GJSD Financial Reserve Plan

Last Updated February 10, 2022

• Introduction
• Economic Factors Bearing on the Fiscal Decisions and the District’s Future
• GJSD Reserve Fund Philosophy
• Intended Use of Reserves
• Worker’s Compensation Reserve
• Reserve for Unemployment Insurance
• Reserve for Retirement Contributions
• District Retirement Contribution Reserve Sub-fund – TRS
• Reserve Fund for Insurance
• Reserve for Employee Benefits & Accrued Liabilities
• Repair Reserve
• Reserve for Tax Reduction
• Reserve for Debt Service
• Construction Capital Reserve Fund (2010)
• Construction Capital Reserve Fund (2020)
• Construction Capital Reserve Fund (2022)
• Capital (Bus Purchase) Reserve Fund (2015)
• Reserve for Tax Certiorari
• Reserve for Property Loss
• Reserve for Liability Claims
• Reserve for Encumbrances
• Assigned Fund Balance
• Unassigned Fund Balance
• Summary of Reserve Fund Activity 2020-2021
• 2020-2021 Reserve Fund Plans and Priorities
• 2020-2021 Reserve Plan – Planned Use and Projected Balances
• 2021-2022 Reserve Plan – Planned Use and Projected Balances

Introduction

The Greater Johnstown School District Board of Education believes that there is a correlation between the long term financial health of the school district and its ability to provide students with the educational programs and facilities to meet its mission and enduring goals:

The GJSD will provide and support diverse, quality academic opportunities in collaboration with our community in order to graduate citizens with the knowledge, skills, and ability to promote and succeed in a stronger society.

Goal 1. Johnstown graduates will be college, career, and civic ready. Students will be proficient and literate in the areas of communication, digital technology and cultural acceptance while exhibiting good citizenship.

Goal 2. Students shall be engaged in rich and diverse opportunities that encompass personal, cultural, and varied learning experiences. Students should participate in the greater community, be encouraged to participate in goal setting, applied learning, personal expression, and citizenship.

Goal 3. The Johnstown School District will foster a faculty experience that encourages student engagement through providing freedom and empowerment, access to resources, communication and collaboration, and efforts to allow them to feel supported and valued.

Goal 4. The Johnstown School District will welcome parents and community members as respected resources for our schools. Effective two-way communication will be fostered among school, parent and community groups. The district will offer a range of opportunities for parent and community involvement.

Goal 5. The Johnstown School District will maintain a balance between program services and citizens’ contributions. Creative approaches to increasing revenue will be encouraged while decreasing expenses and conservation practices remain vital.

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Economic Factors Bearing on the Fiscal Decisions and the District’s Future

The District faces multiple future economic challenges:

• Erratic and unpredictable support from New York State’s budget will continue to affect the amount of state aid available to the District in the future, which accounts for nearly two-thirds of its total budget.
• The District has a lower tax levy than other districts of similar size and demographics; it has been artificially depressed for many years since the enactment of New York’s Property Tax Cap law.
• The passage of the New York’s Property Tax Cap law limits the District’s ability to adequately raise the levy to bring local share revenue into alignment with that which other similar districts already collect.
• Health insurance premiums for employees, retirees and their families are projected to increase at rates that exceed standard increases in the cost of living.
• Increases in salary expenditures will be needed to continue to attract competent, qualified personnel.

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GJSD Reserve Fund Philosophy

Over the long term, the District will continue to use conservative budgeting practices to achieve a balance between revenues and expenditures. In the short term, the District will attempt to construct its budget as balanced a way as is possible to minimize operating deficits. Through the management of its reserves the District hopes to achieve the following:

• Maintenance of educational programming during economic downturns.
• Cash flows that will minimize the need to issue Revenue Anticipation Notes and allow increased investment earnings.
• The ability to fund non-recurring items.
• A long term plan for preserving its infrastructure and school buildings.
• The ability to achieve necessary and sustainable tax levy.
• The ability to maintain and/or improve its bond rating, which will save District citizens fiscal resources at both the local and state levels.
• The ability to capitalize on opportunities as they arise, relevant to school district operations, which could result in better efficiencies, facilities/capital improvements, and instruction that are a beneficial to citizens in the long run.
• Establish, fund and utilize reserves to minimize dramatic budget and tax levy limit “swings” and provide more predictable budgets.

In conjunction with the District mission and the fiduciary responsibility to manage its fiscal affairs prudently, the Board of Education considers all of the above objectives critical components that form the basis of how reserve funds should be managed.

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Intended Use of Reserves

Reserve funds, like other savings plans, are mechanisms for accumulating cash for future capital outlays and other allowable purposes. The practice of planning ahead and systematically saving for capital acquisitions and other contingencies is considered prudent management. Savings for future capital needs can reduce or eliminate interest and other costs associated with debt issuances. Similarly, certain reserve funds can be utilized to help protect the budget against known risks (a potential lawsuit) or unknown risks (a natural disaster).

