RAQs: Recently Asked Questions

Topic: Using tax levy or donated funds to purchase food for community - 4/30/2020
Could we use any of our budgetary funds as collected through our tax levy and/or funds received fr...
Posted: Thursday, April 30, 2020 Permalink

MEMBER QUESTION

Could we use any of our budgetary funds as collected through our tax levy and/or funds received from donations (restricted and unrestricted) to pay for food (dry goods, fresh produce and/or fruit) and PPE's which would be given freely to the public/patrons some of which may not be from our community (we would not ask them for a library card or ID)?

If so, could it be considered a program or if not what other budgetary designation would you suggest it be given?


 

WNYLRC ATTORNEY'S RESPONSE

Before I answer this, I am going to share a story.  Trust me, it’s relevant.

When the workforce restrictions and ban on large gatherings due to COVID-19 started impacting libraries, the first wave of questions to “Ask the Lawyer” were about continuity of operations.  Specifically, they were about continuing payroll and still offering programs, even though staff would need to work from home.

Because Executive Orders and public health restrictions were happening at a rapid pace, answers needed to be developed quickly. 

If there is one thing the lawyers hate, it is quick decision-making.  We like precedent, we like time for research, and we like ample time to reflect on the implications of our client’s decisions.   In a world moving ever-faster, this is one of the things I cherish about my profession: it demands reflection.

But with libraries waiting for input, I didn’t have the luxury of time.  My research indicated that—barring a union contract provision or other express intervening factor—job expectations could be temporarily altered and library programs could continue, re-tooled to meet social distancing requirements (a/k/a “online”) while ensuring legal compliance and limiting liability.  But I couldn’t take a week or two to decide.

So I did what lawyers do when we don’t have time to let advice ferment—I turned to another lawyer.

I called an attorney I knew would appreciate the nuances of a question involving municipal law, Education law, taxpayer money, and the all-seeing eye of the NYS Comptroller.  I laid out the thinking that would eventually form my answers, and asked him to poke any holes he could see (I think I said “Pretend you’re the attorney for an angry taxpayer”). 

He asked a few well-informed, testing questions, and when my legal analysis held up, I felt good. 

But then he asked:

“Cole, do you actually think when this thing is all over, the Comptroller is going to organize a posse and hunt down libraries for trying to help their communities? I mean come on…people are in real need here.  Who would do that?”

I laughed, and it felt good.[1]  I thanked him and said I owed him one (in my world that means he gets to ask me a similar favor, any time, night or day, and I have to deliver).

Here’s the truth, though: although I laughed, my secret answer to his question was: Yes.  Yes, I do think that when this is all over, the Comptroller could audit and expose fiscal mis-steps by well-meaning libraries.  And I am also concerned that frightened tax payers and municipalities, searching for a way to “solve” fiscal panic, could use any small lapses in compliance or transparency to try and reduce budgets next fiscal year (just when they’ll be needing their libraries to assist with ongoing community recovery).  That is why the member’s question is so important.

That said, I got into this business because I believe that law, when well-developed and thoughtfully applied, can ensure justice and create the conditions for a happy society.  And I think the law—even as construed by the Comptroller—will allow for the actions proposed by the member, without the concern that a prohibited gift[2] or shady transaction was engaged in.

How?

I’ll give you three solutions.

But first…

Some Necessary Background

As a primer to each solution, just in case you haven’t checked in on fiscal controls for public libraries, every reader should visit NYLA’s excellent “Handbook for Library Trustees” (2018 edition), pages 50-58.[3]  This section sets forth all the routine requirements for properly accepting, retaining, spending, and accounting for both public and privately sourced funding. 

The solutions below, and the steps to set them in motion, build off the assumption that a library is following the fiscal practices laid out in those pages.

And just one more thing…

 

Safety First

Okay.  Let’s say your board is ready to assess and approve budget adjustments to initiate the acquisition and distribution of food and PPE.  Your staff and some volunteers are rarin’ to go.[4]   All you need to do is sort out the legal stuff.

But before worrying about how to fund it, or how to characterize the initiative in the budget, the first thing to consider is safety.

