Appeal of MARK HENDRICK from action of the Board of Education of the Gouverneur Central School District regarding financial practices.

Decision No. 18,580

(July 7, 2025)

Ferrara Fiorenza PC, attorneys for respondent, Thomas F. Barrett, Esq., of counsel

ROSA., Commissioner.--Petitioner, a resident taxpayer, challenges actions taken by the Board of Education of the Gouverneur Central School District (“respondent”) regarding its budget for the 2024-2025 school year.  The appeal must be dismissed.

In May 2024, voters approved the district’s proposed 2024-2025 budget.  Respondent executed a tax warrant two months later.

In October 2024, the district received an external audit report for the 2023-2024 school year that identified:  (1) operating funds in excess of four percent of the current school year budget; and (2) $4 million in unspent Elementary and Secondary School Emergency Relief (ESSER) funds.[1]  Respondent developed a corrective action plan thereafter.  In November 2024, respondent revised this plan to indicate that it would be “completed by June 30, 2025.”  This appeal ensued.

Petitioner argues that respondent improperly retained excess funds by not applying surplus operating funds to reduce the tax levy in violation of Real Property Tax Law (“RPTL”) § 1318 (1).  For relief, petitioner requests that respondent place $4,079,501 in an interest-bearing fund to be later applied to the tax cap levy calculation for the 2025-26 fiscal year.  Petitioner further requests that respondent place an additional $12,088,356.90—an amount reflecting money that petitioner alleges was improperly levied for the 2012 through 2023 fiscal years—in an interest-bearing account to be credited toward future tax cap calculations.

Respondent concedes that it inadvertently exceeded the four percent tax cap under RPTL § 1318 (1) for the 2024-25 fiscal year.  However, respondent argues that no relief is warranted as it has already adopted a corrective action plan.  Respondent further contends that petitioner’s allegations regarding tax levies imposed for prior fiscal years should be dismissed as untimely.

At the outset, petitioner’s claims regarding excess tax levies for years other than the 2024-25 fiscal year are untimely.  An appeal under RPTL § 1318 (1) is timely if brought within the year during which unexpended surplus funds were allegedly improperly retained (Appeal of Baker, 64 Ed Dept Rep Decision No. 18,495; Appeal of Wille, 56 id., Decision No. 17,050; Appeal of Schadtle, Jr., 40 id. 60, Decision No. 14,421).  This appeal was commenced in November 2024 concerning the allegedly improper retention of funds during the 2024-2025 fiscal year.  Therefore, petitioner’s allegations concerning fiscal years other than 2024-25 must be dismissed as untimely.

Turning to the merits, a board of education must apply “any operating funds in excess of four percent of the current school year budget” to reduce its tax levy for the upcoming school year (RPTL § 1318 [1]).  Surplus funds do not include “funds properly retained under other sections of law” (RPTL § 1318 [1]).  Accordingly, the Commissioner has repeatedly held that, at the end of each school year, all unexpended operating funds in excess of the statutorily permitted four 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; Appeals of Gorman, 43 id. 32, Decision No. 14,906).  If a board wishes to retain unexpended surplus funds, it must place them in a reserve fund prior to the tax levy (Appeals of Puskuldjian and Romano, 61 Ed Dept Rep, Decision No. 18,090; Appeal of Gorman, 43 id. 32, Decision No. 14,906; Appeal of Simons, 39 id. 744, Decision No. 14,367).

In an appeal to the Commissioner, a petitioner has the burden of demonstrating a clear legal right to the relief requested and establishing the facts upon which he or she seeks relief (8 NYCRR 275.10; Appeal of P.C. and K.C., 57 Ed Dept Rep, Decision No. 17,337; Appeal of Aversa, 48 id. 523, Decision No. 15,936; Appeal of Hansen, 48 id. 354, Decision No. 15,884).

Here, it is undisputed that respondent’s 2024-2025 tax levy exceeded the four percent cap set forth in RPTL § 1318 (1).  Therefore, respondent violated RPTL § 1318 (1) by improperly retaining surplus funds (Appeal of Baker, 64 Ed Dept Rep Decision No. 18,495; Appeals of Gorman, 43 id. 32, Decision No. 14,906; Application of Mills, 34 id. 92, Decision No. 13,243).  However, given respondent’s swift adoption of a corrective action plan and commitment to comply with RPTL § 1318 (1) in the future, it is unnecessary to issue any relief in conjunction therewith (Appeal of Baker, 64 Ed Dept Rep Decision No. 18,495).  In this respect, the Commissioner has long held that there is no mechanism for returning a pro rata share of funds to taxpayers after the tax levy (Appeals of Puskuldjian and Romano, 61 Ed Dept Rep, Decision No. 18,090; Appeal of Wood and Grosso, 57 id., Decision No. 17,358; Appeal of Wille, 56 id., Decision No. 17,050).

THE APPEAL IS DISMISSED.

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