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Capital Reserve Fund Q & A

Filed in Archive by on May 1, 2019

Planning for the Future of the Bethlehem Central School District – Learn more about the proposed 2019 Capital Reserve Fund

A separate proposition will be placed on the May 21 ballot seeking voter approval to establish a Capital Reserve Fund up to an amount of $10 million that could be used over a 10-year period to address future renovations and repairs within the district. Establishing a capital reserve fund now allows the district to plan for the long-term needs of the district.

Below are some frequently asked questions about the establishment of a Capital Reserve Fund:

What is a capital reserve fund?
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.

Where does the money for the capital reserve fund come from? 
Money would only be added to the capital reserve fund if there is excess money left at the end of the fiscal year. If there is no excess, then no money is added to the capital reserve fund.

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 fund only accrues a balance if there is an excess of money at the end of the district’s fiscal year.

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 (i.e. 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 an unplanned.