Day: March 14, 2025

To Merge or Not to Merge: New York State Offering Increased Aid to Consolidating School Districts

As of July 2024, school districts in New York State that reorganize—or merge—are eligible for financial assistance of up to 40 percent of the Total Foundation Aid Base under the Reorganization Incentive Operating Aid (RIOA) program. Unfrozen in the 2024-2025 state budget, RIOA is available to reorganized school districts for up to 14 years after merging, on a phase-out basis. New York State encourages consolidation for districts with small student populations as a solution to issues caused by low enrollment. Several districts in the state have already made the decision to merge, and more are considering the possibility.

The potential benefits of merging districts include cost savings, additional resources, expanded offerings for students, and upgraded facilities. However, many smaller districts are reluctant to merge due to concerns over loss of school identity, less individualized student attention, increased travel time, the potential for higher property taxes, and other possible consequences. In-depth studies evaluating the prospective benefits versus costs for school districts considering reorganization are necessary to determine the feasibility of potential mergers.

Potential Benefits of Merging

Cost Savings

Merging districts can result in reduced administrative and operational costs. Consolidating districts reduces the number of teachers and administrative staff required to operate the district, and fewer school buildings means less spending on utilities such as heat and electricity. Consolidating bussing systems can also help reduce transportation costs.

Additional Resources

A reorganized district benefits from the combined resources of both districts involved in the merger, including teaching staff, learning materials, and school equipment.

Expanded Programs

The funding provided through the RIOA program allows reorganized districts to develop and strengthen both academic and extracurricular programs. The new, larger districts may be able to hire more specialized instructors and offer a wider variety of educational programs. The funds can also be used to support non-academic programs such as athletics, clubs, and theater and music programs.

Facility Upgrades

RIOA funds can also be utilized to improve or renovate school buildings and grounds.

Concerns over Merging

Loss of School Identity

Communities faced with the possibility of a school district merger often fear that combining districts will lead to a loss of school identity. People may be reluctant to give up familiar school traditions, mascots, and the tight-knit communities they’ve become accustomed to.

Less Individualized Student Attention

Students, employees, and families in smaller school districts are accustomed to the personal qualities of a small school community, such as small class sizes, opportunities for parent involvement, easy access to teachers, and individualized student attention. A transition to a larger combined district may translate to a less personalized experience for students and families.

Longer Travel Time

When a merger occurs, students may need to travel further distances to school, increasing travel time and transportation costs.

Potential Increased Costs for Taxpayers

When two school districts merge, the new district may level up staff salaries and benefits to those of the higher-paying district, raising staffing costs. These higher staffing costs may result in higher property taxes for residents. Increased school transportation costs can also lead to higher taxes.

School district mergers present both potential advantages and disadvantages for communities in New York State, all of which should be considered by districts exploring the possibility of reorganizing. Merger feasibility studies should be conducted in order to thoroughly weigh the potential benefits versus costs for individual communities. For more information on school district reorganization, see NYSED’s Guide to the Reorganization of School Districts in New York State.

While you continue to act in the best interest of your school district, please know that RBT CPAs is here to support your district’s accounting, advisory, tax, and audit needs. Contact us to find out how we can be Remarkably Better Together.

How Do You Know If You Have a Good Fee Accountant?

A fee accountant is an external accountant hired by a Public Housing Authority on a contractual basis to handle the organization’s accounting responsibilities. The use of a fee accountant can improve the accuracy and efficiency of an Authority’s financial reporting, give the Authority access to specialized knowledge, and save the organization the expense of an in-house accounting team. But—not all fee accountants are created equal.

Below are some signs of a good fee accountant.

Minimal (or zero) audit adjustments

One sign that your fee accountant is doing his/her job well is a lack of adjustments, posted or unposted, to the Authority’s audited financials. This indicates that the Authority’s financial data has been reported accurately and in compliance with regulations.

Minimal errors in monthly financial reports

Another indicator of a good fee accountant is a lack of errors in the financial statements he/she prepares each month for the Board of Commissioners. Monthly financial reports are key to monitoring a PHA’s financial health; they should be accurate and submitted in a timely manner.

Ability to meet deadlines and communicate about delays

Fee accountants need to meet several key deadlines including those regarding budget reports, monthly financial reports, and Financial Data Schedules. If delays occur, the accountant should communicate this information to the PHA.

Understanding of HUD programs and compliance requirements

A good fee accountant understands the specific compliance requirements for HUD programs and keeps abreast of updates in industry regulations.

Experience with PHA software programs

Your fee accountant should be familiar with the common software programs used in the management of Public Housing Authorities, such as MRI Software, Yardi, and PHA-Web.

