Huntington maintains a reserve fund for employee separation expenses

Trustees Strengthen District’s EBALR Fund

Huntington maintains a reserve fund for employee separation expenses.

November 17, 2020

Maintaining several dedicated reserve funds has helped Huntington UFSD develop a strong financial position with budget and tax stability and steadily declining debt.

Among the district’s reserves is the employee benefit accrued liability fund, which contains about $6.787 million. This specific reserve is utilized when certain types of employees separate from the district and payment of accumulated leave is required.

“Contractual obligations related to employee separation typically include a cost,” Huntington Superintendent James W. Polansky said. “This fund helps the district to manage these costs, particularly during a year when an above average number of employees decide to retire as occurred last year.”

“School districts can establish an employee benefit accrued liability reserve (EBALR) under Section 6-p of General Municipal Law (GML) and use EBALR monies to make cash payments to employees for accrued leave time due to them upon separation from school district employment,” according to the Office of the New York State Comptroller.

EBALR fund monies cannot be used for such items as FICA or Medicare payments, retiree health insurance or retirement incentives. The fund typically covers payment for unused sick and vacation time in accordance with the contracts of various employee groups.

The Huntington School District created its EBALR fund on June 30, 2002. It currently contains $6,787,219. “This reserve has typically been funded via end of year surplus monies from the district’s general fund,” states a report detailing each of Huntington UFSD’s reserve fund.

When payment from the reserve is needed, the transaction flows through the budget via a transfer to the general fund from the EBALR fund. “This reserve will continue to be used in this manner to make such payments,” district officials told trustees.

When the Governmental Accounting Standards Board (GASB) issued Statement 45, school districts were advised that reserving funds for future liabilities was appropriate. GASB 45 requires government employers (including states, cities, counties, towns, etc.) to “measure and report the liabilities associated with other (than pension) post-employment benefits.”

The district’s EBALR account balance grew by about $2 million between the 2019/20 and 2020/21 school years as officials seek to have funds available to pay accumulated leave related expenses for employees that will be retiring without impacting the regular school budget.