No matter what situation the library is in, a written safety plan, informed by OSHA and CDC guidelines, and ideally, confirmed with the local County Health Department, is the first priority for any such initiative.  Before approving funds, a board should review the plan for safety, and be assured that it is as well-developed as it can be (and again, if at all possible, confirmed by experts).[5]

So with that “safety first” caveat, here are the three solutions:

 

Solution 1: Acquisition and Distribution Only (No programming)

Objective: The library will acquire and distribute food and PPE, without any educational programming component or further conditions for participation (people can just stop by and pick up what they need).

Action Steps:

Step 1: Organizers (who could be board members, or staff, or volunteers…any combination is fine) develop and, with a county health official, affirm a safety plan for the distribution of the resources.  This plan should include how the items will be acquired, transported, and picked up, and what staff and volunteer resources will be used. 

NOTE: to ensure the safety of employees and protect the library from any liability, changes to routine job duties should be confirmed in a short letter referencing the safety plan.

Step 2:  Considering the need they hope to fill, and safety parameters, organizers develop a procurement plan, consistent with library policy and pages 50-58 of the Trustee Handbook, for the supplies to be acquired.  This plan should consider the appropriate sourcing and selection of supplies (PPE meeting CDC guidelines, food suited to re-distribution), and the need to follow relevant procurement laws.

NOTE:  On March 27, the Governor issued Executive Order 202.11, which suspends the public bid opening requirements of General Municipal Law Section 103(2) (of course, 103 only applies to purchases exceeding $20k…that would be a lot of PPE!).

Step 3: The Treasurer develops a budget recommendation for a budget change that will fund the procurement plan, and confirms to the board that any private funds to be used are not barred by donor terms (if all of the steps in this solution are followed, it will be a legal use of tax levy funds).

Step 4:  The board looks through its mission and plan of service and selects the language in those guiding resources consistent with a distribution for the goods to promote the health or general well-being of the community.

Step 5:  The board verifies the above steps, verifies consistency with bylaws and library policies, and sets a meeting under the modified procedures of the Open Meetings Law to adopt a customized version of the following resolution:

WHEREAS it is the mission of the [NAME] Library to [insert] and the plan of service for the library includes [insert];and

WHEREAS the state is currently in a state of emergency as a result of the ongoing COVID-19 pandemic; and

WHEREAS owing to the pandemic and state of emergency, the library’s area of service is in an unprecedented state of need with regard to fundamentals and supplies for personal safety; and

WHEREAS, owing to travel restrictions and the need of essential workers to serve our community, some people within our area of service may not be card-holding members of the community, but still be in need of supplies that will protect the their well-being, as therefore the general health of our area of service; and

WHEREAS the board finds it consistent with the mission and plan of service to adjust the current budget of the library to allocate resources to assist those within our community by supplying fundamental resources to enable the promotion of health and safety during a time of emergency; and

WHEREAS because the library is uniquely situated and widely regarded as a trustworthy and centrally located institution whose resources are freely accessible to all, and regards it as mission-critical to continue that role at this time; and

WHEREAS the library staff has identified a written plan for the safe allocation of such fundamental resources, and such plan has been reviewed by appropriate health officials; and

WHEREAS the library staff has identified and the board has duly reviewed a proposed plan for the responsible and compliant procurement of such resources, which is attached to this resolution and included in the minutes of this meeting; and

WHEREAS the Treasurer has verified that any private sources of funding do not bar the proposed procurement;

BE IT RESOLVED that the current budget be amended to direct [$amount] from [insert] to the acquisition and free distribution of food and personal protective equipment during the state of emergency, and during any period of recovery (the “Community Health Initiative Plan”); and

BE IT FURTHER RESOLVED that the acquisition of such resources listed in the Procurement Plan shall be conducted and accounted for per all the required provisions for procurement; and

BE IT FURTHER RESOLVED that the library shall effect the distribution of the resources only as set forth in the attached Safety Plan.

 

Solution 2: A Public Health Program

Objective: the library develops a program, consistent with its plan of service, to educate participants on PPE and the importance of good nutrition during a pandemic, and after a short educational program, makes supplies available.  This could even include innovative and fun ideas, like a recipe from a local chef, or instructions for canning food.

Action Steps:

Step 1: Organizers develop and, with a county health official, affirm the content of a short educational program, as well as the safety plan for distribution of the resources. 

