19 Long Island school districts again beyond legal limit for cash reserves, state records show

Cash reserves held by Long Island school districts climbed to nearly $3.64 billion during the 2024-25 academic year — up 12% from last year, Newsday found in a review of state financial records.

About a fifth of those reserves, or $785 million, were "unrestricted" funds — that is, money that can be spent at districts’ discretion. State law bars districts from stockpiling this money beyond an amount equivalent to 4% of their annual operating budgets.

Newsday found that 19 Island districts had accumulated unrestricted cash surpluses above the state’s legal limit — the same number as last year.

Brentwood, the Island’s largest district, reported a year-end surplus of $137.7 million, or 22.8% of its budget. Island Park’s unrestricted balance was nearly $5.3 million, equivalent to 11.9% of its budget; Sewanhaka, $16.4 million or 6.4%; and Uniondale, $16.9 million or 6.3%.

There are no penalties for violations of the law regarding unrestricted cash reserves.

Districts’ cash surpluses are a hot-button issue in this region, where taxpayer advocates contend such money should be applied to tax reductions rather than sitting in banks. School taxation in the region accounts for more than 60% of homeowners’ property tax bills, which rank among the nation's highest. 

School officials insist these funds serve as an essential hedge against inflationary cost increases, economic downturns or potential losses of federal and state school aid.

The prospect of losing state aid is a key concern this year for both state and local school officials, as negotiations now underway in the U.S. Congress could lead to cuts in funding for Medicaid. Costs of that health program are shared by federal, state and local authorities, raising the possibility that any cuts on the federal level would have to be made up by New York State. That could then mean less money available for state financial assistance to schools.

“What is happening in Washington casts a dark cloud because of the prospect of funding cuts, and not just to education, but to other parts of the state’s budget that might damage its ability to fund education,” said Robert Lowry, a deputy director of the New York State Council of School Superintendents, in an email message.

121 districts reviewed

To determine the cash reserves held by Long Island districts, Newsday reviewed financial data from New York State Property Tax Report Cards released in May by the state Department of Education. The reports included district estimates of reserves they expected to have on hand by the close of the current school year on June 30. 

The review covered a total of 121 districts in Nassau and Suffolk counties. The East End districts of New Suffolk, Sagaponack and Wainscott were omitted from the state's fiscal "report cards" due to their small size.

In addition to unrestricted funds, reserves fall in two other major categories: assigned reserves that are meant to be spent as part of a district's annual budget and restricted reserves, which are set aside for specific purposes such as school construction and renovation, liability settlements and employee pension and health benefits.

Islandwide, combined reserves for all districts equal more than 20% of their annual operating budgets.

Officials in districts with some of the highest percentages of unrestricted funds defended accumulating more money than state law allows.

“School district operation costs continue to rise exponentially, and adequate reserves are required to preserve financial stability, safety and security, and academic and extracurricular excellence,” said Monique Darrisaw-Akil, superintendent of Uniondale schools, in a prepared statement sent to Newsday.

Brentwood's superintendent, Wanda Ortiz-Rivera, said in a statement  her system had accumulated much of its surplus in the form of relief during the COVID-19 pandemic and was gradually spending down the money through air conditioning, building security and other improvements.

Sewanhaka and Island Park officials also reported they were in the process of reducing their unrestricted reserves by applying money to capital improvements, tax reductions or other purposes.

Some district officials contended the state’s 4% limit on unrestricted reserves was too binding.

“We believe that increasing the allowable percentage for school districts would provide a more realistic and effective buffer against financial uncertainties while potentially minimizing the impact on taxpayers,” said Alice Kane, the interim Freeport schools superintendent, in a statement.

Freeport lists $34.19 million in unrestricted reserves, or 14% of its operating budget.

Districts on the East End, where student enrollments and budgets are relatively small, racked up some of the largest surpluses in percentage terms. Oysterponds reported an unrestricted reserve of nearly $1.5 million, or 25.9% of its operating budget; Quogue, meanwhile, had a reserve of $944,874 or 9% of its budget.

Jeffrey Ryvicker, the Quogue superintendent, said in an emailed statement to Newsday that while his district opened the current school year with  a 9% reserve, it expected to close either at or near the state’s limit.

Oysterponds' schools chief, Justin Cobis, echoed the sentiments of some of his counterparts, arguing the 4% limit was unrealistic for a district such as his where the unanticipated enrollment of a single student in need of special education or other expensive services could raise serious issues. The addition of one student with high needs could “wipe out” a 4% cash balance, Cobis wrote in a message. 

Taxpayer advocates, on the other hand, voiced outrage over districts’ growing stockpiles of cash, especially in those exceeding the 4% limit. Some said tax rates should be going down, rather than up, at a time when student enrollments are declining in most districts.

Islandwide, school property taxes are due to rise about 2.3% in 2025-26. 

“It’s illegal,” said Fred Gorman, of Nesconset, a longtime regional advocate who was interviewed by phone. “You can’t just have your money sitting there. Anybody that has more than 4% in unrestricted reserves without returning the money is violating the law. Period.”

Another advocate, Andrea Vecchio of East Islip, noted numerous reports from the state Comptroller's Office have documented cases of districts holding on to unnecessary cash surpluses. 

"Any money that's not needed, that's sitting in the budget, should be returned to taxpayers," Vecchio said.

Medicaid worries 

Overshadowing the dispute this year over districts' cash reserves is the worry that cuts on the federal level could lead to belt-tightening by the state.

New York, in fact, has already taken steps to deal with a possible fiscal crunch. The state’s budget legislation, approved last month, includes a “superpower” rule that would let the state withhold school aid and other money if it faces a deficit of $2 billion or more.

Aides to Gov. Kathy Hochul said the provision is meant to protect the state's finances. Many school leaders, however, fear the potential fallout.

Robert Vecchio, executive director of the Nassau-Suffolk School Boards Association, said in a phone interview  his organization was "paying close attention to what might happen to the federal budget and its potential impact on state finances for school aid."

On the Island and in Albany, some longtime school leaders said the budgetary language reminded them of what happened in 1990, when the state got caught up in a nationwide economic slump. At the time, then-Gov. Mario Cuomo and legislators imposed mid-year school aid cuts of $190 million. 

"We would strongly oppose any mid-year cuts to school aid," said Vecchio, who is no relation to the taxpayer advocate with the same last name.

Lowry, of the New York State Council of School Superintendents, also voiced concern over potential reductions in federal funding. He added, however, that recent efforts by Hochul to build up the state's reserves "could spare schools from facing cuts in the middle of the school year."

Lowry added any cuts in federal assistance might prove more harmful than other sorts of financial setbacks. 

"With a recession, we might assume that tax revenues will eventually rebound," Lowry said. "But federal aid reductions might never be fully reversed."