Opinion 89-8


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.


MUNICIPAL FUNDS -- Repair Reserve Fund (necessity for consent by the Office of the State Comptroller to establishment by school district in Adirondack Park)
SCHOOL DISTRICTS -- Repair Reserve Fund (necessity for consent by the Office of the State Comptroller to establishment by a school district in Adirondack Park)
STATE COMPTROLLER -- Approval by (for establishment of repair reserve fund by school district in Adirondack Park)

GENERAL MUNICIPAL LAW, §6-d; Education Law, §3651: A school district located within the Adirondack Park may establish a repair reserve fund pursuant to General Municipal Law, §6-d without the prior consent of the Office of the State Comptroller.

You ask whether a school district, which is located within the Adirondack Park and which has within its boundaries State lands assessed at more than 10% of the aggregate assessed valuation of real property within the school district, must obtain the consent of the State Comptroller prior to establishment of a repair reserve fund.

General Municipal Law, §6-d authorizes the governing board of any municipal corporation, school district, district corporation or town or county improvement district to establish a repair reserve fund. Moneys in the fund may be appropriated for repairs of capital improvements or equipment, which repairs are of a type not recurring annually or at shorter intervals (General Municipal Law, §6-d[3][a]).

Subdivision 7 of section 6-d requires that any town, which is located in the Adirondack Park and has within its boundaries State lands assessed at more than 10% of the total assessed valuation of the town, receive the consent of the Comptroller, on behalf of the State, prior to establishing or appropriating moneys from a repair reserve fund. Subdivision 7 also requires that any district corporation or improvement district, situated in whole or part within such a town, receive consent of the Comptroller prior to establishing or appropriating moneys from a repair reserve fund. Clearly, a school district is not a town or county improvement district (see Town Law, article 12; County Law, article 5-A). Therefore, unless it is a district corporation, approval by the Comptroller would not be required under section 6-d.

The term district corporation is not defined in section 6-d. General Construction Law, §66(3), however, defines "district corporation" as follows:

A 'district corporation' includes any territorial division of the state, other than a municipal corporation, heretofore or hereafter established by law which possesses the power to contract indebtedness and levy taxes, or benefit assessments upon real estate or to require the levy of such taxes or assessments, whether or not such territorial division is expressly declared to be a body corporate and politic by the statute creating or authorizing the creation of such territorial division. [Emphasis added]

"Municipal corporation" is defined under General Construction Law, §66(2) to include a county, city, town, village and school district. Therefore, since the term "district corporation" includes only territorial divisions other than municipal corporations and since, for this purpose, "municipal corporation" includes school districts, we conclude that a school district is not a district corporation under section 6-d. Accordingly, a school district within the Adirondack Park does not require consent of the State Comptroller prior to establishing a repair reserve fund under section 6-d.

It should be noted that, under Education Law, §3651, school districts are authorized to establish reserve funds "for financing, in whole or in part, the cost of any object or purpose for which bonds may be issued by, or for the objects or purposes of, the school district pursuant to the Local Finance Law". Section 3651(8)(b) provides as follows with respect to school districts within the Adirondack Park:

Notwithstanding the foregoing provisions of this section, in any school district which is wholly or partly in the Adirondack park and has within its boundaries state lands assessed at more than ten per centum of the aggregate assessed valuation of the real property within the bounds of such school district, the school district shall not establish a reserve fund unless, on the recommendation of the commissioner of education, the state comptroller, on behalf of the state, shall consent thereto. Upon the expiration of fifteen days from the date of the filing in his office of the application for such consent, together with the recommendation of the commissioner of education, and upon reaching a determination, the state comptroller shall make an order, in triplicate, granting or denying such consent. One copy of such order shall be filed in the office of the state department of audit and control at Albany, New York, another in the state department of education at Albany, New York, and the third in the office of the clerk of such school district. [Emphasis added]

If read literally, subdivision (8)(b) might be construed to require approval of any reserve fund of a school district in the Adirondack Park. It is our opinion, however, that because subdivision (8)(b) provides that it is applicable "(n)otwithstanding the foregoing provisions of this section [3651]", it is intended to require the Comptroller's consent only for reserve funds established pursuant to section 3651 and not for reserve funds established pursuant to General Municipal Law, §6-d. In this regard, we note that, since the Local Finance Law does not prescribe a period of probable usefulness for repairs of capital improvements or equipment, a reserve fund may not be created pursuant to Education Law, §3651 for this purpose (1979 Opns St Comp No. 79-397, unreported).

Accordingly, the consent of the Comptroller is not required prior to establishment of a repair reserve fund under General Municipal Law, §6-d. Further, a school district repair reserve fund may be established only pursuant to General Municipal Law, §6-d and not Education Law, §3651.

March 16, 1989
George O. Milroy, School District Treasurer
Town of Webb