Step 2:  Follow all the steps in “Solution 1,” but add this “whereas” clause to your resolution:

WHEREAS the library staff has [developed/identified] a short informational program on personal protective equipment and the important of good nutrition, and such program has been [reviewed by/endorsed by] appropriate health officials;

And add this further action to the resolution:

BE IT FURTHER RESOLVED that in conjunction with the distribution of fundamental resources the library shall promote the short informational program identified in the Safety Plan.

And finally…

 

Solution 3: The Partnered Program

Objective: together with another entity, and per a written agreement, the library allocates financial, and perhaps other, resources to a joint public health initiative to acquire and distribute supplies.

This one I can’t provide a template for: the permutations are just too diverse.  I can only say, when working with another entity, the library will need to consider every element listed in the above solutions: safety (first, always), mission alignment, employee needs, budget, and proper vetting of the plan by appropriate health officials.

Because of the risks related to compliance, a collaborative approach (unless it is just a donation to one of the above efforts…with that, take the money and get it done!) should be only through a written agreement that has been reviewed by the library's lawyer.  For this reason, it could be more cumbersome than other approaches, but in the event of a worst-case scenario, confirming all those details will be worth it.

 

For All Solutions

For any of the solutions I have outlined above, a critical contributor may be the library's insurance carrier. Right after the organizers start developing the plan for safety, someone should give your carrier a call, just to make sure there are no “exclusions” from the policy or conditions for your library to consider.

How do you check in with a carrier on this?  Just tell them: “Some lawyer who writes about library legal issues said we should check in with you before we do this.”

While your insurance carrier is probably used to the library developing innovative programming and serving a wide swathe of the population, the distribution of food and PPE during a pandemic is something they might want to weigh in on.  That said, in my experience, most carriers will encourage your initiative.  They might ask questions about where the distribution will take place, who is offering the programming, and how you are sourcing the supplies. 

Since the answers might impact your planning, it is better to call them early in the process, rather than just before the board meets (telephonically, as allowed by Executive Order 202.6[6]) to vote.

And who knows?  They might even have some helpful hints for you as you undertake to support your community.   This whole thing is keeping agents and adjusters awake at night, just like the rest of us.

 

Thank you

Okay, once I start waxing on about insurance, it’s time to pack it in.  I hope this was helpful, and I hope it can contribute to your library meeting the needs of your community.

Thank you for a great question, for your determination, and your dauntless innovation.

 



[1] This image his rhetoric inspired in my head--an army of GAGAS-wielding accountants, riding horses across libraryland, handing out fiscal frontier justice—makes me laugh now, too (but also cringe).

[2] In violation of Article VIII, Section 8 of the NY Constitution.

[3] One cardinal rule at “Ask the Lawyer” is “don’t reinvent the wheel.”  If library resources have already been used to develop solid guidance on a topic, we simply refer the member to that answer.  Lucky for me, librarians are innovators, so there are always new topics to address.

[4] Some libraries and library systems may have determined that, because they are regarded as a subdivision of government, the current workforce reduction orders do not apply to them.  Others will be organizing a program with the restriction that employees must (as of April 28, 2020) 100% work from home.  Still others will be coordinating terms of employment with a union.  This answer presumes your library is working within its own, unique parameters.

[5] By stressing this, I don’t mean to imply that the member is not thinking about safety (in fact, the care the member is taking about legal compliance suggests to me that they place a high priority on safety).  I just want to make sure that in any initiative to assist during this time of emergency, safety is the first consideration on the table.  At all times.

Tags: COVID-19, Donations, Emergency Response, Municipal Libraries, Taxes

Topic: Tax Assessment Changes - 1/3/2020
We are an association Library that uses a school ballot to levy funding. We have received a bill f...
Posted: Friday, January 3, 2020 Permalink

MEMBER QUESTION

We are an association Library that uses a school ballot to levy funding. We have received a bill from the school for 2 years now that a landowner has had their taxes re-accessed back 3 years and now we owe the school money. Last year we paid it because it seemed like bad luck and there weas court documents saying the back money was owed. It seems to becoming a trend as another large land owner/company has done the same and now we owe again this year, and it's increasing. How do we continue to handle this trend and do we owe them?

WNYLRC ATTORNEY'S RESPONSE

Imagine walking through a metal maze, wearing magnet shoes, trying to solve a Rubik's Cube coated in honey.