Most reserve funds are established to provide resources for an intended future use. An important concept to remember is that a reserve fund should be established with clear intent or plan in mind regarding the future purpose, use and, when appropriate, replenishment of funds from the reserve. Reserve funds should not be merely a “parking lot” for excess cash or fund balance. Local governments and school districts should balance the desirability of accumulating reserves for future needs with the obligation to make sure tax payers are not overburdened by these practices. There should be a clear purpose or intent for reserve funds that aligns with statutory authorizations.

Each statute that authorizes a reserve fund sets forth a particular purpose for the fund. For example, provisions of the General Municipal Law (the GML) and the Education Law allow municipalities and school districts, respectively, to establish capital reserves for future equipment purposes and capital improvements. The GML also authorizes the establishment of an employee benefit accrued liability reserve for the payment of the monetary value of accumulated, unused leave time to employees upon separation from service. Planning today and saving incrementally for expected future events can help mitigate the financial impact of major, nonrecurring or unforeseen expenditures on your annual operating budget. Establishing and funding allowable reserve funds for a clear purpose can help smooth out spokes in the annual budget and in the real property tax levy.

Sources:
Office of the New York State Comptroller-Local Management Guide for Reserve RG Timbs, Inc. Reserve Plan Template

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Worker’s Compensation Reserve

Purpose:

To fund Workers’ Compensation expenses, related medical expenses, and self-insurance administrative costs. This reserve is an operational reserve, meaning that the funds contained within may be utilized to offset current year anticipated workers’ compensation
expenditures.

Legal Reference:

General Municipal Law Article 2 § 6-j

Account Code:

A814

Source of Funds:

Funded by budgetary appropriations, or other sums that may be legally appropriated through board resolution.

Use of Reserve:

The district is a member of the Fulmont Workers Compensation Trust. Funds from this reserve can be used to pay claims through contributions to the Fulmont Workers Compensation Trust, since funding workers’ compensation through the Trust is analogous to being self-insured. (as per Amy Pedrick, West & Company)

Voter approval is not needed to expend funds.

Excess funds may be transferred to other reserves authorized by General Municipal Law and Education Law sixty days before the end of the fiscal year.

Creation:

This reserve was created by BOE resolution on December 11, 2014, effective June 30, 2015.

Funding Level:

The reserve was initially funded at a level of $558,000.

Ideal Balance:

The equivalent of five years of annual expenditure (5 x $120,000 annual premium).

It is anticipated that the rates will continue to increase slightly year to year. The financial health of the Trust is strong and the district’s experience modifier is stable.

Planned Use:

Starting in 2022-23, use the funds in this reserve to pay the District’s self-insured Workers’ Compensation premiums through the Fulmont Workers’ Compensation Trust. Further, monies from this reserve, approximately $400,000 will be used to support the 2022-2023 budgetary revenue strategy in order to bring the reserve balance closer to the ideal balance of $600,000.

Balance as of June 30, 2021:

$1,115,227

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Reserve for Unemployment Insurance

Purpose:

To pay the cost of reimbursement to the New York State Unemployment Insurance Fund for payments made to claimants where the Greater Johnstown School District uses the benefit reimbursement method, meaning the District reimburses New York State (NYS) for actual unemployment claims incurred. The District does not pay NYS a fixed premium for unemployment coverage.

Legal Reference:

General Municipal Law, Article 2 §6-m

Account Code:

A815

Source of Funds:

Funded by budgetary appropriations, or other funds that may be legally appropriated by board resolution. Can also be funded by transfers from other appropriate reserves.

Use of Reserve:

Funds from this reserve are used to pay unemployment claims and to offset unemployment expenditures exceeding the budgeted amount.

Voter approval is not needed to expend funds.

Excess funds may be transferred to other reserves authorized by General Municipal Law and Education Law sixty days before the end of the fiscal year.

Creation:

This reserve was created by BOE resolution on June 30, 2009.

Funding Level:

This reserve was funded entirely from excess fund balance when it was created. It was funded in anticipation of an increased number of staff reductions. The initial funding was an amount sufficient to pay full unemployment insurance at the maximum rate for approximately nine individuals.

Ideal Balance:

Approximately 3% of payroll. ($12,200,000 x 0.03 = $366,000)

Planned Use:

Use funds to pay annual unemployment expenses beginning in 2022-23.

Balance at June 30, 2021:

$366,500

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Reserve for Retirement Contributions

Purpose:

This reserve is used to pay for district expenses for the NYS Employee’s Retirement System only. Payments to the Teachers Retirement System are not allowed from this reserve.

Legal Reference:

General Municipal Law, Article 2 §6-1

Account Code:

A827

Source of Funds:

Funds may be placed into this reserve by BOE Resolution. Allowable sources of funds include excess fund balance, budgetary appropriations and other funds that may be legally appropriated or, transfers from the other appropriate reserves pursuant to GML or Education Law 3651.

Use of Reserve:

Use of funds from this reserve may be authorized by BOE resolution.

Voter approval is not needed to expend funds.

A portion of the funds may be transferred to another reserve fund established pursuant to Education Law § 3651 following a public hearing conducted in the manner set forth by in law.

Creation:

This reserve was established by BOE resolution on December 16, 2010, effective January 3, 2011.

The reserve was re-established by BOE resolution on May 8, 2013 with an effective date of June 30, 2013.

Funding Level:

This reserve was initially funded at $1,000,000.

Ideal Balance:

Approximately 5 years of the past five-year average ERS expenditures.
(5 x $408,000)

Planned Use:

Use funds to pay annual ERS expenses beginning in 2022-23. Further, monies from this reserve, approximately $500,000 will be used to support the 2022-2023 budgetary revenue strategy in order to bring the reserve balance closer to the ideal balance of $2,040,000.

Balance at June 30, 2021:

$2,975,781

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District Retirement Contribution Reserve Sub-fund – TRS

Purpose:

Financing retirement contributions made to the NY State Teachers’ Retirement System. This reserve is used to pay for district expenses to the NYS Teachers’ Retirement System only.

Legal Reference:

General Municipal Law, Article 2 §6-r

Account Code:

A828

Source of Funds:

The source of funds for this Reserve Sub-Fund shall be:

1. such amounts as may be provided therefore by budgetary appropriation or raised by tax therefore;
2. such revenues as are not required by law to be paid into any other fund or account;
3. such other funds as may be legally appropriated; and
4. such amounts as may be transferred from a reserve fund established pursuant to Section 6-c, 6-d, 6-e, 6-f or 6-g of Article 2 of the General Municipal Law, comprised of moneys raised from the same tax base as the moneys in the retirement contribution reserve fund, or a reserve fund established pursuant to Education Law Section 3651, provided that any such transfer shall only be made by Board resolution adopted after a public hearing held on at least 15 days prior notice published in at least one newspaper having general circulation in the District.

Use of Reserve:

Expenditures may only be made pursuant to a board resolution and must be used to finance TRS contributions and/or to offset all or a portion of the amount deducted from the moneys apportioned to the District from the State for the support of schools pursuant to Section 521 of the Education Law.

Use of reserve does not require voter approval.

Creation:

This reserve was created by BOE resolution on April 17, 2019.

Funding Level:

The reserve was not funded when initially created.

Annual contributions to the TRS Reserve Sub-Fund shall not exceed 2% of the total compensation or salaries of all teachers (as that term is defined in Education Law §501[4]) employed by the District who are members of TRS paid during the immediately preceding fiscal year.

Ideal Balance:

The balance of the Reserve Sub-Fund shall not exceed 10% of the total compensation or salaries of all teachers (as that term is defined in Education Law §501[4]) employed by the District who are members of TRS paid during the immediately preceding fiscal year.

2019-2020 TRS Salaries: $9,309,457

2% Limit: $186,189 10% Limit: $930,946

Planned Use:

Use funds to offset annual TRS expenses beginning in 2022-23.

Balance at June 30, 2021:

$186,187

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Reserve Fund for Insurance

Purpose:

The insurance reserve fund is used to pay for liability, casualty and other losses, except those losses for which the following types of insurance may be purchased: life, accident, health, annuities, fidelity and surety, credit, title residual value and mortgage guarantee. claims incurred. Examples include uninsured losses, claims, actions, expert or professional services in connection with an investigation and settlement of claims.

Legal Reference:

General Municipal Law, §6-n

Account Code:

A863

Source of Funds:

Funded by budgetary appropriations, transfers from other reserve funds as permitted by law, and such other funds as the school board may legally appropriate by BOE resolution.

Use of Reserve:

Voter approval is not needed to expend funds.

A judicial approval is needed to pay settled or compromised claims exceeding
$25,000.

Upon determination that this fund is no longer needed the fund may be discontinued and transferred to another reserve fund as permitted by law.

Creation:

Established by BOE Resolution

Funding Level:

This reserve was initially funded at a level of $1,000,000

Ideal Balance:

Annual contribution to this fund is limited to greater of $33,000 or 5% of the budget.

There is no limit on the accumulated reserve balance. The ideal balance for the Insurance.

Reserve amount “reasonably necessary” to pay uninsured losses, claims, actions, expert or professional services in connection with an investigation and settlement of claims.

Planned Use:

Dormant

Balance at June 30, 2021:

$0

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Reserve for Employee Benefits & Accrued Liabilities

Purpose:

This reserve is used to fund payments of the monetary value of accrued and accumulated, but unused and unpaid sick leave, personal leave, vacation leave, holiday leave time allowances granted in lieu of overtime compensation earned by employees and due upon their termination of employment by retirement or otherwise.

This fund cannot be used to pay for items such as: retirement incentives, FICA and Medicare payments and retiree health insurance.

Legal Reference:

General Municipal Law, Article 2 §6-p

Account Code:

A867

Source of Funds:

Funds may be placed into this reserve from excess fund balance, budgetary appropriations and other funds that may be legally appropriated or, transferred pursuant to GML or Education Law 3651, by BOE resolution.

Voter approval is not required to fund this reserve.

Use of Reserve:

This reserve is used when an employee separates from the District and payment of accumulated leave is required. These transactions flow through the budget via a budget revision with the offsetting revenue coming from a drawdown of this reserve.

Voter approval is not needed to expend funds.

Funds cannot be used to pay lump sum “retirement incentives” paid upon retirement under a collective bargaining agreement.