Audit preparation and readiness

Your fee accountant should have experience working with auditors and must be able to provide accurate supporting documentation to auditors in a timely manner. A fee accountant must ensure that the PHA’s books and records are audit-ready, meaning that all supporting documentation should reconcile to the trial balance before the auditor’s review. The auditor’s role is to verify accuracy, not to make adjustments. Any necessary corrections should be identified and addressed before the audit begins to ensure a smooth and efficient audit process.

Communication and responsiveness

Is your fee accountant accessible and responsive when you reach out with questions or concerns? A good fee accountant maintains consistent communication with the Housing Authority as well as with auditors.

Willingness and ability to help the Authority resolve issues

Finally, your fee accountant should be a helpful resource, identifying potential issues and opportunities in the PHA’s financial processes. A good fee accountant is committed to helping the PHA resolve deficiencies and other issues that arise.

As you can see, there is much more to the fee accountant role than merely completing accounting tasks. When it comes to accounting services, quality of service matters. Essential to maintaining the financial reputation and integrity of your PHA is a fee accountant who is reliable, effective, and well-versed in the specific requirements for HUD programs.

Our experts at RBT CPAs possess the specialized knowledge and skills to work with you on a per-service basis alongside your internal accounting resources or as your full-service accounting and tax department and advisor. When you partner with RBT CPAs, you can be confident in your program’s financial integrity and compliance, so you can continue to focus on your goal of providing decent and safe housing for our state’s residents. To learn more about how we can support your accounting, tax, audit, and advisory needs, visit our website or give us a call.

3 Tax-Saving Opportunities for New York Breweries and Distilleries

Is your business making the most of tax benefits this year? As annual tax deadlines approach, consider the following credits and deductions available to breweries and distilleries in New York State.

Section 179 and Bonus Depreciation

Section 179 allows business owners to deduct the full cost of tangible property placed into service during the tax year. Eligible property includes machinery, equipment, certain vehicles, computers, software, and more. For a full list of eligible property, see IRS publication 946. For tax years beginning in 2024, the maximum expense deduction businesses can take is $1,220,000. This limit decreases when more than $3,050,000 worth of Section 179 property is placed into service during the tax year.

Bonus depreciation is another immediate expense deduction available to brewers and distillers. Bonus depreciation allows business owners to deduct a percentage of the cost of newly acquired property. The bonus depreciation rate for 2024 is 60 percent for certain qualified property. Note: Beginning in 2022, bonus depreciation percentages began decreasing as the incentive started phasing out. The rate will continue to go down by 20 percent each year until 2027 when the phase-out will be complete.

Combining Section 179 and bonus depreciation can result in significant tax savings for business owners. If you plan to utilize both benefits, keep in mind that Section 179 must be applied first.

Alcoholic Beverage Production Tax Credit

Registered distributors who produce beer, cider, wine, or liquor in New York are eligible for the Alcoholic Beverage Production Tax Credit if, during the tax year, they produced a maximum of 60 million gallons of beer or cider; 20 million gallons of wine; or 800,000 gallons of liquor.

For the first 500,000 gallons produced in the state, the tax credit equals:

14 cents per gallon of beer or cider
30 cents per gallon of wine
$2.54 per gallon of liquor with alcohol by volume (ABV) between 2% and 24%
$6.44 per gallon of liquor with an ABV above 24%

For amounts in excess of 500,000 gallons, the credit equals 4.5 cents per gallon up to 15 million additional gallons of beer, cider, or wine and up to 300,000 additional gallons of liquor. During an audit, you may be required to prove entitlement to the tax credit by providing copies of various forms (click here for a list.)

Please note that this credit is taxable. For more information, check out our article on the taxability of the NYS Alcohol Production Tax Credit.

Tipped Employee Credits

FICA Tip Credit

If you employ food and beverage service workers who customarily earn tips and you pay Social Security and Medicare taxes on those tips, you may be eligible to credit a portion of what you pay against your business income taxes. Recordkeeping requirements apply.

New York Tip Credit

If you employ food and beverage service workers who earn at least $30 a month in tips, a portion of those tips may be used to satisfy your minimum wage obligation. When taking this credit, recordkeeping and reporting requirements apply. More information on the NYS Tip Credit can be found here.

Conclusion

Don’t miss out on opportunities to maximize your tax benefits this year. These credits and deductions can save you money on taxes, and capital which can then be used to reinvest in your business. For more information on tax benefits available to your business, contact our experts at RBT CPAs. Our firm is here to support your business’s accounting, advisory, tax, and audit needs. Give us a call today to find out how we can be Remarkably Better Together.