Visualizing that? Metal floor.  Magnet shoes.  Lots of honey.

Okay.

This…is an even stickier problem.

Why is it sticky?  Because for any library but a school district library, there is no definitive answer.

To show you why, let me extract you from the metal maze and bring you into the weeds of New York's Real Property Tax Law ("RPTL") Section 726.[1]

Specifically, let's look at Section 726, sub-section 1(c), which controls a school district's refund of taxes paid by those who have successfully fought to reduce their property assessment.

Since 2014, this portion of the RPTL has given tax-levying school districts the following authority:

"A school district which levies taxes on behalf of a school district public library [that must be refunded to a taxpayer] may charge back to such public library the portion of such refund attributable to library purposes."

Prior to 2014, school districts had no such express authority.  The law was silent on this topic. This lead the New York State Comptroller to write three decisive opinions (in 1975, 1979, and 1995) stating that school districts who levied funds for public libraries did NOT have that authority.[2]  In other words, if a refund was owed: the district was stuck.

So stalwart was the Comptroller's stance on this ("Comptroller" just sounds like someone in charge, right?) that in 2007, it was cited by the NY Commissioner of Education when they decided that a school district's attempt to "charge back" an association library's portion of a refund--by withholding an equivalent amount from the following year's levy--was forbidden.[3]

So, there we were until 2014: a Comptroller-confirmed approached that was a great deal for libraries.

But not such a great deal for New York's school districts, right? When a refund came a-knocking, they were left holding the bag.

By 2014, the complaints had gotten so loud, the Assembly added the above-quoted section to RPTL 726, while commenting:

Existing law is silent on whether a school district may charge back court ordered refunds. Opinions of the State Comptroller (95-15, 79-103, 75-1210) have consistently, held that school districts are lacking in the necessary statutory authority. This legislation corrects an apparent oversight in Real Property Tax Low [sic]. It was never the intent of the Legislature to prohibit school districts %% inch[sic] levy taxes on behalf of a school district public library from apportioning the library portion of certiorata and small claims assessment review refunds to such libraries. The inequity of requiring a school district to refund a library's share of tax certiorari debt from the school district's own resources is clear.[4]

From a certain point of view, legislation to correct this "inequity" makes a lot of sense.  If you're running a school district, you're probably already struggling to get new orchestra instruments.  Now out of the blue you have to issue a tax refund to the local over-assessed big box store?  The last thing you want to do is also eat the portion owed by the local library.  Good thing the legislature fixed that, right?

But a sharp reader has probably noticed: in trying to clear up one problem, the legislature created another.

What does that language in 726 (c)1 say, exactly?

"A school district which levies taxes on behalf of a school district public library [that must be refunded to a taxpayer] may charge back to such public library the portion of such refund attributable to library purposes."

What's the problem here?  The black letter law of the new section of 726(c)1 only names school district public libraries.  Association libraries, special district, municipal libraries--these are all left out. And even though there are sections of the Education Law where "all types of libraries [are] treated equally,"[5]  and school districts can levy taxes for any kind of library,[6] without clear authority to indicate anything different, I would not be comfortable stating that the new section of 726(c)(1) has positioned school districts to charge back any taxes from anything other than a school district public library.  The language is just too specific.

So, when a non-school district public library gets a charge-back bill from a school district,[7] what's a public library do? 

First, as they say in the intergalactic travel biz: DON'T PANIC.  You'll figure something out.

Second: Gather your paperwork (the charge back bill, the court papers related to the Article 7 assessment challenge if you got them, and the most recent correspondence with the district).

Third: Assemble your team. Who is "your team"?  In New York, it should (at least) be: your Treasurer, your board chair (or other designated member/s), a rep from your system,[8] and a lawyer.[9]

Fourth: After an initial meeting, someone from your team might want chat with the assessor, and maintain some routine contact--you'll want some intel on how much more of this could happen. 

Fifth:  After gathering all the intel you can, your team should formulate a recommended "Response," to be authorized by the library's board. 

What will the Response authorized by the board provide?  I can't say.  Looking at the diversity of library-related legal cases, it is clear that New York's libraries are very diverse in their approach to taxes and risk.  Some, after assessing the validity of the back charge (and the resources needed to fight it), might just eat the cost.  Others might ask the Comptroller for an opinion about the 2014 change to the law, holding off on paying up until they get a reply.  And still others might attack the validity of the adjustment, or band together with other entities to formulate a broader strategy.