Creation:

This reserve was created on June 30, 2002.

Funding Level:

Ideal Balance:

This reserve should be funded at 100% of the accrued liability for unused accumulated leave time, computed annually.

Planned Use:

Balance at June 30, 2021:

$179,101

Note: Originally intended to offset the GASB 45 liability, this reserve should be retained for that purpose, should be retained for that purpose, should enabling legislation be authored.

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Repair Reserve

Purpose:

This reserve is used to pay for unanticipated, non-recurring repairs to district capital improvements, facilities and equipment.

Legal Reference:

Gen. Municipal Law § 6-d(3)(a); see also Opinion. Of St. Comp. 84-8; 26 Opinion. Of St. Comp. 225 (1970).

Account Code:

A882

Source of Funds: Voter approval is required to fund this reserve from budgetary appropriations, or revenues not required by law to be paid into another account or fund.

In accordance with the proposition approved by the voters in Johnstown, this reserve was funded entirely via a transfer of funds from the Reserve for Accrued Employee Benefits Liability. The wording of the proposition does not allow for additional funding of this reserve beyond the initial amount.

Use of Reserve:

In accordance with the law, a public hearing must be held in order to use funds from this reserve, except in an emergency.

In cases of an emergency, money in the fund may be expended, without voter approval, by resolution of the Board of Education approved by not less 2/3 of the Board. The total amount used on an emergency basis shall be repaid to the reserve fund no later than the last day of the second fiscal year in which the funds were expended.

Use is restricted to the purpose stated above. To date, funds have been used for the tennis court repair, installation of tank alarms for the underground fuel tanks, and a roof repair.

Creation:

This reserve was created on May 20, 2008 via voter approval.

Funding Level:

This reserve was funded at $1,000,000.

Ideal Balance:

Planned Use:

Dormant.

Balance at June 30, 2021:

$0

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Reserve for Tax Reduction

Purpose:

To reduce real property taxes over a period of time.

Legal Reference:

Education Law §1604[36], §1709[37]

Account Code:

A916

Source of Funds:

Proceeds from the sale or appropriation of real property, after being used for any other legally required purchase.

Use of Reserve:

Use of this reserve is authorized by BOE resolution.

Creation:

This reserve was established by BOE resolution on October 20, 2014 and funded on November 4, 2014.

Funding Level:

The reserve was initially funded at a level of $1,000,000.

Duration:

Ideal Balance:

Planned Use:

Transfer remaining funds to the Capital Construction Reserve (2022) of $948,112 and $77,836 to Capital Bus Purchase Reserve (2015).

Balance at June 30, 2021:

$1,025,948

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Reserve for Debt Service

Purpose:

This reserve was established to provide a source of funds to offset the local share of bond payments related to capital projects.

This fund would be used to segregate funds required for debt payments as well as to transfer the interest earned on proceeds of long-term debt as required. The purpose of the fund would be to hold the interest earned from borrowed funds during construction period and unexpended funds from the capital project completed in 2019. It is intended would be to offset the local cost of future debt service payments.

Legal Reference:

Gen. Municipal Law § 6-1;

Account Code:

A884

Source of Funds:

This reserve was originally funded incorrectly from excess fund balance. Any future funding for such reserve must be the excess funds from sale of a building or property.

Use of Reserve:

Use of this reserve is authorized by BOE resolution.

BOE resolution authorized $515,000 from this reserve to be applied to BAN payments to reduce the local tax liability related to the 2016-2018 capital project.

Creation:

This reserve was established by BOE resolution on October 20, 2014 and funded on November 4, 2014.

Funding Level:

The reserve was initially funded at a level of $1,086,893

Funding for this reserve was increased by $363,626 by BOE resolution on August 15, 2007, effective June 30, 2007.

Funding for this reserve was increased by $549,481 by BOE resolution on October 20, 2014, bringing the total amount in the fund to $2,000,000

Ideal Balance:

Planned Use:

In 2021-2022, transfer funds to Capital Reserve for Construction to fund essential construction projects identified in the building condition survey with minimal impact to taxpayers, pending voter approval. This reserve will then be closed.

Balance at June 30, 2021:

$2,051,888

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Construction Capital Reserve Fund (2010)

Purpose:

This reserve may be used to fund the cost of construction, general improvement, reconstruction, renovations or additions to the District’s buildings, including site work and the acquisition of original furnishings, equipment, machinery, or apparatus required for the purpose for which such buildings are to be used. The Capital Reserve Fund is used to pay the cost of any object or purpose for which bonds may be issued.

The reserve is intended to reduce the impact to district residents of capital projects.

Legal Reference:

Education Law, §3651

Account Code:

A878

Source of Funds:

Voter approval is required to establish and fund this reserve.

Voter authorization is required to establish the reserve and to spend from the reserve. The form of the required legal notice for the vote on establishing the reserve and the form of the proposition to be placed on the ballot are set forth in §3651 of the Education Law. Expenditures must be specific i.e., to purchase school buses, facility construction, equipment, etc.

Use of Reserve:

Use of this reserve requires voter approval. The proposition to use these funds must specifically establish the scope of the project and maximum dollar amount.

