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Decision No. 15,366

Appeal of WILLIAM H. GOLDEN from action of the Board of Education of the Oxford Academy and Central School District regarding reserve funds.

Decision No. 15,366

(February 23, 2006)

Bond, Schoeneck & King, PLLC, attorneys for respondent, Jodi Lynn Butler, Esq., of counsel

MILLS, Commissioner.--Petitioner appeals the decision of the Board of Education of the Oxford Academy and Central School District ("respondent") to expend funds from its capital reserve fund ("reserve fund") to purchase real property and, allegedly, to expend monies in excess of the amount in the reserve fund.

In 1990, district voters approved a reserve fund pursuant to Education Law �3651 in the amount of $200,000 for "repair, construction and reconstruction of certain capital improvements and equipment." The fund had a 10-year term, and was to be funded by money authorized by district voters and state aid received on capital improvements.

In 2000, voters extended the term of the reserve fund until 2019 and approved an increase in its amount to $700,000 to be funded by state aid and unexpended fund balances, as determined by respondent. The voters simultaneously approved the expenditure of up to $20,400,000, with $527,000 coming from the reserve fund, for certain construction projects.

On February 15, 2005, voters approved a proposition to reestablish the maximum amount of the reserve fund at $700,000. Voters also approved the purchase of vacant land for development as athletic fields and other improvements and renovations to district facilities to be paid for from the reserve fund in an amount not to exceed $250,000. This appeal ensued. Petitioner's request for interim relief was denied on March 30, 2005.

Petitioner contends that the reserve fund purposes as approved by the voters do not permit the purchase of real property. Petitioner further contends that the balance in the reserve fund is $173,000 ($700,000 less the dedicated $527,000), which is insufficient to cover the cost of the purchase of the real property and the other construction and renovation projects approved by the voters for up to $250,000. Petitioner requests that I prevent respondent from purchasing real property and from expending funds allegedly in excess of the balance of the reserve fund.

Respondent asserts that the appeal is moot. Although it contends that the purposes of the reserve fund are broad enough to encompass the purchase of real property, respondent asserts by affidavit of its superintendent that it no longer intends to use money from the reserve fund to purchase real property. Respondent represents, under oath, that its proposed 2005-2006 budget includes an interfund transfer from the general fund to its capital fund to cover the cost of the purchase and associated improvements.

Respondent also commits that it will only spend $173,000 from the reserve fund for the remaining projects. It promises to transfer the remaining balance of $424,779, comprised of interest earnings and transfers, to the general fund. Respondent states that it intends to seek voter approval to establish a new reserve fund, and to transfer these monies to that fund.

Petitioner, in his reply, objects to the transfer of the $424,779, asserting that respondent is liquidating the reserve fund and, therefore, that money must first be applied against outstanding bond indebtedness. Petitioner also objects to the interfund transfer to pay for the purchase of real property and related improvements without voter approval.

The allegations in the petition are dismissed as moot. The Commissioner will only decide matters in actual controversy and will not render a decision on a state of facts which no longer exist or which subsequent events have laid to rest (Appeal of B.K. and R.K., 44 Ed Dept Rep 195, Decision No. 15,146; Appeal of V.L., 44 id. 160, Decision No. 15,132; Appeal of Garvin, 44 id. 30, Decision No. 15,087). Respondent has agreed not to purchase the real property from the reserve fund and to only expend $173,000 on the approved renovation projects. Respondent has, in effect, granted the relief requested by petitioner in the petition. Therefore, no further meaningful relief can be granted.

The issues raised by petitioner in his reply must also be dismissed. In an appeal to the Commissioner, a petitioner has the burden of demonstrating a clear legal right to the relief requested and the burden of establishing the facts upon which petitioner seeks relief (8 NYCRR �275.10; Appeal of Patton, et al., 42 id. 226, Decision No. 14,832; Appeal of Pope, 40 id. 473, Decision No. 14,530).

Respondent denies that it is liquidating the reserve fund and states that the additional balance accumulated because of past practices that utilized the reserve fund as a rolling reserve fund. However, as a result of my decision in Appeal of Kackmeister, 40 Ed Dept Rep 577, Decision No. 14,560, respondent now acknowledges that it should have obtained voter approval to replenish the reserve fund before such deposits were made. To correct this, respondent intends to return the $424,779 to its original source -- the unappropriated fund balance -- and then provide voters with the opportunity to approve the establishment of a new capital reserve fund and to transfer that money into the new reserve fund. Respondent states that if the voters do not authorize the creation of that reserve fund, the $424,779 will be used to pay down bond indebtedness. In addition, respondent maintains that the interfund transfer for the purchase of real property is contingent on voter approval.

It appears that respondent is addressing the issues raised by petitioner and is working to correct any errors that may have occurred in the past regarding the use of its reserve funds. Petitioner has failed to establish that any further relief is warranted.