What is important is that whatever is done is based on good information, and a well-informed decision of the board.  Whatever strategy your library adopts, it should consider the relationship with the school district as a whole.  Remember, they didn't cause this mess.

Thank you for submitting this sticky question.  I wish my answer was simpler, but right now, the law does not allow for an easy response. 

Someday we'll take off the magnets and put down the honey.



[1] Yes, you're still holding the Rubik's Cube.  Don't worry, there are no bees in these weeds to be attracted by the honey.

[2] Opinions number 95-15, 79-103, and 75-1210.

[3] Decision No. 15,662.

[4] New York State Assembly Bill Search and Legislative Information for Bill Number A05310 (2014).

[5] Section 259, for instance, (which as commented by the Education Commissioner in the Croton Free Library decision), "provides that moneys received by a municipality or school district from taxes or other public sources are to be paid over to the treasurers" of all kinds of libraries just the same.

[6] A function of convention, more so than law; see the "Ask the Lawyer" on school tax levies: https://www.wnylrc.org/ask-the-lawyer/filter/52

[7] Do not confuse a charge-back bill from a school district with a charge-back bill from a municipality or other entity!  This commentary only pertains to school districts…in the year 2020…until there is some authority from the Comptroller, the courts, or the legislature to sort this mishegas out.

[8] Depending on what's happening in your region, this might not be their first charge-back rodeo.

[9] A lawyer is critical, because there is more than one kind of tax adjustment proceeding, and RPTL 726 only applies to adjustments under Article 7.  The lawyer's job will be to make sure the adjustment and charge back demand is legit (or not), and to assess the risks of paying (or not).

Tags: Taxes, Association Libraries, School Ballots

Topic: 501c3 Rules for Meeting Room Use - 11/6/2019
I need clarification about the IRS regulations on 501c3 organizations. A local political group ask...
Posted: Wednesday, November 6, 2019 Permalink

MEMBER QUESTION

I need clarification about the IRS regulations on 501c3 organizations. A local political group asked to use our meeting room space for a 'meet the candidates' event, a library trustee thinks this is not compliant with the "The Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations" https://www.irs.gov/charities-non-profits/charitable-organizations/the-restriction-of-political-campaign-intervention-by-section-501c3-tax-exempt-organizations

I think our meeting room policy is very out of date and restricting access to the room based on content of the meeting violates 1st amendment rights, as outlined by ALA: http://www.ala.org/advocacy/intfreedom/librarybill/interpretations/meetingrooms

No staff are involved in this event, we have not helped plan it and it was made clear on all the publicity the political group put out that the library is only the venue, we are not hosting, this is not a library program.

Thank you!

WNYLRC ATTORNEY'S RESPONSE

This answer comes with many disclaimers, because the legal parameters of room access and rental at chartered libraries in New York is variable territory.  In other words: the answer can depend on the library’s “type” (set by its charter), its fundamental rules (found in the bylaws), its IRS status (the “501 (c)(3) mentioned by the member”), its day-to-day rules (controlled by policies), its lease (not all libraries own the space they occupy), and any deed restrictions (although deed restrictions on the basis of speech would bring concerns).

That’s right: education law, not-for-profit corporation law, tax law, real property law…this question has it all!

That being said, the member’s question centers on federal tax law; specifically, the library’s 501(c)(3) status, which not only makes the library tax-exempt, but allows it to receive tax-deductible donations.  This status is an important fund-raising asset, and its many conditions (including not engaging in politics) cannot be taken lightly.

Here is what IRS Publication 557, the go-to for creating a tax-exempt entity, has to say about political activity:

If any of the activities (whether or not substantial) of your [501(c)(3)] organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization won't qualify for tax-exempt status under section 501(c)(3). Such participation or intervention includes the publishing or distributing of statements. Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c) (3), while other so-called voter education activities may be prohibited. [emphasis added]

Like many guides from taxing agencies, this one is superficially helpful (I put that part in bold), but upon examination, employs a disclaim that gives very little concrete guidance (I underlined that part).  So, what’s a library with a spare room to do? 

