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Volume 6 - Opinions of Counsel SBEA No. 38

Opinions of Counsel index

School districts (surplus funds) (effect of L.1977, c.73) - Real Property Tax Law, § 1318:

Chapter 73 of the Laws of 1977 amends subdivision 1 of section 1318 of the Real Property Tax Law to require unexpended operating funds in excess of two percent of the current school year budget to be applied in determining the school tax levy.

Section 1318 of the Real Property Tax Law provides for the annexation of the warrant for collection of taxes to the school tax roll and the delivery of the roll and warrant to the collecting officer. Chapter 73 of the Laws of 1977 amended subdivision 1 of section 1318 to require the trustees or board of education to include in the warrant a statement of the amount of “unexpended surplus funds” in its custody and a declaration that, except as otherwise authorized or required by law, those funds have been applied in determining the school tax levy. The term “surplus funds” for this purpose is defined in the amendment as, “any operating funds in excess of two percent of the current school year budget, and shall not include funds properly retained under other I sections of law.” An explanation of the amendment is requested.

The memorandum in support of this amendment submitted by its sponsor declares that the purpose of the amendment is to put an end to the practice of school districts retaining unexpended operating funds from a preceding fiscal year rather than applying those funds toward the reduction of the amount of the real property tax levy in the current year. As a compromise, the two percent exception was included in the amendment.

As an example, in computing a school district’s tax levy for the 1977-1978 school year, the new law requires that any unexpended operating funds remaining from the 1976-77 school year be applied against the 1977-1978 levy, i.e., be used to reduce the year’s tax levy subject to the exception that up to two percent of the 1976-77 school year budget need not be so applied.

August 30, 1977

Updated: