The Huntington School District’s employee benefit accrued liability reserve fund contains more than $3.4 million. The reserve is utilized when certain types of employees separate from the district and payment of accumulated leave is required.
“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 an EBALR fund on June 30, 2002. It currently contains $3,496,043. “This reserve has typically been funded from excess fund balance,” district officials told Huntington School Board members in a report detailing each district reserve fund.
“Employee separation payments for the purposes of retirement or otherwise cannot often be anticipated during the budget development process,” Huntington Superintendent James W. Polansky said. “This reserve fund helps to ensure that the district is able to appropriately address certain non-discretionary expenses that are less than predictable.”
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.”