2018 - 2019 Reserve Plan

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 cost associated with debt issuances. Similarly, certain reserve funds can be utilized to help protect the budget against know risks (a potential lawsuit) or unknown risks (a major ice storm).

Most reserve funds are established to provide resources for an intended future use. An important concepts 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 underlying 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.

Source: Office of the New York State Comptroller-Local Management Guide for Reserves
http://www.osc.state.ny.us/localgov/pubs/lgmg/reservefunds.pdf

Capital Reserve Funds are used to pay for the cost of any object or purpose for which bonds may be issued. The creation of a capital reserve fund requires voter authorization to establish the purpose of the reserve, the ultimate amounts, its probable term, and the source of the funds. Expenditures may be made from the reserve
only for a specific purpose further authorized by the voters. These reserves are accounted for in the General Fund.

The 2018 Building Capital Reserve Fund was established to allow the District to set funds aside to finance the cost of construction and reconstruction of district facilities. Facilities planning is a continuous process that
requires constant monitoring and oversight. The Capital Project Reserve Funds support the financing requirements for future capital improvement needs with the intent to minimize the impact on taxpayers as much as practically possible.

Funding goal: Fully fund to the total of $2,000,000.00 by June 30, 2020.

Projected Need: $2,000,000.00 to fund the local share of the next capital project circa 2023

The Capital Technology Reserve Funds were established for the purpose to finance, in whole or in part, the purchase of equipment, including computer equipment (i.e., hardware and software, related devices, networking equipment, apparatus and peripherals such as printer, modems, file servers, communication devices, and required wiring for same). The District has utilized the Technology Reserve Fund to support computer hardware upgrades and replacement needs. This reserve has met the funding goal and has been fully funded.

Projected Need: $150,000.00 per year beginning circa 2020-2021 to fund 1:1 device replacements

The Bus Purchase Reserve Funds were established to allow the District to set funds aside to finance the cost of transportation vehicles. This reserve has met the funding goal and is fully funded. In May 2017 the voters approved expenditures of up to $532,250 for the purchase of four (4) - 65 passenger buses, one (1) - 30
passenger mini bus and one (1) - suburban during the 2017-18 school year. In May 2018 the voters approved expenditures of up to $489,618.86 for the purchase of four (4) - 65 passenger buses and one (1) - 30 passenger
mini bus during the 2018-19 school year.

Projected Need: 2018-19: $489,618.86 for bus replacement costs

Projected Need: 2019-20: $240,000.00 for bus replacement costs

Projected Need: 2020-21: $200,000.00 for bus replacement costs

Projections are based on moving some bus purchases back to the General Fund budget.

This reserve is used specifically to purchase Maintenance Vehicles and Equipment. This reserve has met the funding goal and is fully funded. In May 2018, the voters approved the expenditure of up to $50,000 for the purchase of one (1) one-ton dump truck during the 2018-19 school year.

Projected Need 2019-20: $68,000.00 to replace a tractor and groomer

Projected Need 2020-21: $40,000.00 to replace lawn equipment

Projected Need 2021-22: $55,000.00 to replace a sander truck

Projected Need 2022-23: $25,000.00 to replace a tow behind mower

The Repair Reserve fund was established to pay the cost of repairs to capital improvements or equipment, which repairs are of a type that do not recur annually. Voter approval is required to fund this reserve. Expenditures from this reserve may be made only after a public hearing has been held, except in emergency situations. If no hearing is held, the amount expended must be repaid to the reserve fund over the next two
subsequent fiscal years. This reserve is accounted for in the General Fund and has met the funding goal.

Projected Need: $294,722.60 to fund unexpected building repairs over the next 5-10 years

The Tax Certiorari Reserve Fund is used to establish a reserve fund for tax certiorari claims and to expend from the fund without voter approval. The monies held in the reserve shall not exceed the amount which might reasonable be deemed necessary to meet anticipated judgments and claims arising out of tax certiorari 
proceedings. This reserve is accounted for in the General Fund and has met the current funding goal.

Projected Need: $117,616.75 to fund active claims

The Reserve for Liability Fund was established to pay for property loss and liability claims incurred. This reserve is accounted for in the General Fund and has met the funding goal.

Projected Need: $244,562.00 to pay potential property loss and liability claims of the next 5-10 years.

The Insurance Reserve Fund was established to pay liability, casualty and other types of losses, except those incurred for which the following types of insurance may be purchased: life, accident, health, annuities, fidelity, and surety, credit, title residual value and mortgage guarantee. This reserve is accounted for in the General Fund and has met the funding goal.

Projected Need: $240,000.00 to pay potential liability, casualty and other loss claims over the next 5-10 years.

The EBALR Fund was established to pay accrued benefits due employees upon termination of service. This reserve is accounted for in the General Fund and is fully funded to the funding goal as of June 30, 2018.

Projected Need: Varies by fiscal year due to staff retirements and other personnel changes

The Retirement Contribution Reserve Fund is used for the purpose of financing retirement contributions. This reserve is accounted for in the General Fund. The Board of Education’s foresight to have funds reserved for retirement contributions is fiscally prudent. Having funds available to support payments to the Employees’
Retirement System will help mitigate the budget impact of sharp increases in contribution rates. The funding goal for this reserve is at the level of 5 years of ERS costs. On May 15, 2018 the voters approved transferring $500,000.00 from this reserve to fund the initial deposit into the 2018 Building Capital Reserve Fund.

Funding Goal: $1,690,836.06 (5 years of ERS expenses)

Projected Need: Evaluate needs for additional funds above the 5 year funding goal including capital and budget support

The Unemployment Insurance Reserve is used to pay the cost of reimbursement to the State Unemployment Insurance Fund for payments made to claimants where the school district uses the benefit reimbursement method. Within sixty days after the end of any fiscal year, excess amounts may either be transferred to another
reserve or the excess applied to the appropriations of the next succeeding fiscal year’s budget. This reserve is accounted for in the General Fund. In May 2018 the voters authorized the use of $40,079.00 to support the 2018-19 budget. This amount shows as revenue in the public budget document.

Funding Goal: $100,000.00

Projected Need: $40,079.00 to support the 2018-19 budget, evaluate needs for additional funds above the goal for other uses including capital and budget support

 

*An interest amount of $0.00 does not indicate the funds in the reserve did not earn interest. It simply indicates that the interest amount was applied to general revenue, not the specific reserve fund.

FUTURE ACTION ITEMS
May 2019:
1.) Establish a new Capital Building Reserve for future capital projects