statement must be made available, upon request, to residents during the fourteen-day period preceding the vote.
QUESTION: What are the requirements for the Notice of Board Election and Budget Vote?
ANSWER: The notice of the election and budget vote shall be advertised four (4) times within the seven (7) weeks proceeding the date of the annual meeting, with the initial advertisement to appear at least forty-five days (45) before the vote (annual meeting) date (Education Law §§ 2003, 2004).
PROPOSITIONS SUBMITTED TO THE VOTERS
QUESTION: Must the board of education submit a proposition for the expenditure of money brought to them by a petition from the voters?
ANSWER: Where the petition has (a) the number of signatures required under Education Law §2008(2); (b) is within the powers of the voters of the district; (c) the purpose for which a vote is called is not illegal or restricted; and (d) the proposition contains the necessary specific appropriation, the board of education must place the proposition before the voters at the annual meeting or if received after the date of the annual meeting, call a special district meeting for a vote on the proposition. No meeting (vote) need be called where the board finds that there is a valid reason for refusing to call such meeting.
QUESTION: Is a board of education restricted from acting on a petition submitted by voters pursuant to Section 2008 after there have been two previous budget votes ?
ANSWER: The legislation establishes a two-vote limit on budgets. Therefore, the board of education would be precluded from resubmitting a budget proposition to the voters on items of expenditure that have already been voted on twice.
CONTINGENT BUDGET ADOPTION
QUESTION: In the event that the qualified voters fail to approve a budget, what limitations are placed upon appropriations for the next year?
ANSWER: The board of education may adopt a budget which provides for teachers' salaries and ordinary contingent expenses. The contingency budget is capped at the lesser of: (1) the results obtained when computing 120 percent of the consumer price index (CPI), or (2) four percent over the prior year's budget. In addition to this limitation, the administrative component of a contingent budget may not comprise a greater percentage of the contingency budget, exclusive of the capital component, than the lesser of: (1) that percentage in the prior year's budget; or (2) that percentage in the last defeated budget presented for the subsequent year.
QUESTION: What items may a board of education include in a contingency budget?
ANSWER: After determining teachers' salaries necessary to retain and recruit competent teachers, the board is faced with the necessity of determining ordinary contingent expenses. In general, the term "ordinary contingent expense" encompasses all expenditures deemed to be needed to provide the minimum services legally required to (1) operate and maintain the schools and the educational program of the school district and (2) preserve the property of the district in order to assure the health and safety of the students and staff.
QUESTION: What is the definition of "teachers salaries" as used in Section 2023 of the Education Law?
ANSWER: This term refers to professional educator positions certificated by the Education Department which includes teachers, administrators, teaching assistants, and professional specialists in the various areas of pupil personnel services.
QUESTION: May additional noncertified personnel, such as registered nurses, be employed to replace certified personnel?
ANSWER: No. Nothing in the legislation authorizes violation of teacher certification requirements, tenure statutes, or provisions of the Taylor Law. The board of education has authority to employ the number of nonteaching personnel necessary to maintain the educational program, preserve district property and protect the health and safety of students and staff; but, the board does not have the authority to replace certified teachers and administrators in violation of such laws.
QUESTION: May increased appropriations for salaries be authorized by the board of education to the extent required by an agreement negotiated under the provisions of the Taylor Law?
ANSWER: The board of education has full authority to provide the appropriations required by such agreements, regardless of whether the agreements are concluded prior to or subsequent to voter action on the annual budget. However, the authority to increase salaries does not authorize the board of education to exceed the percentage limitation imposed on the contingency budget or the administrative component of the budget.
QUESTION: Is it necessary to present a contingency budget to the voters at a special district meeting?
ANSWER: No. A contingency budget represents those appropriations over which the board of education has full jurisdiction, and is approved by action of the board of education.
QUESTION: Is the cost of a workbook an ordinary contingent expense?
ANSWER: The ANSWER is a qualified "yes". The definition of a textbook under Education Law section 701(2) includes any book, or a book substitute, which includes hardcover or paperback books, workbooks, or manuals which a pupil is required to use as a text, or a text substitute, in a particular class or program in the school he/she legally attends.
QUESTION: To what extent is the cost of instructional supplies considered to be an ordinary contingent expense?
ANSWER: The cost of supplies for the use of teachers in instruction represents an ordinary contingent expense. In addition the cost of certain student supplies which would represent a hazard if sent to school with pupils, may be provided at district expense (such as dangerous chemicals).
QUESTION: Following the adoption of the budget by the board in the case of a budget defeat, or the adoption by the voters of a budget containing funds for teachers salaries' and other contingent expenses, may the board raise the additional amount required in the event the funds originally authorized are inadequate without submitting the matter to the voters?
ANSWER: Yes. Section 2023 of the education law has uniformly been interpreted by the Education Department and by the courts (Burns v. Wilson, Reinken v. Keller, 1967, 53 Misc.2d 944, 280 N.Y.S. 2d 253) to permit the levy by a board of education of the required additional amounts without first submitting the matter to the voters, whether the inadequacy of fund resulted from the failure of the voters to approve any budget, or resulted from an adopted or approved budget which included insufficient funds for teachers' salaries and ordinary contingent expenses. However, in the case of a defeated budget the limitations on the total budget and the limitations on the administration component of the budget may not be exceeded.
QUESTION: What items should be excluded when determining total expenditures that are subject to the percentage limitation under a contingency budget?
ANSWER: The items which must be excluded when determining total expenditures that are subject to the percentage limitation under a contingency budget include the following:
- Costs related to increases in student enrollment including the new pre-kindergarten enrollment.
- Expenditure of gifts and grants in aid and use of insurance proceeds.
- Non- recurring expenditures in the prior years budget.
- Expenses related to tax certiorari proceedings.
- Expenses related to court orders or judgements.
- Emergency expenses necessary as a result of damage or destruction of a school building or school equipment.
- Capital expenditures including debt service and leases resulting from projects approved by the voters.
QUESTION: When calculating the percentage cap on the administrative component of the budget and/or the total budget cap, how do I handle the rounding of decimals?
ANSWER: Since the law refers to a "percent" and to two decimal places, the computation should result in XX.XX (percentage plus two decimal places). For example, if the administrative ratio calculates to 11.62654, then the calculation would be rounded to 11.63%. Should any of these calculations result in a third decimal place below 5, the percentage would not be rounded. For example, if the lowest overall budget cap, as calculated using the CPI resulted in 2.76455, the cap percentage would be 2.76%.