Legislation Offers Lifeline for Funding of COVID-19 Equipment and Capital Improvements

In the midst of 2020-21 school reopening in August of 2020, New York State Governor Andrew Cuomo signed into law Assembly Bill #A10492 to authorize certain COVID-19 related capital expenditures and reserve fund transfers. Facing looming costs related to COVID-19 health and safety guidance and the shift to in-person learning, these tools have become needed lifelines for schools. The legislation permits schools to access reserve fund money by board resolution for unprecedented expenses relating to the pandemic, subject to certain requirements and restrictions.

As described below, the legislation authorizes (1) capital reserve expenditures for capital costs attributable to COVID-19 pandemic; and (2) transfer of moneys from reserve funds to pay costs attributable to COVID-19 pandemic.

Capital Reserve Expenditures

Under the legislation, schools are authorized to spend money from capital reserve funds for “capital costs attributable to” the COVID-19 pandemic. The expenditures are not subject to voter approval, but must be approved by a board resolution. School districts should work closely with the project’s architect and legal counsel to prepare the description of capital costs attributable to the COVID-19 pandemic in the authorizing resolution. Schools should also be mindful that other requirements applicable to capital projects still apply, including competitive bidding requirements.

Reserve Fund Transfers

The legislation also authorizes transfers from any reserve fund for “operating costs or other costs attributable to” the COVID-19 pandemic. Under the legislation, the transfers are not subject to voter approval requirements that ordinarily apply. However, when transferring the money, the School District must comply with the requirements below:

• The Board must authorize the transfer by resolution.
• The money transferred must be reimbursed to the reserve over a period of not more than five (5) fiscal years, starting with the fiscal year following the transfer.
• At least 20% of the moneys temporarily transferred must be reimbursed each fiscal year, including the amount that would have been earned on investment of such moneys.

If you have any questions regarding use of these options in connection with your budget and preparation for the 2021-22 school year, feel free to contact Jeff Lewis at jmlewis@ferrarafirm or at one of the telephone numbers listed below.