Unexpended funds may be transferred to other funds only with voter approval.

Reserve may be liquidated by approval of voters if funds are no longer needed for the original purpose.

Proceeds must be applied first to outstanding bond indebtedness then to tax levy.

Creation:

This reserve was authorized by BOE resolution on March 19, 2009, approved by voters on May 19, 2009 and established on July 1, 2009.

Funding Level:

The reserve was initially funded at a level of $185,000, authorized up to a maximum level of $2,000,000.

In accordance with the approved proposition, this reserve is funded entirely from excess fund balance or excess amounts in the Employee Benefit Accrued Liability Reserve.

Duration:

The probable duration of the reserve is ten years from the date of establishment.

Ideal Balance:

Planned Use:

Transfer remaining balance to unassigned fund balance to offset the cost of the capital outlay project in 2021-2022. Approved by voters on May 18, 2021.

Balance at June 30, 2021:

$85,418

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Construction Capital Reserve Fund (2020)

Purpose:

The purpose of this reserve is to finance the construction of, and general improvements, reconstruction, renovations or additions to, the District’s buildings and grounds, including site work and the acquisition of original furnishings, equipment, machinery or apparatus required for the purpose for which such buildings are to be used.

The reserve is intended to reduce the impact to district residents of capital projects.

Legal Reference:

Education Law, §3651

Account Code:

A878

Source of Funds:

Voter approval is required to establish and fund this reserve.

Voter authorization is required to establish the reserve and to spend from the reserve. The form of the required legal notice for the vote on establishing the reserve and the form of the proposition to be placed on the ballot are set forth in §3651 of the Education Law. Expenditures must be specific i.e., to purchase school buses, facility construction, equipment, etc.

Use of Reserve:

Use of this reserve requires voter approval. The proposition to use these funds must specifically establish the scope of the project and maximum dollar amount.

Unexpended funds may be transferred to other funds only with voter approval.

Reserve may be liquidated by approval of voters if funds are no longer needed for the original purpose.

Proceeds must be applied first to outstanding bond indebtedness then to tax levy.

Creation:

This reserve was authorized by BOE resolution on March 5, 2020. This reserve would be approved by the voters of the Greater Johnstown School District at its Annual Meeting on June 9, 2020 and approved by the Board of Education of the at its June 10, 2020 Board Meeting. The reserve would be established on July 1, 2020.

Funding Level:

The reserve would be initially funded at a level of $0, with the Board of Education authorized to fund the reserve up to a maximum amount of $500,000.

Duration:

The duration of the reserve is ten years from the date of establishment. The reserve expires on June 30, 2030.

Ideal Balance:

Planned Use:

Fund the reserve at the maximum allowable level to fund necessary construction projects beginning in 2022-2023.

Balance at June 30, 2021:

$500,000

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Construction Capital Reserve Fund (2022)

Purpose:

The purpose of this reserve is to finance the construction of, and general improvements, reconstruction, renovations or additions to, the District’s buildings and grounds, including site work and the acquisition of original furnishings, equipment, machinery or apparatus required for the purpose for which such buildings are to be used.

The reserve is intended to reduce the impact to district residents of capital projects.

Legal Reference:

Education Law, §3651

Account Code:

A878

Source of Funds:

Voter approval is required to establish and fund this reserve.

Voter authorization is required to establish the reserve and to spend from the reserve. The form of the required legal notice for the vote on establishing the reserve and the form of the proposition to be placed on the ballot are set forth in §3651 of the Education Law. Expenditures must be specific i.e., to purchase school buses, facility construction, equipment, etc.

Use of Reserve:

Use of this reserve requires voter approval. The proposition to use these funds must specifically establish the scope of the project and maximum dollar amount.

Unexpended funds may be transferred to other funds only with voter approval.

Reserve may be liquidated by approval of voters if funds are no longer needed for the original purpose.

Proceeds must be applied first to outstanding bond indebtedness then to tax levy.

Creation:

The voters authorized this reserve in August 2021.

Funding Level:

The reserve would be initially funded with the remaining balance in the Reserve for Debt, with the Board of Education authorized to fund the reserve up to a maximum amount of $3,000,000.

Duration:

The duration of the reserve is ten years from the date of establishment. The reserve expires 10 years after creation based on the date of voter approval.

Ideal Balance:

Same as above $3,000,000

Planned Use:

Fund the reserve with the balance remaining in the Reserve for Debt and use the reserve funds to offset the cost of necessary construction projects beginning in 2022-2023.

Balance at June 30, 2021:

$0

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Capital (Bus Purchase) Reserve Fund (2015)

Purpose:

This reserve may be used to fund the cost of acquisition of school buses and vehicles. As a form of a capital reserve fund, this fund is used to pay the cost of any object or purpose for which bonds may be issued.

The reserve is intended to reduce the impact to district residents for the purchase of buses.

Legal Reference:

Education Law, §3651

Account Code:

A878

Source of Funds:

Voter approval is required to establish and fund this reserve.