As alluded to in both the member’s question and my opening paragraph, this question doesn’t turn solely on the IRS.  Any 501(c)(3) library that rents or allows free use of space should have a robust “Facility Use Policy”[1] that considers not only IRS regulations, but safety, equal access, and operational priorities (requiring users to clean up after their meeting, to not be noisy, to respect the space).  For a library in a municipally-owned building, care must be taken to ensure use fees are applied in a way that does not violation the NYS Constitution.  And for a library that rents, the Facility Use Policy must harmonize with the lease.

But the member’s question is about 501(c)(3).  So, having established that this consideration is but one of many when giving access to or renting space, here are the three things to consider when a 501(c)(3) rents or gives access to space:

1)  Rental income needs to be a very small percentage of the library’s revenue. 

Section 501(c)(3) requires that income from renting space can’t outweigh donations and other sources of income related to the library’s tax-exempt purpose.  This is something to discuss with the library’s accountant; while rental income isn’t barred, it can bring funding ration and tax consequences that warrant the attention of a professional.

2) The use of the space can’t “inure” to the benefit of any one company or individual.

Section 501(c)(3) also requires that a qualifying organization’s resources can’t directly benefit any one person or entity more than the general public.  For example, free use of the spare room by a person conducting a stained-glass workshop with an admission fee (even a nominal one), can be considered an “inurement.” [2]

3)  As raised by the member’s trustee, the use of the space cannot violate the bar on lobbying (influencing legislation) and political activity (supporting a particular candidate for office).

And as reviewed, Section 501(c)(3) bars political activity (as further defined in the excerpt from 557, above).

“Ask the Lawyer,” has had some fairly large answers, but I don’t have space to address every occurrence that could run afoul of the bar on “political activity.” But what about renting space, on the same terms as to any other entity, to an event like the one described by the member?

Here is what the IRS has to say:[3]

Can a section 501(c)(3) organization conduct business activities with a candidate for public office?

A business activity such as selling or renting of mailing lists, the leasing of office space or the acceptance of paid political advertising may constitute prohibited political campaign activity. Some factors to consider in determining whether an organization is engaged in prohibited political activity campaign include:

a. Whether the good, service or facility is available to candidates in the same election on an equal basis,

b. Whether the good, service or facility is available only to candidates and not to the general public,

c. Whether the fees charged to candidates are at the organization’s customary and usual rates, and

 d. Whether the activity is an ongoing activity of the organization or whether it is conducted only for a particular candidate.

When developing a Facility Use Policy, if a library is a 501(c)(3) charitable organization, and wishes to be able to rent space to (among others) political organizations for event, the above-listed factors should be built right into the policy.

Here is some sample language (some of it will sound familiar):

As a 501(c)(3) organization, the NAME library does not participate or intervene, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. Therefore, the use of space in our facility by political organizations or for partisan political events is only available on the same rental terms as for the general public, and is subject to a rental fee that is charged equally to any political group or other individual or group.   NOTE: Certain voter education activities or public forums conducted in a nonpartisan manner may qualify for a fee waiver, just as do other free and open events conducted by a charitable entity for the benefit of the public.

So, what about the member’s scenario?   In the absence of a spot-on facility use policy, I suggest the following process:

  1. Using the appropriate tax guidance, the library needs to decide if this particular “Meet the Candidates” event complies with 501(c)(3); in particular, is to be a “public forum conducted in a nonpartisan manner?”  Or is it skewed to benefit one candidate over the other? 
  1. Is the sponsoring organization a charitable entity, or is there any risk that the terms for using the room would be an “inurement?”  Will donations be solicited?  Is money charged to enter?
  1. If the answer to either shows a risk of violating 501(c)(3), then the library needs to consider if it wants to follow the formula to “do business” with a candidate for public office.  This would mean charging for the use as you would any other use.

If the library’s past practices make following those three steps too blurry, it is best to take a pass on this precise event, and take the time to develop an up-to-date and thorough Facility Use Policy that considers the types of uses the library will allow, and how and when it will charge for them. There are many good models out there to draw inspiration from, but before the board passes such a policy, it would be good to have it reviewed by a lawyer (who has ready the charter, bylaws, other policies, lease, deed, and any other relevant documents).

