12 Long Island school districts had cash reserves beyond the legal limit in 2025-26, state records show

A dozen Long Island districts had cash reserves higher than the allowable state limit in the 2025-26 school year, with Brentwood accumulating the largest percentage at nearly one-fifth of its budget in unrestricted funds, a Newsday analysis found.

Islandwide, the number of districts with higher-than-permissible unrestricted reserves dropped compared with the prior year and a quarter had less money set aside. One regional official speculated districts may be increasingly dipping into their reserves to help offset budget shortfalls.

"If inflation continues to outpace what state revenue comes in at, you're going to see more and more districts utilize reserves to make up the gaps," said Bob Vecchio, executive director of the Nassau-Suffolk School Boards Association. 

School districts in New York State can have up to 4% of their annual budget in what is known as unrestricted reserves. School business officials have compared these reserves to savings accounts or emergency funds used to cover unexpected expenses.

These cash reserves have long been a point of contention on the Island, where residents are among the highest-taxed in the nation and school taxes on average account for two-thirds of a homeowner’s property tax bill. Some argue the state's 4% limit encourages fiscal responsibility and any excess funds should be used to lower property taxes. The state comptroller's office has also said districts could use the money to pay off debts.

Even Gov. Kathy Hochul weighed in earlier this year. When asked on a local radio show about state aid to schools, she said she believed many Island districts are "overtaxing because they already have reserves."

Meanwhile, school officials contend they need the extra buffer to pay for unanticipated costs. Some have noted the state does not have a similar cap on its budget. And officials in smaller districts argue the limit is too restrictive, as the cost to educate one student with intense special needs could amount to as much as 4% of their annual budget.

"The addition of a single high-needs student could wipe out a 4% unappropriated fund balance in one school year," Justin Cobis, superintendent of the 64-student Oysterponds district, wrote in an email.

Negative cash reserves

Newsday obtained data on unrestricted fund balances for 121 Island districts from the State Property Tax Report Card, released annually by the state Education Department. New Suffolk, Sagaponack and Wainscott were omitted from the report cards due to their small size.

In all, Long Island public schools held $757 million in unrestricted reserves in 2025-26.

Unlike restricted reserves, which are set up for specific purposes, unrestricted reserves can be used at a district’s discretion. There are also assigned reserves appropriated for annual budgets.

For the 12 Island districts with higher-than-allowed unrestricted reserves, the percentages ranged from 4.01% in Elmont to 19.33% in Brentwood. Oysterponds had 16.48% while East Quogue, another small district on the East End, was at 11.75%.

Two districts had negative cash reserves: South Country, which has faced deficits due to overspending and mismanagement, was short about $1.5 million. Port Jefferson was nearly $9 million in the red, after the district tapped into its fund to cover $16.5 million in Child Victim Act settlements.

Port Jefferson Deputy Superintendent Sean Leister said the district could bring this fund to a positive $2 million after its borrowing was converted from short-term to long-term. 

The number of Island districts with cash reserves exceeding 4% declined from 19 in 2024-25.

In some districts, the amount of those reserves also decreased. In Freeport, for example, its unrestricted funds dropped from 14% of its budget in 2024-25 to 9.96% in 2025-26, a $9 million reduction.

A district spokesman said the money was used toward property tax relief.

Vecchio said more districts are finding it necessary to pull from their reserves as rising costs driven by inflation continue to outpace the state's 2% cap on annual school property tax increases. Many Island districts have also argued they are not receiving enough state aid.

"I think next year you'll see fewer districts [with higher-than-4% reserves] and fewer percentages, and more folks using reserves," he said.

'Overtaxation' concerns

There are no penalties for districts that violate state law limiting unrestricted reserves. The state comptroller's office recommends districts develop a plan to reduce their surplus fund balance to comply with the statutory limit.

But some argue districts should be using those extra reserves to help Islanders deal with the region's rising cost of living.

Kyle Strober, executive director of the developers’ group Association for a Better Long Island, said Islanders are struggling to afford to live here. Strober's group has long argued against what it calls school "overtaxation." 

"When schools overtax, amounting [to] millions ... more in reserve funds over the 4% limit, that's less money in the taxpayers' pockets — money that can be used to spur economic activity within the community, whether to be paid for dinner with the family, or a new shirt or backpack for school," he said.

