Voters approve amending debt limit for small city school districts

On Board Online • November 27, 2023

By John Daley
Governmental Relations Representative

On Nov. 7, voters across New York State passed a constitutional amendment to the debt limit for small city school districts, with 64.2% in favor and 35.8% opposed. This marks a major milestone for school district fiscal flexibility.

State law allows most school districts (central, common and union free districts) to incur debt up to or equal to 10% of full value of the taxable property within the district. But, beginning in 1951, a Constitutional amendment set the debt limit for the state's 57 small city school districts at 5%. At the time, budgets of small city school districts were not subject to voter approval.

However, voter approval of small city school district budgets began in 1997, weakening, if not ending, any rationale for treating small city school districts differently from other districts whose budgets are subject to voter approval. Nevertheless, the outdated 5% debt limit remained in place. The restriction caused small city school districts to break debt-financed projects into pieces, deal with cost increases and experience other difficulties when pursuing facility updates and improvements.

In 2003, state voters narrowly rejected a proposal to raise the debt limit to 10%. That prompted NYSSBA and other educational organizations to begin work to get the issue before the voters again and to promote passage.

The process of amending the state Constitution involves multiple steps. First, a bill that authorizes putting the question of amending the Constitution before the voters must pass in both houses of the state Legislature in two successive legislative sessions. Then a simple majority of voters must vote in favor of the change in a statewide referendum.

The legislation to authorize the most recent amendment was sponsored by Senator Shelley Mayer and Assemblymember John McDonald and was supported by NYSSBA. It passed during the 2022 and 2023 legislative sessions. Therefore, it appeared on the November 2023 general election ballot.

In months prior to the referendum, NYSSBA and other education groups sought to raise awareness of the importance of the ballot measure and encourage "yes" votes.

"Passage of the amendment will do much to create much-needed flexibility for small city school districts," said NYSSBA Executive Director Robert Schneider. "Our small city school districts will now be able to undertake debt-financed projects in a fairer and more equitable fiscal environment."