S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8708
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 2, 2025
                                ___________
 
 Introduced by M. of A. McDONALD -- read once and referred to the Commit-
   tee on Education
 
 AN  ACT  to amend the education law, in relation to prior year state aid
   adjustments
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Subdivision  5  of  section 3604 of the education law, as
 amended by chapter 82 of the laws of 1995, paragraph  a  as  amended  by
 chapter  161  of the laws of 2005, and paragraph b as amended by section
 59 of part A of chapter 436  of the laws of 1997, is amended to read  as
 follows:
   5. a. (I) State aid adjustments. All errors or omissions in the appor-
 tionment  shall  be  corrected  by  the  commissioner. Whenever a school
 district has been apportioned less money than that to which it is  enti-
 tled,  the  commissioner may allot to such district the balance to which
 it is entitled. Whenever a school district  has  been  apportioned  more
 money  than  that  to  which it is entitled, the commissioner may, by an
 order, direct such moneys to be paid back to the state to be credited to
 the general fund local assistance account for state aid to the  schools,
 or may deduct such amount from the [next] FIRST apportionment to be made
 IN THE SUBSEQUENT SCHOOL YEAR to said district[, provided].
   (II)  PROVIDED, however, that, upon notification of excess payments of
 aid for which a recovery must be made by the state through deduction  of
 future  aid  payments,  WHERE  THE    TOTAL AMOUNT TO BE RECOVERED IS IN
 EXCESS OF ONE PERCENT OF THE DISTRICT'S TOTAL GENERAL FUND  EXPENDITURES
 FOR THE PRECEDING SCHOOL YEAR, a school district may request  that  such
 excess  payments be recovered by deducting such excess payments from the
 payments due to such school district and payable in the [month  of  June
 in  (i)] FIRST AVAILABLE APPORTIONMENT  OF THE SCHOOL YEAR FOLLOWING the
 school year in which such notification was received and [(ii)]  the  two
 succeeding  school years, provided further that there shall be no inter-
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD13063-01-5
              

 A. 8708                             2
 
 est penalty assessed against such district or collected  by  the  state.
 Such  request  shall  be  made  to  the commissioner in such form as the
 commissioner shall prescribe[, and shall be based on documentation  that
 the  total  amount  to  be  recovered is in excess of one percent of the
 district's total general fund  expenditures  for  the  preceding  school
 year].  The amount to be deducted in the first year shall be the greater
 of [(i)] (A) the sum of the amount  of  such  excess  payments  that  is
 recognized  as  a liability due to other governments by the district for
 the preceding school year and the positive remainder of  the  district's
 unreserved  fund  balance at the close of the preceding school year less
 the product of the district's total general fund  expenditures  for  the
 preceding  school  year  multiplied  by five percent, or [(ii)] (B) one-
 third of such excess payments. The amount to be recovered in the  second
 year  shall  equal  the  lesser  of  the remaining amount of such excess
 payments to be recovered or one-third of such excess payments,  and  the
 remaining amount of such excess payments shall be recovered in the third
 year.  [Provided  further  that, notwithstanding any other provisions of
 this subdivision, any pending payment of moneys due to such district  as
 a prior year adjustment payable pursuant to paragraph c of this subdivi-
 sion  for  aid  claims that had been previously paid as current year aid
 payments in excess of the amount to which the district is  entitled  and
 for  which  recovery  of  excess payments is to be made pursuant to this
 paragraph, shall be reduced at the time of actual payment by any remain-
 ing unrecovered balance of such excess payments, and the remaining sche-
 duled deductions of such excess  payments  pursuant  to  this  paragraph
 shall  be  reduced  by  the commissioner to reflect the amount so recov-
 ered.]
   (III) The commissioner shall certify no payment to a  school  district
 based on a claim submitted later than three years after the close of the
 school  year in which such payment was first to be made.  For claims for
 which payment is first to be made in the nineteen  hundred  ninety-six--
 ninety-seven school year, the commissioner shall certify no payment to a
 school  district  based  on a claim submitted later than two years after
 the close of such school year. For claims for which payment is first  to
 be  made  in the nineteen hundred ninety-seven--ninety-eight school year
 and thereafter, the commissioner shall certify no payment  to  a  school
 district  based on a claim submitted later than one year after the close
 of such school year. Provided, however, no payments shall be  barred  or
 reduced  where  such payment is required as a result of a final audit of
 the state. It is further provided that, until June  thirtieth,  nineteen
 hundred  ninety-six,  the  commissioner  may  grant  a  waiver  from the
 provisions of this section for any school district if it is in the  best
 educational  interests  of the district pursuant to guidelines developed
 by the commissioner and approved by the director of the budget.
   b. Claims resulting from court orders or judgments. Any payment  which
 would  be  due  as  the result of a court order or judgment shall not be
 barred, provided that, commencing January first, nineteen hundred  nine-
 ty-six,  such  court order or judgment and any other data required shall
 be filed with the comptroller within one year from the date of the court
 order or judgment, and provided  further  that  the  commissioner  shall
 certify  no payment to a school district for a specific school year that
 is based on a claim that results from a  court  order  or  judgement  so
 filed  with  the  comptroller  unless  the total value of such claim, as
 determined by the commissioner, is  greater  than  one  percent  of  the
 school  district's  total  revenues  from  state  sources  as previously
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 recorded in the general fund and reported  to  the  comptroller  in  the
 annual financial report of the school district for such school year.
   c.  Payment  of moneys due for prior years. State aid payments due for
 prior years in accordance with the provisions of this subdivision  shall
 be  paid  [within  the  limit  of  the appropriation designated therefor
 provided, however, that each eligible claim  shall  be  payable  in  the
 order  that it has been approved for payment by the commissioner, but in
 no case shall a single claim draw down more than forty  percent  of  the
 appropriation so designated for a single year, and provided further that
 no  claim  shall  be  set  aside  for  insufficiency  of funds to make a
 complete payment, but shall be eligible for a  partial  payment  in  one
 year and shall retain its priority date status for appropriations desig-
 nated  for  such purposes in future years] TO THE SCHOOL DISTRICT IN THE
 FIRST APPORTIONMENT OF THE SCHOOL YEAR  FOLLOWING  THE  NOTIFICATION  OF
 SUCH  PAYMENTS.  FOR  PAYMENT OF ELIGIBLE CLAIMS APPROVED BY THE COMMIS-
 SIONER AS OF JUNE THIRTIETH, TWO THOUSAND TWENTY-FIVE, THE  STATE  SHALL
 ANNUALLY  APPROPRIATE AND PAY THE LESSER OF FIFTY MILLION DOLLARS OR THE
 TOTAL SUM  THEN DUE AND OWING TO SCHOOL DISTRICTS  AS  ELIGIBLE  CLAIMS,
 WHENEVER APPROVED BY THE  COMMISSIONER.
   §  2. This act shall take effect immediately and shall apply to school
 years commencing on and after July 1, 2026.