Ed Management Services

Budgeting Handbook

Legal Aspects


The laws of the State of New York are quite explicit as to where the responsibility of budget preparation and presentation lies. The responsibility resides with each Common, Union Free, Central and Small City School District board of education, as follows:

It shall be the duty of the board of education to present at the public hearing the proposed budget. The board of education must present its budget in three components: (1) a Program Component, (2) a Capital Component, and (3) an Administrative Component.

The budget must be written in plain language. Categories of revenues, expenditures and fund balance information, as well as comparison data from the prior year's budget must be set forth in such a manner as to best promote comprehension and readability.

Boards of education must attach to the proposed budget the salaries, benefits and any in-kind or other form of compensation of the superintendent, assistant or associate superintendent and any administrator who will earn over $138,000 in the upcoming year (2019-20).

Boards of education must also append to the proposed budget an annual report card prepared by the NYS Education Department which measures the academic performance of the district on a school by school basis. The report card must compare academic performance to statewide averages for all schools of comparable wealth and need. (Education Law §§1608, 1716 and 2601-a)


School Boards of Education must hold a public hearing to present to the voters the budget for the upcoming school year. The budget hearing must be held no more than fourteen days nor less than seven days before the date of the annual meeting and election. Notice of the date, time and place of the public hearing must be included in the notice of the annual meeting. (Education Law §§1608, 1716, 2003, 2004 &2601-a)

The annual meeting and election must be held on the third Tuesday in May, unless it conflicts with a religious observation. At the request of the school board, the Commissioner may certify by March 1 that a religious conflict exists, in which case the election and budget vote may be held on the second Tuesday in May (Education Law §§1906,2002,2022,2022a and 2601-a)

The board of education must notify the residents of Common, Union Free, Central and Small City School Districts of the time and place of the public hearing and the annual meeting, in accordance with Education Law.

The clerk of each school district shall give notice of the time and place of the public hearing and annual meeting as required by §§1608, 1716, and 2022 of the Education Law. The published notice shall appear four times within the seven weeks preceding the district meeting. The first publication shall be at least forty-five days before said meeting. The announcement shall appear in two newspapers, if there are two, having general circulation within the district. When no newspaper has general circulation therein, the notice shall be posted in at least twenty of the most public places in the district forty-five days before the time of such meeting. (Education Law, §2004)

The notice of the annual meeting (see APPENDIX D for Sample Notice) shall state:

  1. between what hours such annual meeting and election is to take place, and
  2. the place(s) where such election is to be held (Education Law §§2003,2004,2601-a).


Each board of education is required to have the proposed budget for Common, Union Free, Central and Small City schools available for public comment.

The budget must be complete and available upon request to residents within the district seven days before the budget hearing. The board of education, as part of the notice of the annual meeting referred to in part B. of this section, must give notice that district residents may obtain a copy of the budget, and provide time and place where budgets will be available.

The budget shall be completed at least fourteen days before the annual or special meeting and copies thereof shall be prepared and made available, upon request, to residents within the district during the period fourteen days immediately preceding such meeting and at such meeting. The board shall also, as a part of the notice required, give notice that a copy of such statement may be obtained by any resident at each schoolhouse, public and free association library within the district, and made available on the district's website, if any. (Education Law, §§ 1608, 1716, 2003, 2004).(Library and website requirement effective 2009).

Common, union free, central high school district and small city school districts shall mail a school budget notice to all qualified voters of the school district after the date of the budget hearing but no later than six days prior to budget vote(s) and election. The school budget notice shall compare the percentage increase or decrease in the proposed budget over total spending under the school district budget adopted for the current year, with the percentage increase decrease in the consumer price index. The notice shall also include the district's tax levy limit pursuant to section two thousand twenty-three-a of Education Law, and the estimated school tax levy, excluding any levy necessary to support the expenditures pursuant to subparagraphs (i) through (iv) of pararagraph i of subdivision two of section two thousand twenty-three-a of Education Law, that would result from adoption of the proposed budget. 

Commencing with the proposed budget for the two thousand one--two thousand two school year, such notice shall also include a description of how total spending and the tax levy resulting from the proposed budget would compare with a projected contingency budget assuming that the contingency budget is adopted on the same day as the vote on the proposed budget. Such comparison shall be in total and by component (program, capital and administrative), and shall include a statement of the assumptions made in estimating the projected contingency budget. The notice shall also include a comparison of the tax savings under the basic school tax relief (STAR) exemption authorized by section four hundred twenty-five of the real property tax law and the increase or decrease in school taxes from the prior year, and the resulting net taxpayer savings, for a hypothetical home within the district with a full value of one hundred thousand dollars, under the existing school district budget with such savings under the proposed budget. The notice shall also set forth the date, time and place of the school budget vote (See Form). (Education Law §2022)


The budget must be presented to the voters for their approval. The board of education may submit its budget and/or proposition(s) to the voters no more than two times. If the voters fail to approve the budget after the second submission, the board must adopt a contingency budget.


