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Decision No. 15,213

Appeal of FREDERICK J. GORMAN from action of the Board of Education of the Sachem Central School District regarding financial practices.

Decision No. 15,213

(April 26, 2005)

Ingerman Smith, L.L.P., attorneys for respondent, Neil M. Block, Esq., of couns el

MILLS, Commissioner.--Petitioner challenges the financial practices of the Board of Education of the Sachem Central School District ("respondent"). The appeal must be dismissed.

Petitioner contends that respondent violated Real Property Tax Law ("RPTL") �1318 by improperly creating an unauthorized reserve fund in the amount of $4,636,176 for retirees' health insurance premiums for the 2003-2004 school year. Petitioner also contends that respondent failed to seek approval from district voters or an opinion from the New York State Education Department before creating the alleged reserve fund.

Petitioner requests that I order respondent to liquidate the alleged reserve fund and to reduce taxes or transfer the fund to a reserve account permitted by law. Petitioner also requests that I censure respondent and caution it against establishing reserves not authorized by law in the future.

Respondent asserts that petitioner's appeal is untimely and fails to state a claim upon which relief may be granted. Respondent also asserts that it did not create a reserve fund for retirees' health insurance premiums. Rather, it maintains that the amount petitioner characterizes as a reserve fund is actually an accrued liability.

Pursuant to �275.16 of the Commissioner's regulations, an appeal to the Commissioner must be commenced within 30 days from the making of the decision or the performance of the act complained of unless any delay is excused by the Commissioner for good cause shown. Under RPTL �1318(1), an appeal is timely if it is brought within the fiscal year during which unexpended surplus funds are improperly retained (Appeal of Schadtle, 40 Ed Dept Rep 60, Decision No. 14,421; Appeal of Siver, 37 id. 498, Decision No. 13,912). This appeal was commenced on March 29, 2004, during the 2003-2004 school year and, therefore, is timely to the extent that petitioner alleges that respondent created an unauthorized reserve fund for that school year.

In an appeal to the Commissioner, the petitioner has the burden of demonstrating a clear legal right to the relief requested and the burden of establishing the facts upon which he seeks relief (8 NYCRR �275.10; Appeal of Sloley-Raymond , 44 Ed Dept Rep 27, Decision No. 15,085; Appeal of Nelson, 44 id. 20, Decision No. 15,082). Petitioner has failed to prove that respondent created an unauthorized reserve fund.

Petitioner bases his claim, in part, on a document entitled "Sachem Central School District Analysis of Reserves" ("the Reserve Analysis"). This document includes a line for "Retirees Health Insurance" and reflects a balance of $4,636,176 as of June 30, 2003. Petitioner also submits a "General Fund Balance Sheet" that reflects accrued liabilities in the same amount. In addition he submits eight "General Ledger Transaction Analysis" sheets that appear to show the accumulation of the $4,636,176 from 2000 to 2003. None of these documents, however, indicate the existence of a reserve fund for retirees' health insurance; neither do the 2004-2005 budget documents that petitioner submits with his reply.

According to respondent's assistant superintendent for business, the district does not maintain a reserve fund for retirees' health insurance. The assistant superintendent avers that, although the Reserve Analysis includes reserve funds established by the district, it also sets forth liabilities for retirees' health insurance and teachers' and employees' retirement systems for which reserves have not been created. To avoid any future confusion respondent states that it will remove these liabilities from the Reserve Analysis in financial statements prospectively.

Thus, on the record before me, petitioner has failed to establish that respondent created an unauthorized reserve account. Accordingly, his allegations with respect thereto must be dismissed.

In light of this disposition, I need not address the parties' remaining contentions.

THE APPEAL IS DISMISSED.

END OF FILE