Senator Saland Announces Budget Passed Today To Help School Districts Affected By Accounting Changes

Stephen M. Saland

March 31, 2005

Senator Steve Saland (R,C Poughkeepsie) today announced that the budget passed today includes provisions that will help school districts affected by a new accounting requirement resulting from a ruling by the Governmental Accounting Standards Board (GASB) in December 2004. The Governmental Accounting Standards Board (GASB) is an independent, not-for-profit organization which establishes financial accounting and financial reporting standards for state and local governments.

In December 2004 the GASB ruled that governmental entities must account for the liability associated with pension payments in the same year that the salaries are paid. This ruling has a significant impact on approximately 30% of school districts which use either a cash or modified accounting methodology. Those schools which use a full accrual accounting system are not affected.

Those districts on a cash or modified accrual system had planned on carrying the 2004-05 pension liability in their 2005-06 budget. Because the GASB ruling would have required school districts to account for the 2004-05 pension liability in their 2004-05 budget these districts were caught midyear with a major unplanned liability. Among school districts in the 41st Senate District affected by this changes are Germantown, Kinderhook, Beacon, Arlington, and Poughkeepsie.

"Without this relief those districts were faced with paying unanticipated and substantial additional amounts of money during this school year and would have been forced to exhaust fund balances or increase taxes," said Senator Saland.

The legislation allows school districts to obtain an accrual advance on 2005-06 state aid to account for the difference resulting from this GASB ruling or apply to the Commissioner of Education for special permission for a waiver to compensate for these changes.

"I am very pleased that this legislation will assist those schools caught in a difficult position by this unexpected change in practice," said Senator Saland. "I am pleased that our school districts brought this issue to my attention and that we were able to offer a solution."