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Long Island school district ‘rainy day’ funds get failing grade

A Newsday analysis found that Long Island

A Newsday analysis found that Long Island public school districts have reserve funds totaling $2.44 billion. Credit: Gordon M. Grant

School district reserve funds have hit record highs on Long Island. A Newsday analysis puts the total in the region at $2.44 billion. That’s an 80 percent increase over the last 10 years, a period when the overall inflation rate was 16 percent and many Long Island taxpayers continued to struggle to make ends meet.

That’s wrong. Money not needed by school districts should be returned to taxpayers, not hoarded. The most egregious example is the portion of reserves known as unrestricted fund balances — often called “rainy day” funds. In the past 4 1⁄2 years, the state comptroller’s office criticized 29 Long Island districts for exceeding the state limit capped at 4 percent of a district’s annual operating budget. Typically, excesses happen when districts overestimate expenses and/or underestimate revenue, often deliberately, often year after year.

Telling taxpayers that money in unrestricted reserves will be spent on worthwhile projects like increasing school security might be reassuring, but it means that money will often be spent on projects voters did not approve. Saying that extra reserves give districts flexibility without burdening taxpayers is a crock. The money in those reserves came from taxpayers, who already shouldered the burden of putting it there.

State law prioritizes taxpayer relief, with its implicit prescription that funds not needed by a school district in any one year should not be taken from taxpayers. If school districts disagree, they should make a compelling argument to state lawmakers to change the 4 percent law. Until then, school officials should keep their hands out of taxpayers’ pockets until the districts really need the money.

— The editorial board