Opinion 98 - 16

This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

REAL PROPERTY TAXES AND ASSESSMENTS -- Certiorari Proceedings (timing for return to general fund of excess moneys in school district reserve fund for tax certiorari claims)

SCHOOL DISTRICTS -- Reserve Fund (timing for return to general fund of excess moneys in fund established to pay tax certiorari claims)

EDUCATION LAW, §3651: Moneys deposited in a tax certiorari reserve fund by a school district, which are not expended to pay judgments or claims arising out of tax certiorari proceedings for the tax roll in the year the moneys are deposited in the fund and/or which will not reasonably be required to pay any such judgment or claim, may be returned to the general fund at any time before the first day of the fourth fiscal year after the initial deposit, but no later than on that date.

You ask how long a school district must hold moneys paid into a tax certiorari reserve fund before the moneys may be returned to the school district's general fund.

Education Law, §3651(1-a) authorizes a school district to establish a reserve fund for the payment of judgments and claims in tax certiorari proceedings in accordance with Real Property Tax Law, article 7. Section 3651(1-a) further provides that the reserve fund may be established without voter approval (1989 Opns St Comp No. 89-17, p 35) and that the total amount of moneys held in such a reserve fund may not exceed the amount which might reasonably be deemed necessary to meet anticipated judgments and claims arising out of tax certiorari proceedings (cf., Korn v Gulotta, 72 NY2d 363, 373, 534 NYS2d 108, 113).

As to how long moneys must be held in the fund, section 3651(1-a) provides as follows:

Any monies deposited to such reserve fund which are not expended for the payment of judgments or claims arising out of such tax certiorari proceedings for the tax roll in the year such monies are deposited to the said fund and/or which will not reasonably be required to pay any such judgment or claim shall be returned to the general fund on or before the first day of the fourth fiscal year following the deposit of such monies to said reserve fund. (Emphasis added)

The plain meaning of the phrase "on or before" in connection with the payment of moneys is that the money must be paid immediately on the designated date or at any time in advance of that date (see, e.g., Edlund v Bounds, 842 SW2d 719, 726).

Accordingly, moneys deposited in a tax certiorari reserve fund by a school district, which are not expended to pay judgments or claims arising out of tax certiorari proceedings for the tax roll in the year the moneys are deposited in the fund and/or which will not reasonably be required to pay any such judgment or claim, may be returned to the general fund at any time before the first day of the fourth fiscal year after the initial deposit, but no later than on that date.

August 10, 1998
Bruce Bonacquist, District Treasurer
Menands Union Free School District