The Freeport district has either frozen its tax levy or lowered it in recent years. But retirees like Laura Jannetto say they would like to see tax bills go down further.

Jannetto, who worked in Freeport schools as a teaching assistant and whose children attended schools there, said she considered the school taxes fair but the financial outlook has been tough for senior citizens like her.

"The economic picture is so grim," she said. "It’s getting increasingly more difficult. Seniors deserve to get tax reductions in [whichever] way they can."

Freeport school board President Michael Pomerico said in a statement it is a board priority to review the use of unrestricted reserves but questioned the fairness of the 4% limit.

"Like many Boards of Education across Long Island and New York State, we have concerns about the fairness of this arbitrary cap, particularly when the State itself and most other municipal entities are not subject to this same restriction," his statement read in part.

Richard Hucke, 82, also expressed concern over school property taxes.

Hucke has lived in his home in Brightwaters for nearly five decades. His children went through the Bay Shore school district decades ago.

"In 48 years, I’ve paid a lot of taxes into the school district," he said.

The Bay Shore district had $6.8 million in unrestricted reserves in 2025-26 — 3.36% of the budget, lower than most Island districts. 

But, Hucke said, "it’s too much." He believes the school district should help reduce the tax bills of residents, especially seniors: "We are being overburdened at this time."

The district's superintendent, Steven J. Maloney, said in a statement the district in recent years has expanded exemptions for senior citizens, which helps lower their tax bills. Maloney said the district recognizes property taxes are a big concern for many but said the district remains committed to balancing fiscal responsibility with their obligation to provide a high-quality education.

New culinary facility, air-conditioning expansion

Some school leaders defended their districts' high percentages of reserves.

Brentwood schools Superintendent Wanda Ortiz-Rivera said the district's unrestricted reserves grew due to significant state aid increases and an infusion of pandemic relief.

The district is now drawing from this pool of money to pay for projects like adding classroom spaces, expanding air conditioning and upgrading facilities. One project now under construction is a new culinary facility that will include two classrooms and a full commercial-grade kitchen.

As a result, Brentwood's unrestricted balance decreased from $138 million in 2024-25 to $133 million in 2025-26 — a nearly 4 percentage point drop.

"By strategically using available resources, the District can address critical infrastructure and educational needs while reducing the need for costly borrowing and minimizing the long-term impact on Brentwood taxpayers," Ortiz-Rivera said in a statement.

At the same time, Brentwood has raised its tax levy each of the past three years — though for amounts well under the tax cap.

Ortiz-Rivera said Brentwood kept the tax levy flat from 2020-21 through 2023-24, but officials are preparing for an increase in tuition reimbursements to charter schools as three new charters were approved in Brentwood and Central Islip.

"Continuing to freeze or reduce the tax levy while recurring expenses continue to rise would eventually require the district to rely on reserves to support ongoing operating costs," her statement read. "That approach would deplete reserves at an unsustainable rate and create a structural imbalance in future budgets."

Brentwood tends to receive more in state aid than most other school districts. For the 2026-27 school year, for example, about three-quarters of the district's revenue will come from state aid while property tax will pick up about 15%. In high-wealth districts, property taxes fund the majority of the school budget — as high as 70% or more in some districts.

Maria Gonzalez-Prescod, a former Brentwood school board member and a mother of a rising senior at Brentwood High School, said she’s been happy to see the many programs the district offers.

"We are still playing catch-up when compared to other districts and leveling the playing field," she said.

Preparing for 'unpredictable' costs

Compared with Brentwood, the largest school district on Long Island, with 18,000 students, Oysterponds is tiny.

With fewer than 100 students and a 2026-27 budget of nearly $6 million, the district's superintendent said 4% of unrestricted reserves equates to less than $250,000. That amount, Cobis said, would leave the district "woefully unprepared for unanticipated costs." 

A similar situation exists in East Quogue.

The district has about 380 students and pays tuition for its secondary students to attend school in the Westhampton Beach district. Officials said tuition costs can sometimes differ from what was budgeted for based on previous trends.

"Those costs are unpredictable," said former East Quogue school business official Robert Doyle, who left the district on July 30. Doyle, who now works for the South Country district, said having enough money in reserve was necessary to cover those unexpected costs.

"We feel it's prudent to continue to keep a little of money set aside in case we have an issue with our general ed or special ed tuition," he said.