Appeal of ANDREW P. DORO from action of the Board of Education of the Millbrook Central School District regarding the retention of surplus funds.

Decision No. 15,513

(December 28, 2006)

Shaw & Perelson, LLP, attorneys for respondent, Margo L. May, Esq., of counsel

MILLS, Commissioner.--Petitioner appeals actions of the Board of Education of the Millbrook Central School District (“respondent”) regarding retention of surplus funds from the 2005-2006 school year.  The appeal must be dismissed.

On June 20, 2006, district voters approved the proposed budget for the 2006-2007 school year, and respondent accepted the election results.  In its June 2006 newsletter, respondent listed budgeted expenditures and revenues for the 2005-2006 and 2006-2007 school years.  Budgeted expenditures for the two years were $18,431,446 and $20,732,929, respectively.  For both years, budgeted revenues listed the amount of $730,847 as “fund balance.”  This appeal ensued.  Petitioner’s request for interim relief was denied on July 31, 2006.

Petitioner claims that respondent retained an unreserved, unexpended fund balance in excess of the two percent authorized by law.  Petitioner calculates that the two percent fund balance should have been $368,629.[1]  He argues that since the district had a “fund balance” of $730,847, any excess should have been used to reduce the tax levy.  Petitioner seeks an order directing respondent to reduce the tax levy by $362,218. 

Respondent claims that petitioner has failed to state a claim upon which relief can be granted because he provided no evidence that surplus funds were improperly retained.  Respondent maintains that petitioner’s claims are based on a mistaken reading of the budget information published in its June 2006 newsletter.  Respondent explains that the $730,847 listed as “fund balance” under the revenues category for both the 2005-2006 and 2006-2007 budgets is not unappropriated fund balance subject to the two percent limit.  Rather, respondent asserts that this is a revenue source to be applied to reduce the tax levy in both school years.

Under RPTL §1318(1), at the conclusion of each fiscal year, a board of education must apply any unexpended surplus funds to reduce its tax levy for the upcoming school year.  Surplus funds are defined as “any operating funds in excess of two percent of the current school year budget, and shall not include funds properly retained under other sections of law” (RPTL §1318[1]).  Accordingly, at the end of each school year, all unexpended operating funds in excess of two percent of the amount of the budget for the upcoming school year must be applied to reduce the tax levy (Appeal of Uy and Norden, 44 Ed Dept Rep 368, Decision No. 15,201; Appeal of Gorman, 43 id. 32, Decision No. 14,906; Appeal of Schadtle, Jr., 40 id. 60, Decision No. 14,421).

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 Ed Dept Rep 226, Decision No. 14,832; Appeal of Pope, 40 id. 473, Decision No. 14,530).

In this case, petitioner introduced respondent’s newsletter as evidence to support his claim.  However, the newsletter lists the $730,847 figure under revenues, which supports the district’s claim that those funds are a revenue source being used to reduce the tax levy.  In fact, the record does not reflect the amount of unexpended surplus funds from the 2005-2006 school year.  Therefore, on the record before me, petitioner has failed to establish that any surplus funds were improperly retained. 

THE APPEAL IS DISMISSED.

END OF FILE

[1] The two percent fund balance should have been based on respondent’s 2006-2007 budget, rather than the 2005-2006 budget as calculated by petitioner, or $414,659.