CAPITAL RESERVE FUNDS

Spring 2011

At the May 2008 budget vote, the community approved the establishment of a Capital Reserve Fund for Technology Replacement and a Capital Reserve Fund for Building Improvements and Repairs.

A reserve fund is a separate account established by a school district to finance various district costs. It can be thought of as a savings account for a specific purpose. The Capital Reserve sets aside money for future projects, rather than fund the expenditure through the current year’s budget or by issuing bonds (thereby avoiding an increase in the tax levy). Expenditures may be made from the reserve only for specific purposes further authorized by the voters.

To understand how these reserve funds work it is important to know that:

1. The money in each of the reserves is not a request for new or more money from the community.
2. The money can only be used for the reasons explained in the establishment of the funds, such as technology and facilities. It cannot be used to hire staff.
3. The money cannot be used to reduce the 2011-2012 tax levy.
4. Any money from the reserve funds that is not spent as of June 2013 will be returned to the general fund budget for the 2013-2014 school year.
5. Any expenditure from the reserve funds must be approved by the voters of the district.
6. Using money in the reserve fund keeps the budget to budget increase lower as some of the health and safety items would have had to be placed in the budget.

In June 2009, the district transferred $400,000 from the Post Retirement Reserve fund to begin financing the Technology and Capital Reserve Funds with $200,000 each. This was made possible through a recommendation from the district’s auditor that the Post Retirement Reserve fund had more than was needed.

This May, there will once again be three propositions on the ballot. The first will be for the budget, the second will be to expend money from the Technology Replacement Fund and the third will be to expend money from the Capital Reserve Fund for Building Improvements and Repairs. Details of these expenditures will be shared at the Budget Hearing on May 5, 2011.