Reposting District Superintendent's email regarding reserves:
As we enjoy our weekends, I have seen and have been hearing a lot of information and speculation about the Bond, the District’s financial resources, and various news reports. Normally, we would wait to send something like this on Monday, but I thought that it would be helpful for you to hear directly from me over the weekend to work through the information and formulate any questions that you may have for me.
I thought I had sent you my last Bond Question of the Week, but like 007 himself, we're back!
Q. Dr. G., can the District use the monies currently in reserves to pay for the scope of items within the bond?
Answer:
It’s actually an interesting question, and the truth is that it really depends on whether the reserve is considered Restricted or Unrestricted. In the interest of full and complete transparency, let me take you all through a full accounting of the District's reserves. Most of us have had to rebuild a bank account in our lives. Savings usually take a long time to build, can disappear very quickly, and are likely to take a long time to re-build. Reserves are no different.
Restricted Funds
Restricted reserves can only be used for specific purposes and they can only be accessed with voter approval for their intended purpose. They help us to plan against existing liabilities in all facets of our operations. We use these monies to protect ourselves against existing liabilities such as building repairs, workers’ compensation claims, unemployment claims, retirement system payments, and capital projects approved by the voters.
Here is a complete accounting of the District’s Reserves from our audited financial statements that were previously presented to the Audit Committee and will appear on the Board of Education’s agenda on December 12, 2019 for action.
Restricted Reserves: $16,328,322.49
These can only be used for a specific purpose as outlined in statute and with approval from either the voters or sometimes from the Board of Education in special circumstances.
Assigned Fund Balance from 2018-2019: $2,300,000.00
These are monies from additional interest income earned on investments last year and savings from the 18-19 budget that are being used to offset the 2019-2020 tax levy. It includes money from the special legislative grants, also used to offset the tax levy. The total is comprised of the following:
- Fund Balance from the prior year $1,200,000.00
- Designated Special Grant to offset razing of
Glenwood Landing Power Plant from Senator
Marcellino and Assemblyman Lavine: $1,100,000.00
Assigned Encumbrances: $1,660,895.37
These are funds that are carried over from 2018-2019 purchase orders that were issued, but not fulfilled by the end of June 30, 2019. They must be used to pay for our outstanding expenses.
Subtotal: Total Restricted Reserves: $20,289,217.86
Unrestricted Funds
The District has much more flexibility when using our unrestricted reserves and we can use them at our discretion. However, it is important to preserve the existence of these monies. This is essentially our savings account of accessible money that we would only use in the most serious of circumstance to fund a project that would not have been budgeted for or not covered by the District’s insurance carrier.
Unrestricted Reserves: $4,311,997.44
Special Designation- LIPA:
Balance of unused Special Grant to offset razing
of Glenwood Landing Power Plant from Senator
Marcellino and Assemblyman Lavine $2,884,879.53
These unrestricted reserve funds can be used at the Board’s discretion. However, a portion of the special grants are being used each year to offset the tax levy. We've already been using a portion of these, judiciously and openly each year, to deal with previous tax effects related to the demolition of the Glenwood Landing Power Plant. Since we are simultaneously studying the financial impact analysis of the tentative LIPA settlement with Nassau County, some of these reserves are specifically intended to help with a LIPA settlement - and we will use them in that manner since they are intended/ restricted to be used for that specific reason.
Subtotal: Total Unrestricted Reserves: $7,196,876.97
Grand Total: $27,486,094.83
It would be impractical at this time to use the monies in our reserves to fund projects identified within the bond. There are essentially three reasons:
- New York State Statute would prohibit the District from using any of the Restricted Reserves for anything other than their intended purposes.
- In addition to there being no statutory mechanism to do so, it would be both improper and an irresponsible use of our taxpayers’ money to simply save the $40M over time and then embark upon the planned work within the scope of a bond.
- The long-term financial health of the District is dependent upon our ability to hold available and unrestricted funds to meet the complex needs of a complex organization.
I am always available to the community and I welcome anyone with any general or specific questions to contact me directly. While some of this can be confusing I wanted to be sure to address the community with steadfast fortitude through the lens of providing our students with the world class education they deserve. The greatest value of a democracy is having the ability to vote and express opinions. Regardless of where you stand on the proposed bond, I hope that on Tuesday, December 10, 2019 our North Shore community members take the time to vote and have their voices heard and that we continue to work in the spirit of collaboration on behalf of the children we share.
Very truly yours,
Dr. Peter Giarrizzo
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