Appeal of MARTIN DAVIS from action of the Board of Education of the Hewlett-Woodmere Union Free School District regarding the annual school district budget.
Decision No. 13,192
(June 1, 1994)
Ehrlich, Frazier & Feldman, Esqs., attorneys for respondent, Jerome H. Ehrlich, Esq., of
SOBOL, Commissioner.--Petitioner appeals respondent's alleged retention of excess surplus funds in connection with its 1992-93 and 1993-94 school district budgets. The appeal must be dismissed.
Petitioner, a resident of respondent's school district, seeks review of respondent's budget practices and alleges that respondent violated '1318 of the Real Property Tax Law. That provision requires that, at the end of each fiscal year, any unexpended surplus funds must be applied to the tax levy for the current school year. "Surplus funds" are defined as "any operating funds in excess of 2% of the current school year budget, and shall not include funds properly retained under other sections of law." Consequently, at the end of each school fiscal year, a board of education may not retain more than 2% of its surplus funds for expenditures the following year, and must use the remaining surplus funds to offset the upcoming tax levy. Therefore, with respect to the years in question, on June 30, 1992 and again on June 30, 1993, respondent could have set aside 2% of any surplus funds from the current year for use in the subsequent school year, and had to apply the remaining surplus funds to offset the tax levy for fiscal years 1992-93 and 1993-94, respectively.
Petitioner asserts that, at least for the 1992-93 and 1993-94 school years, respondent retained more than 2% of its surplus funds in violation of Real Property Tax Law '1318. To support his claims, petitioner submits a copy of a budget summary that respondent distributed setting forth revenues and expenditures included in its 1992-93 and 1993-94 budgets. The revenue portion of each budget includes an "Applied Balance" representing the anticipated fund balance from the prior year to be included as revenue for the coming year and applied against anticipated expenditures. Specifically, respondent included as revenue in its 1992-93 budget an applied balance of $2,300,000 from its 1991-92 budget, which constituted 6.04% of its total anticipated revenue in the 1992-93 budget. Subsequently, respondent included in its 1993-94 budget an applied balance of $2,600,000 from its 1992-93 budget, which constituted 6.45% of its total anticipated revenue for 1993-94. Petitioner challenges respondent's inclusion of those applied balances in its budgets as violating the 2% limitation set forth in Real Property Law '1318.
In its answer, respondent asserts a procedural defense that I will first address. Respondent argues that, to the extent petitioner seeks review of its budgetary practices prior to the 1993-94 school year, the appeal is untimely. Section 275.16 of the Regulations of the Commissioner of Education requires that an appeal be initiated within 30 days of the action or decision complained of. Petitioner's claims regarding the 1992-93 school budget are untimely and, therefore, must be dismissed.
Petitioner's claim regarding the 1993-94 school budget must be dismissed on the merits. Petitioner has misconstrued the significance of respondent's inclusion of the $2.6 million applied balance as revenue in its 1993-94 budget. By applying that amount of its 1992-93 fund balance to the 1993-94 budget as revenue, respondent, in fact, reduced its tax levy by $2.6 million. To illustrate, as a result of applying the $2.6 million balance from 1992-93 as revenue in the 1993-94 budget, respondent had to raise approximately $32 million from the local tax levy. Without that applied balance, approximately $34.6 million ($32 million plus $2.6 million) would have had to be raised. Consequently, the applied balance of surplus funds from 1992-93 was used to reduce the taxes necessary for the 1993-94 school year in accordance with Real Property Law '1318. Moreover, petitioner presents no evidence that respondent otherwise set aside more than the 2% of the unexpended funds permitted by law. The fact that the $2.6 million applied balance represented 6.45% of the total anticipated revenues for 1993-94 is irrelevant to any determination of whether respondent retained more than 2% of 1992-93 surplus funds.
Because petitioner presents no evidence that respondent, in fact, retained more than 2% of its 1992-93 surplus funds, and because the record indicates that respondent properly applied its surplus funds to reduce the 1993-94 tax levy, the appeal must be dismissed.
In addition, pursuant to '276.6 of the Regulations of the Commissioner of Education, I instructed my staff to review respondent's 1993-94 annual financial report and the independent audit report filed with the Department. That review also failed to uncover any evidence that respondent acted in contravention of Real Property Law '1318.
THE APPEAL IS DISMISSED.
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