The member’s library is fortunate to have leadership that is thinking about both the first amendment and safeguarding the organization’s tax status.  Good work.  No matter what the final decision, awareness and commitment to these values serves your community.

 



[1] The member has stated their policy might not be suited to addressing this situation.  We’ll tackle that in a bit.

[2] If this just caused a stab of panic because your library let’s an instructor host a “Yoga for Seniors” class for a minimum fee to the instructor, don’t worry, this event can happen…you just have to do it right.

 

Tags: IRS, Laws, Library Programming and Events, Meeting Room Policy, Policy, Taxes

Topic: School Ballot Option for Public Libraries - 10/24/2019
Our public, municipal library wants to seek funding through a school board levy.  The boundar...
Posted: Thursday, October 24, 2019 Permalink

MEMBER QUESTION

Our public, municipal library wants to seek funding through a school board levy.  The boundaries of the school district we’re petitioning are outside (but include) our municipality.  Are there any legal impediments to a public, municipal library going on the school district ballot?  We have reached out to New York State Ed’s Division of Library Development and NYLA, but seek a lawyer's perspective.

WNYLRC ATTORNEY'S RESPONSE

Perhaps because our nation was born resisting taxes, few things can rile a close-knit community so much as a good old-fashioned tax levy.  This is one area where the legal issues might be simpler than the range of human emotions. 

That said, the laws governing a school district’s support for a library can present significant considerations, if not impediments, before it can be successfully deployed.  So let’s fly at 10,000 feet, and look at the lay of the land.

There are relatively few entity types that can levy taxes based on real property,[1] and school districts are one of them.[2]  In addition to facilitating school funding through those taxes (the school budget “levy”), districts are empowered to raise a separate amount for “library purposes.”[3]

This power to tax for the benefit of libraries comes with some very clear conditions.

First, the amount to be raised for the library must be listed as a separate item on the ballot; the voters must see it as distinct from the funds to be levied for the school(s).[4]

Second, if the proposition passes, the funds must be delivered to the treasurer of the library as soon as possible, and cannot be retained or mingled with district funds.[5]

Third, the amount of taxes attributable to library purposes must be separately stated on each statement of taxes.[6]  Voters should be able to easily discern the difference.

Now, here is where things get really interesting.

There are two ways such a proposition related to a library levy can get on a school district ballot: 1) a vote by library’s board,[7] or 2) a petition directly from the voters.[8]  Since 2007,[9] the precise amount of any proposed levy has to be endorsed by the library’s board[10] (this is so competing or even contrary funding resolutions can’t get on the same ballot[11]).  When a library board votes to request it, the proposition must be placed on the ballot—even if it lacks the support of the school board.[12]

This power can be used to the benefit of any public library: municipal, special district, school district, free association, etc.[13]  This is true even if the precise boundaries of the school district and the library’s chartered area of service don’t match up.[14]

How can that be?  Anyone who follows “library world” knows that there are numerous kinds of libraries: municipal (created by and with the boundaries of a city, town, or village), school district, special district (which can cross and combine municipal borders), and free association.[15]  The permutations of these libraries are vast, but all serve their communities without charge, and thus meet the definition of “library” as used in Education Law §259.  And thus, all qualify as a “library” that may be supported by a tax levy by a school district.

Here is how the New York State Commissioner of Education,[16] quoting an earlier case, put it as recently as 2015:

As stated in Earlville, a school district is among those entities enumerated in Education Law §255 and, thus, is authorized to vote taxes “for library purposes” pursuant to Education Law §259(1)(a).  Earlville noted that, “although only those entities specifically enumerated in Education Law §255 may levy a tax for library purposes under §259(1)(a) [citations omitted], there is no restriction in §259(1) regarding the type of library for which such taxes may be levied.[17]

Voters, of course, are free to reject the request for support (they can also bring a petition to cease the levy[18]). But the mere act of being asked gives the voters a direct opportunity to consider their community’s overall commitment to educational resources.  In library-philic New York, where we treasure books and learning, this is a critical commitment to education, information access, and community advancement.

It is also a serious vote, since once the levy has been established by the school district, it remains in effect each year until there is a vote to have it removed[19] (which, again, can be initiated by the library’s board, or the voters).

