Long Island School Districts Face Scrutiny Over Excess Cash Reserves

Newsday reports that 12 Long Island school districts held unrestricted cash reserves above the New York State legal limit during the 2025-26 school year; nearly $3.64 billion.  The issue has particular significance in Long Island, where taxpayers already face substantial property tax bills. School taxes typically account for more than half of a homeowner’s overall property tax payment.

New York law permits school districts to maintain unrestricted reserves equal to no more than 4% of their annual operating budgets. These funds can be used at a district’s discretion, unlike restricted reserves that are set aside for specific purposes.  While most districts remained within legal guidelines, 12 districts reported unrestricted reserve levels above the 4% cap. Some of the districts cited were Brentwood, Port Jefferson, Freeport, Hempstead, Herricks, Island Park, and other smaller districts.

School administrators argue that maintaining healthy reserves is a prudent strategy, providing protection against inflation and unexpected expenses, for example.  However, some Long Island taxpayers may argue they are paying more tax than necessary when a school district exceeds the 4% in reserves and that those excess funds should be applied toward lowering future tax levies, for example.

Overall, Newsday highlights the ongoing challenge Long Island school districts face when planning each school year and the effect it can have on Long Island taxpayers.

See: 12 Long Island school districts had cash reserves beyond the legal limit in 2025-26 – Newsday

See also Michael Guerriero’s Tax Tracker Post from June 2025 on this topic:  Annual Property Tax Report Cards – $3.64 Billion in School District Cash Reserves – Farrell Fritz