Voter authorization is required to establish the reserve and to spend from the reserve. The form of the required legal notice for the vote on establishing the reserve and the form of the proposition to be placed on the ballot are set forth in §3651 of the Education Law. Expenditures must be specific i.e., to purchase school buses.

Use of Reserve:

Use of this reserve requires voter approval. The proposition to use these funds must specifically establish the nature of the purchase and maximum dollar amount.

Unexpended funds may be transferred to other funds only with voter approval.

Reserve may be liquidated by approval of voters if funds are no longer needed for the original purpose.

Proceeds must be applied first to outstanding bond indebtedness then to tax levy.

Creation:

This reserve was authorized by BOE resolution on March 19, 2015, approved by voters on May 19, 2015 and established on July 1, 2015.

Funding Level:

The reserve was initially funded at a level of $1,500,000 authorized up to a maximum level of $3,000,000.

The voter-approved resolution authorized the BOE to deposit unallocated fund balance and unused funds from the Employee Benefit Accrued Liability Reserve for nine fiscal years following the date of establishment.

Duration:

The duration of the reserve is ten years from the date of establishment.

Ideal Balance:

Planned Use:

Fund the reserve with an additional $1,480,000 from unassigned fund balance to make future bus purchases with no impact to the tax levy. Use funds from the reserve to purchase buses annually in accordance with the District’s Bus Purchase Plan through 2024-2025.

Balance at June 30, 2021:

$1,919,643

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Reserve for Tax Certiorari

Purpose:

This reserve is used to pay for prior year judgments and claims in tax certiorari proceedings under Article 7 of the Real Property Tax Law. Amount of money held in this reserve may not exceed the amount “reasonably necessary” to pay anticipated judgments and claims arising out of tax certiorari proceedings Education Law (§ 3651(1-a)).

Current year tax refunds not covered under Article 7 should be paid through the budget.

Legal Reference: Education Law, §3651 (Subdivision 1-a).

Account Code:

A864

Source of Funds:

Funding methods may include from excess fund balance, or other funds that may be legally appropriated or transfers from other reserves by BOE resolution.

Use of Reserve:

Voter approval is not needed to expend funds

Creation:

Created via resolution at the Board of Education meeting on June 14, 2012, effective June 30, 2013.

Funding Level:

This reserve was initially funded at a level of $50,000.

Duration:

Funds placed in this reserve that are not used to pay tax certiorari judgments or claims must be returned to the General Fund after four years.

Ideal Balance:

Funding level should not exceed the amount “reasonably necessary” to satisfy outstanding Tax Certiorari claims if the proceeding or claim has not been finally determined, or otherwise terminated or disposed of after the exhaustion of all appeals.

Calculations will be required each year to support the amounts in this reserve.

Planned Use:

Use the reserve to fund future tax certiorari payments.

Balance at June 30, 2021:

$48,606

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Reserve for Property Loss

(Formerly Property Loss and Liability Reserve, Education Law Section 1708(8-c))

Purpose:

To pay for property loss and liability claims incurred by the District.

Legal Reference:

Education Law, §1709, Subdivision 8-c

Account Code:

A861

Source of Funds:

This reserve is funded from Budgetary appropriation, excess fund balance or other funds that may be legally appropriated.

Use of Reserve:

Once established funds may not be reduced below amounts needed to cover incurred but unsettled claims other than for payments for which the funds were established.

May be expended without voter approval unless the funds are expended for a purpose other than the one for which it was established.

Creation:

This reserve was created by BOE resolution on August 15, 2007, effective June 30, 2007.

Funding Level:

This reserve was initially funded at a level of $25,000.

This reserve was replenished and re-funded by BOE resolution on May 8, 2013, effective June 30, 2013. At that time, the reserve was re-funded to a total balance of $500,000.

Ideal Balance:

This reserve is limited 3% of the annual budget or $15,000, whichever is greater. (Education Law, §1709, Subdivision 8-c).

Planned Use:

Balance at June 30, 2021:

$482,112

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Reserve for Liability Claims

Purpose:

To pay for liability claims incurred by the District. The total amount of the Liability Reserve is limited to 3% of the annual budget or $15,000, whichever is greater. (Education Law, §1709, Subdivision 8-c).

Legal Reference:

Education Law, §1709, Subdivision 8-c.

Account Code:

A862

Source of Funds:

Budgetary appropriation or other funds that may be legally appropriated.

Funding methods may include from excess fund balance, or other funds that may be legally appropriated or transfers from other reserves by BOE resolution.

Use of Reserve:

Funds may be expended per BOE resolution. Voter approval is not needed to expend funds.

Creation:

This reserve was created by BOE resolution on August 15, 2007, effective June 30, 2007.

Funding Level:

This reserve was initially funded at a level of $25,000.

Ideal Balance:

The balance cannot exceed 3% of the budget.

Planned Use:

Balance at June 30, 2021:

$25,649

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Reserve for Encumbrances

Purpose:

Allows outstanding encumbrances remaining at the end of a school year to be carried over to the next school year. Encumbrances represent bona fide obligations.

Account Code:

A821

Source of Funds:

Establishing or funding the reserve does not require board resolution or voter approval.

Ideal Balance:

Equivalent to actual identified obligations.

