Submitted By The Garden CitySchool District

Garden City Public Schools recognizes that the Comptroller's report concerning Employee Benefit Accrued Liability Reserves (EBALR)-one of the district's reserve funds--raises important questions for all levels of government in New York State. However, the school district believes the report focuses on a technical point and masks a larger and much more significant issue. As indicated in the report, Garden City, like 250 other school districts, placed funds in such a reserve account in order to address the very real post-employment benefit obligations that inevitably must be paid in the future to retirees. These obligations will be cited as a liability, beginning with the 2009 financial statements required from all school districts. The Comptroller's report states that EBALR accounts are not currently authorized to hold funds for post-employment benefits, but it is important to note that this interpretation has only been made clear to school districts recently.

Garden City followed sound accounting practices and the guidance of its auditor to comply with the requirements imposed by the Governmental Accounting Standards Board Statement 45 (GASB-45). Given the fact that a state-mandated actuarial analysis of obligations to retirees identified a liability for our school district of $95 million, the funding of the EBALR reserve should be viewed as a prudent and well intentioned strategy to protect local taxpayers, both now and in the years ahead from spikes in taxes that could wreak havoc with budgets: putting away money today reduces the costs that would otherwise have to be shouldered by taxpayers for years to come. Garden City acted in this manner in full belief that it constituted best practice.

Dedicating reserves to post-employment benefits was done with full disclosure to the community and after numerous discussions regarding the GASB-45 requirements at Board of Education meetings. Given that 250 other districts in New York State approached this issue in the same way as Garden City, that is, by committing some funds now to offset predicted future liabilities, the school district was far from alone in recognizing this significant threat to long-term fiscal health. The district's course of action demonstrates transparency in its budgeting and represents an effort to protect taxpayers, both current and future.

The district recognizes that it should not have utilized interest from EBALR funds for its general fund. The district has already corrected this practice. The district is also gratified that the Comptroller acknowledges, "Our report does not conclude that these districts are overtaxing their residents (p.27)."

Post-employment benefits that must be paid to retirees are obligations that school districts must fulfill; these requirements will not disappear just because the Comptroller and the Legislature have not yet agreed on the precise account to which funds should be posted. As the Comptroller himself noted in a press release last May, "The state and local governments have to start preparing for these costs . . . .The responsible, good government thing to do is to start preparing for the future."

Garden City taxpayers deserve responsible fiscal practice in the present to insulate them from future liabilities that clearly lie on the horizon. The school district is committed to working with the State Legislature and Office of the State Comptroller to determine how to properly fund post-employment benefits. In light of the Comptroller's report, the funds already put away for this purpose are now "stranded": no reserve fund currently available passes muster with the Comptroller, and the Legislature has not passed laws that would provide for alternate routes to address the liability. It is the school district's hope that these matters will be resolved quickly so the funds can be utilized in the best possible manner.