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CAPITAL RESERVE FUND PROPOSITION

(April 2018) A separate proposition will be placed on the May 15 ballot seeking voter approval to establish a capital reserve fund. The fund would have a term limit of 10 years and be capped at $5 million. The fund would essentially serve as a savings account for the District to set aside unused money from its yearly operating budgets specifically to address future construction projects and capital improvements in the District.

To spend money from a capital reserve fund, school districts must have voter authorization through a referendum. Taxes would not increase due to the capital reserve fund.

“By establishing a reserve fund, the District can save incrementally for future needs,” said Superintendent Michael Vanyo. “It also helps reduce the level of borrowing and in turn, the tax impact on residents for future capital improvement projects.”

Frequently Asked Questions


What is a Capital Reserve Fund?

A Capital Reserve Fund allows the district to set aside money for future construction projects and major purchases, much like a savings account. The fund cannot be established without voter approval AND reserve funds cannot be spent without voter approval. A separate proposition will be placed on the May 15 ballot seeking voter approval to establish a $5 million capital reserve fund over a 10-year period to address future capital improvements.

Where does the money for the Capital Reserve Fund come from?

Money would only be added to the Capital Reserve Fund if there is a surplus at the end of the year. In such cases, the board may authorize the funding of the reserve with some or all of the surplus, with the total not to exceed $5 million over 10 years. If there is no surplus, no money can be added to the reserve.

Will my taxes go up due to the establishment of a Capital Reserve Fund?

No, taxes would not increase due to the Capital Reserve Fund. The Capital Reserve is funded from monies not needed for current purposed and unexpended balances remaining at the end of a District’s fiscal year. Establishing and using this fund would actually benefit taxpayers because it means the District would not need to borrow as much money for future building projects, and therefore would pay less interest on that borrowing. This ultimately reduces long-term costs.

Why should the District establish a Capital Reserve Fund now?
Asking the voters to decide on this proposition during the May 15 vote saves the District and taxpayers from having to finance a separate referendum at another time. Also, New York State’s recent financial crisis highlighted the difficulties that arise when state aid is uncertain. Should the District need to fund a major construction project in the future, the local share cost for taxpayers would be lower if a capital reserve was immediately available to supplement state building aid.

What kinds of projects can the money be used for?

The Capital Reserve Fund can only be used with voter approval, so any proposed project using the fund would have to be presented to and decided upon by the community. Major building projects or purchases (e.g., a new boiler, if one were needed) could be funded using a capital reserve.

Why does the District need a Capital Reserve Fund to set aside money?

The Government Finance Officers Association recommends that governmental bodies maintain an unreserved fund balance of 5 to 15 percent of the general fund. However, state rules prohibit school districts from keeping more than 4 percent of a district’s budget in an undesignated reserve account. Capital reserve funds are exempt from that limitation, allowing schools to save for major expenses, both planned and unplanned.