The amount in the reserve for encumbrances at the end of the school year is appropriated from existing fund balance to cover the financial obligations represented by the encumbrances.

Balance at June 30, 2021:

$648,772

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Assigned Fund Balance

Reserve for Subsequent Year/Designated for Expenditures.

Purpose:

An amount of funds set aside to cover budgeted deficits for the upcoming fiscal year.
These funds are actually fund balance that have been set aside for a particular purpose, namely to maintain the tax levy at the simple majority vote required to support an ensuing year’s budget.

Assigned (appropriated) fund balance is a means for districts to provide for unexpected or one-time expenditures without adversely affecting the tax levy or programs. Assigned (appropriated) fund balance provides cash flow during periods of low revenue receipts. Caution should be taken to avoid dependence on assigned fund balance to fund regular, recurring expenditures.

Account Code:

A914

Ideal Balance:

Over time, it is recommended that the planned amount of assigned fund balance included as a revenue source in future budgets be limited to a maximum of 4% of the ensuing budget, in as much as possible.

Balance at June 30, 2021:

For the 2021-22 budget, the District appropriated $2,519,558 of unassigned fund balance. This represents 6.3% of the 2021-22 budget.

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Unassigned Fund Balance

Purpose:

Unassigned fund balance is the amount of District fund balance that is not reserved in specific funds or appropriated to cover subsequent year expenditures.

Legal Reference:

RPTL §1318

Account Code:

A917
Use of Funds:

These funds are unrestricted and may be used for any valid purpose.

It is recommended that these funds not be used except for an emergent, unanticipated expense, or revenue shortfall, that cannot be handled either in the budget or with other available reserves.

Ideal Balance:

Unassigned fund balance is limited by OSC regulation to 4% of the district budget for the upcoming school year.

This is a restrictive requirement particular to school districts which further necessitates the need to establish and manage reserve funds. Amounts in excess of 4% should be allocated to reserve funds, where appropriate, to reduce the burden on local taxpayers in future years.

Balance at June 30, 2021:

The unassigned fund balance of approximately $3,774,206 is 9.4% of the 2021-2022 budget total of $39,967,989.

In future years, the District intends to retain unexpended funds in this account up to or below the legal limit of 4% of the upcoming year’s budget. (RPTL §1318).

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Summary of Reserve Fund Activity 2020-2021

Restricted Fund Balance:	June 2020	June 2021	Increase/Decrease
Workers’ Compensation Reserve	$502,200	$1,115,227	$0
Unemployment Insurance Reserve	$0	$0	$0
Reserve for Retirement Contributions	$1,002,206	$2,975,781	$0
Reserve for Retirement Contributions TRS	$0	$186,187	$0
Reserve for Property Loss	$469,209	$482,112	$0
Reserve for Liability Claims	$25,000	$25,649	$0
Insurance Reserve	$0	$0	$0
Reserve for Tax Certiorari	$46,998	$48,606	$0
Reserve for Employee Benefits and Accrued Liabilities	$174,573	$179,101	$0
Construction Capital Reserve Fund (2010)	$85,000	$85,418	$0
Capital (Bus Purchase) Reserve Fund (2015)	$666,417	$1,919643	$0
Reserve for Repairs	$0	$0	$0
Reserve for Debt	$2,000,000	$2,051,888	$0
Reserve for Tax Reduction	$1,000,000	$1,025,948	$0
Other Restricted Fund Balance	$0	$0	$0
Total Restricted Fund Balance	$5,971,603	$10,962,060	$0
Assigned Appropriated Fund Balance (Against Next Year’s Budget)	$3,383,021	$2,519,558
Total Unassigned (cash on hand)	$3,021,733	$3,774,206

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2020-2021 Reserve Fund Plans and Priorities

• Purchase three (3) 66-passenger buses for $392,372 using funds from the Capital Reserve for Buses as authorized by the voters in May 2022. Consider the purchase of a smaller student transportations vehicle purchase.
• Fund existing reserves where additional liabilities are found.
  • Fund the retirement reserves in anticipation of increased mandatory contributions in coming years as a result of general economic climate.
    • Fund Reserve for Retirement Contributions (ERS Reserve) at the level of four years of average annual ERS contribution.
    • Fund the Reserve for Retirement Contributions TRS at the maximum level allowed (2% of TRS salaries).
  • Fund the Unemployment Insurance Reserve at 3% of total payroll.
  • Fund the Workers’ Compensation Reserve with an additional 5 years’ worth with a planned use of the funds over the next 5-7 years.
  • Fund the Capital Reserve for Constructions (2022) to the maximum level of $3,000,000, with the funds to be used for maintenance and repairs.
• Continue on-going review of reserve funds, funding reserves to protect the district against future liabilities, both known and unknown.
• Use Fund balance to offset the local share of capital expenses to stabilize the tax cap.