When a board of education is faced with adopting a contingent budget after the voters have refused or continue to refuse to approve the budget, the crucial question is the determination of what constitutes ordinary contingent expenditures. In general, except for those items for which the statutes themselves either provide mandates or give discretion to the board of education, these may be considered expenditures deemed to be absolutely necessary to operate and maintain schools. The emphasis should be on those expenditures considered essential to maintain an educational program, preserve property, and assure the health and safety of students and staff. In addition, section 2023 of the Education Law places a computed dollar cap on general fund appropriations. The administrative component of the budget is also subject to a cap.

Formal Opinion of Counsel No. 213 specifically discusses provisions for teachers' salaries as authorized by §1709, subdivision 16, of the Education Law. It also divides ordinary contingent expenditures into three categories: (1) legal expenditures; (2) expenditures specifically authorized by statute; and (3) other items necessary to maintain the education program, preserve property and assure the health and safety of students and staff. Formal Opinion of Counsel No. 213 can be used as a guide in helping the board to arrive at a determination of an "ordinary contingent expenditure." (See APPENDICES C, F AND G for further information).

It is important to note that although an item may be an ordinary contingent expenditure, the amount of the administrative component of a contingency budget and the amount of the tax levy to support a contingency budget may not exceed the cap and limitation set forth under Education Law §2023 and 2023-a.

In the event the Board of Education adopts a contingency budget, the tax levy may be no greater than the levy of the prior year (Chapter 97 of the Laws of 2011).  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 which the administrative component had comprised in the prior year's budget; or (2) that percentage which the administrative component had comprised in the last defeated budget presented for the subsequent year.

The board of education must exercise its best judgment in determining what the minimum expenditures shall be within the limitations imposed by the administration and the contingent budget caps.


Common, Union Free, Central and Small City School Districts are empowered to levy or authorize the levy of taxes after the voters have approved the budget and the resultant tax or after the board of education has adopted a contingent budget.

Where a budget of expenditure is voted at an annual school meeting for school purposes during the following school year, the school authorities shall determine and levy or authorize the levy of the necessary tax, prepare the school tax roll therefore and, on or before September 1, annex thereto a warrant for its collection. (Real Property Tax Law, §1306(1)

NOTE: These procedures may vary in Nassau and Suffolk counties where the Nassau County Administrative Code and Suffolk County Tax Act govern tax collection.


The budget of a school district is a well calculated estimate as to what will be needed for expenditures by function and object. A school district must keep its expenditures within legally authorized appropriations. The appropriate section of Education Law limiting liabilities and expenditures appears below.

"No board of education shall incur a district liability in excess of the amount appropriated by district meeting unless such board is specially authorized by law to incur such liability." (Education Law, §1718).


It is an exceptional budget that does not require some adjustments made to its appropriation function-object codes during the fiscal year.

The board of education has the power to make transfers between and within functional unit appropriations for teachers' salaries and ordinary, contingent expenditures. Though transfers are for contingent items, they may not cause the administrative or overall contingent budget caps to be exceeded. Boards of education may, by resolution, authorize the chief school officer to make transfers within the limits as established by the board. §170.2(1) of the Commissioner's Regulations allows transfers "between and within a functional unit appropriation for teacher's salaries and ordinary contingent expenditures" as follows:

  • Transfers to be made between contingent expenditure codes.
  • Transfers to be made from a non-contingent expenditure code to a contingent expenditure code.

This regulation does not allow:

  • Transfers to be made from contingent expenditure codes to non-contingent expenditure codes.
  • Transfers to be made between non-contingent expenditure codes.

Grants in aid received from the state and federal governments and other gifts which are required to be expended for particular objects or purposes, any insurance proceeds received for the loss, the damage or destruction of real or personal property, when proposed to be used or applied to repair or replace such property, may be appropriated by resolution of the board of education at any time for such objects or purposes. (§1718 of Education Law)


Districts must implement and maintain controls whereby appropriations and actual expenditures are monitored for compliance with overall and administrative component caps when administering a contingent budget. The district may be required to present evidence that these monitoring controls are in place and operating as designed. Such controls may be integrated into existing accounting and reporting systems or built-on to existing systems, such as through the use of spreadsheet or database applications software.

Last Updated: April 4, 2019