As described by the member, boards considering a school board levy are wise to gather (early) ALL the support they can as they plan for a school board tax levy proposition.  The State Education Department’s Division of Library Development maintains a great starter kit for an initiative.[20]  Reaching out to NYLA, as well as other library advocacy groups, can be critical.  And a lawyer with experience in education law (to help draft resolutions, track the paperwork, and have your back when the unexpected[21] happens) is an essential member of your team.

But while you assemble your team and resources, don’t forget “the people.”  As the famous Tip O’Neall[22] liked to say, “All politics is local.”  So while it’s essential to know a tax levy initiative stands on firm legal ground, nothing replaces careful cultivation of support[23] for your initiative.  That is where the allies listed above, and an attorney looking at the specific circumstances of your library (and always the latest case law), are essential.

Thanks for a great question on a very important topic.  Good wishes for a vote that supports democracy, community, and information access.

 


[1] They are listed in New York’s Real Property Tax Law, which is a fun read if you are lucky enough to be amused by tax law.

[2] See NY Real Property Tax Law Article 13.

[3] See NY Education Law Section 259(1)(a).

[4] New York Real Property Tax Law, §1322 (1) and §1324.

[5] See New York Comptroller Opinion 92-28, as well as Education Law §259(1)(a) and Real Property Tax Law, §1322 (1) and §1324.

[6] New York Real Property Tax Law, §1322 (1) and §1324.

[7] See Education Law §259(1)(a), and for some good color commentary on the process, see New York State Education Commissioner Decision 15,662, which established that once the tax has been turned over to the library, the taxing authority can’t demand it be returned, even if they have to give a taxpayer a correcting refund.

[8] Education Law §2035(2).  To see how this plays out in the field, check out Education Commissioner Decision # 13,891.

[9] See Bill S03542, 2007.

[10] §239(1)(a), again!

[11] This is due to the law being amended in 2007. The objectives of the amendment are detailed in the legislative “memo” for A05107 (2007). The impact of the changes is also discussed in Education Commissioner Decision 16,765. Buckle up if you explore this avenue…there is some quibbling.

[12] This broad interpretation of the word “library” as used in Education Law §259(1)(a) was established in New York State Education Commissioner Decision 12,423, regarding Earlville Free Library, in 1990.  Although §259(1)(a) was amended in 2007, the approach of “Earlville” as the case in known in library circles, was re-affirmed by the Education Commissioner in 2015 (see Decision #16,765, regarding Jamesville-DeWitt Central School District).

[13] As defined by Education law §253(2), that term includes any library established for “free public purposes by official action of a municipality or district or the legislature….”  Some time is spent on this definition in the “Earlville” decision, referenced above.  Note that the definition does exclude libraries within technical, professional, and public schools.

[14] This was also established in Education Commissioner Decision 12,423, regarding Earlville Free Library (1990).

[15] To say nothing of cooperative and federated libraries.

[16] You’re seeing a lot of citations to the Commissioner here.  That’s because per Education Law §2037, the Commissioner with “exclusive original jurisdiction over all disputes concerning the validity of any district meeting or election.”  See Education Commissioner Decision 14,571 (2001).

[17] Appeal of The Board of Trustees of the Earlville Free Library, 1990 Op Comr Educ No 12423.  It is worth noting that while §259 was amended in 2007 (17 years after Earlville) this principle was upheld in 2015 in Decision 16,765,regardingtheJamesville-DeWitt Central School District.

[18] This is broken down in a great Comptroller Opinion: 1981 N.Y. Comp. LEXIS 726, 1981 N.Y. St. Comp. 176.

[19] See New York State Commissioner of Education Decision 15,002 “Appeal of Beaver Falls Library” (2003), applying Education Law §259(1).

[20] Check out their guide “School Districts and Taxes for Public and Association Libraries: How the Partnership Works” at www.nysl.nysed.gov/libdec/libs/sdtaxes.htim.

[21] I would spend a paragraph or two on what “the unexpected” is, but of course, we can’t expect it!  That said, a good look at Education Commissioner Decisions numbers listed in these vast footnotes answer can give you a flavor.

[22] I just finished his autobiography, “Man of the House.”  An interesting read, and a great primer for anyone wanting an abject lesson about local, state, and national politics. 

[23] Taking care to abide by all restrictions and best practices for libraries and political activity.

Tags: Municipal Libraries, Taxes, Voting

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