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2020-2021 Reserve Plan – Planned Use and Projected Balances

Restricted Fund Balance	Actual June 2020	Interest 2020-2021	Planned Activity 2020-2021	Actual June 2021	Notes for Planned Activity
Workers’ Compensation Reserve	$502,200	$13,027	+$600,000	$1,115,227	Fund the reserve with 5 years of workers’ comp expenses; plan to spend $120,000 per year starting in 2021-2022 until funds are exhausted.
Unemployment Insurance Reserve	$0		+$366,500	$366,500	Fund the reserve at 3% of payroll; Use to fund unemployment expenses starting in 2022.
Reserve for Retirement Contributions	$1,002,206	$23,575	+$1,950,000	$2,975,781	Fund the reserve with the equivalent to 5 years worth of retirement contributions; begin using funds in 2022-2023 to offset mandatory retirement contributions.
Reserve for Retirement Contributions TRS	$0		+186,187	$186,187	Fund the reserve at 2% of TRS payroll; Begin using in 2022-2023 to offset TRS contributions.
Reserve for Property Loss	$469,209	$12,467		$482,112
Reserve for Liability Claims	$25,000	$649		$25,649
Insurance Reserve	$0			$0
Reserve for Tax Certiorari	$46,998	$1,608		$48,606
Reserve for Employee Benefits and accrued Liabilities	$174,573	$4,528		$179,101
Construction Capital Reserve Fund (2010)	$85,000	$418		$85,418	Use balance of this fund in 2021-22 to partially fund the capital outlay project.
Construction Capital Reserve Fund (2020)			$500,000	$500,000	Fund the reserve at the maximum level to be used in conjunction with aid from Capital Outlay project to fund annual capital outlay projects beginning in 2022-2023.
Capital (Bus Purchase) Reserve Fund (2015)	$666,417		+$1,480,000 -226,774	$1,919,643	Use $226,774 to purchase 2 66-passenger buses. Fund the reserve with an additional $1,480,000 to cover bus purchases through 2024-2025.
Reserve for Repairs	$0			$0	Sunset the reserve; no further funds can be deposited.
Reserve for Debt	$2,000,000	$51,888		$2,051,888	In 2021-2022, transfer funds to a Repair Reserve or Construction Reserve to fund essential repair projects identified in the building condition survey with $0 impact to taxpayers.
Reserve for Tax Reduction	$1,000,000	25,948		$1,025,948	Liquidate and return to unassigned Fund Balance in 2024-2025 to maintain positive balance in unassigned fund balance.
Other Restricted Fund Balance	$0			$0
Total Restricted Fund Balance	$5,971,603	$5,217,231	$5,217,231	$10,962,060
Assigned Appropriated Fund Balance	$3,383,021			$3,168,330	Includes carryover encumbrances.
Unassigned Fund Balance	$3,021,733			$3,774,206

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2021-2022 Reserve Plan – Planned Use and Projected Balances

Restricted Fund Balance:	Actual June 2021	Planned Activity 2021-2022	Projected June 2022	Notes for planned activity
Workers’ Compensation Reserve	$1,115,227		$1,115,227
Insurance Reserve	$366,500		$366,500
Reserve for Retirement Contributions	$2,975,781	-$195,000	$2,780,781	Transfer $195,000 to fund the TRS reserve.
Reserve for Retirement Contributions TRS	$186,187	+$195,000	$381,187	Fund the reserve at 2% of TRS payroll.
Reserve for Property Loss	$482,112		$482,112
Reserve for Liability Claims	$25,649		$25,649
Insurance Reserve	$0		$0
Reserve for Tax Certiorari	$48,606		$48,606
Reserve for Employee Benefits and Accrued Liabilities	$179,101		$179,101
Construction Capital Reserve Fund (2010)	$85,418	-$85,418	$0	Use remaining balance to offset the cost of the capital outlay project.
Construction Capital Reserve Fund (2020)	$500,000		$500,000
Construction Capital Reserve Fund (2022)	$0	+$2,051,888 +$948,112	$3,000,000	Fund the reserve from the Reserve for Debt and Reserve for Tax Reduction.
Capital (Bus Purchase) Reserve Fund (2015)	$1,919,643	-$392,372 +$77,836 -$77,836	$1,527,271	Use $392,372 to purchase 3 66-passenger buses (if authorized by voters). Transfer $77,836 from Reserve for Tax Reduction and use for purchase of one smaller vehicle.
Capital (Bus Purchase) Reserve Fund (2022)	$0	+$142,835	$142,835	Obtain voter approval to establish a 10-year reserve with maximum contribution at $3M. Resolution & proposition should allow BOE to fund the reserve by resolution. Deposit state aid from bus purchases back into the reserve.
Reserve for Debt	$2,051,888	-$2,051,888	$0	Transfer the funds from the Reserve for Debt to the Construction Capital Reserve (2022) to fund necessary maintenance and repairs. Requires voter approval.
Reserve for Tax Reduction	$1,025,948	-$1,025,948	$0	Transfer funds to Construction Capital Reserve (2022) to fund necessary maintenance and repairs and Capital Bus Purchase Reserve (2015) to purchase buses.
Other Restricted Fund Balance	$0
Total Restricted Fund Balance	$10,962,060		$10,549,269	Without the addition of excess fund balance.
Assigned Appropriated Fund Balance	$2,519,558		$2,519,558
Unassigned Fund Balance	$3,774,206

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