reserve funds presentation

8/12/2019 Reserve Funds Presentation

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Educational Institutions Client Update:

Reserve FundsCharles I. Schachter

99 Garnsey Road

Pittsford, NY 14534

585.419.88

!!!.harris"each.co#
http://www.harrisbeach.com/http://www.harrisbeach.com/


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Educational Institutions Client UpdateFebruary 2014 Harris Beach PLLC 2014

Overview; Common Issues

!uthori"in# the For$ation o% &eser'e

Fundin# Li$itations

!llo(able )ources %or Fundin#

E*penditures or +rans%ers ,ut o% Fund

+rans%ers to ,ther &eser'e Funds

Li-uidation


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Types of Reserve Funds

1. Capital &eser'e Fund /Education La( )ection1/133

2. +a* Certiorari &eser'e Fund /Education La( )ection

1/1a33

. Liability &eser'e Fund /Education La( )ection 1506/7c3 160/43/c33

4. Property Loss &eser'e Fund /Education La( )ection1506 /7c3 160/43/c33

. +a* &eduction &eser'e Fund /Education La( )ection104/3 and 1506/533


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Types of Reserve Funds (cont.

. Uncollected +a*es &eser'e Fund 8 )$all City )chool9istricts /Education La( )ection 1/1b33

5. Career Educational E-uip$ent &eser'e Fund 8 B,CE)

/Education La( )ection 160/43/ee33

7. &epair &eser'e Fund /:eneral ;unicipal La( )ectiond3

6.


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Types of Reserve Funds (cont.

11. Une$ploy$ent Insurance Pay$ent &eser'e Fund/:eneral ;unicipal La( )ection $3

11. Insurance &eser'e /:eneral ;unicipal La(

)ection n3

11. E$ployee Bene%it !ccrued Liability &eser'e Fund/:eneral ;unicipal La( )ection p3

11. &etire$ent Contribution &eser'e Fund /:eneral;unicipal La( )ection r3

12. E*cess +a* Le'y &eser'e


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Ca$ital Reser%e &'nds(Education Law Section 3651(1))


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Capital Reserve Funds: !llowa"le #urposes

(llo!a"le P'r$oses) +o pay the cost o% any?ob>ect or purpose@ %or (hich a school districtcould issue bonds under the Local Finance La(.

E*a$plesA :eneral Purpose Capital &eser'e Fund

)chool Bus &eser'e Fund

+echnolo#y &eser'e Fund E-uip$ent &eser'e Fund


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Capital Reserve Funds: Creation

*o! Created) By 'oter appro'al. ;ustbe appro'ed by a re%erendu$ appro'ed bythe 'oters.

Bothotice o% Proposition andProposition $ust stateA Purposes o% %und

Ulti$ate !$ount /%undin# li$it3

Probable +er$ )ources %ro$ (hich %unds (ould be obtained


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Capital Reserve Funds: E$penditures

+$endit'res) ;ust be appro'ed by 'oter re%erendu$statin# speci%ic purpose and a$ount o% e*penditure

o%ten done a part o% a capital pro>ect re%erendu$ (here portion o%

cost paid %or out o% e*penditure %ro$ reser'e %und (ith balance%inanced %ro$ bonds o% the district

SED rulingsA $ust be %or exact amount not an ?up to@a$ount

Cannot authori"e e*penditure %ro$ %und in sa$e year as reser'e%und is established andDor %unded


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Capital Reserve Funds: Fundin% &imit andTerm &imit

&'ndin- and er# /i#its) ,nce either the %undin# li$it or the stated ter$ o% the

reser'e set %orth in the ori#inal proposition creatin# the

reser'e has been reached no %urther contributions can be$ade to the reser'e ho(e'er the reser'e re$ains ine*istence and %urther e*penditures can be authori"ed %ro$any re$ainin# balance

!nother proposition could be appro'ed by the 'otersreauthori"in# the reser'e (ith a ne( ter$ andDor%undin# li$it


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Capital Reserve Funds: Transfers toOt'er Funds

ransfers to 0ther &'nds) !ll or part o%balance in %und $ay be trans%erred with voterapprovalto another reser'e %und %or$ed under

Education La( )ection 1 /e.#. anothercapital reser'e %und a ta* certiorari reser'e %undor a reser'e %or uncollected ta*es /s$all cityschool districts only33


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Capital Reserve Funds: &iuidation

/i'idation)

;ay be li-uidated with voter approval, i% the 'otersdeter$ine the ori#inal purpose %or (hich the %und (asestablished is no lon#er needed.

Balance applied %irst to pay do(n any outstandin#bonded indebtedness o% )chool 9istrict and then to

reduce ta* le'y sub>ect to certain li$itations.


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a Certiorari Reser%e &'nds(Education Law Section 3651(1-a))


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Ta$ Certiorari Reserve Funds:#urpose and Creation

P'r$ose) +o pay >ud#$ents or clai$s /i.e.re%unds3 resultin# %ro$ ta* certiorari proceedin#s

*o! Created) By Board action

oter appro'al notre-uired


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Ta$ Certiorari Reserve Funds:Fundin% &imitation and )ource of Funds

&'ndin- /i#itation) a$ount deposited into%und $ay not e*ceed the a$ount ?(hich $i#htreasonably be dee$ed necessary to pay

anticipated >ud#$ents or clai$s@ in ta*certiorari proceedin#s

So'rce of &'nds) #enerally bud#etary

appropriations so$eti$es trans%ers %ro$other %unds


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Ta$ Certiorari Reserve Funds: E$penditures

+$endit'res)

oter appro'al not re-uired

;ay only be applied to pay re%unds in proceedin#sco$$enced in the speci%ic year o% the deposit into the%und


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Ta$ Certiorari Reserve Funds:Transfers to Ot'er Funds

ransfers to 0ther &'nds) o General &'nd

;oneys deposited into the reser'e %und $ust be returned to the:eneral Fund no later than uly 1 o% the %ourth %iscal year a%ter the

deposit into the reser'e %und i% they are not used to pay re%undsarisin# out o% ta* certiorari proceedin#s %or the ta* role in the speci%icyear they (ere deposited andDor (ill not be ?reasonably required@ topay such re%unds

Funds (ill be dee$ed ?reasonably required@ i% a clai$ as not been%inally deter$ined or other(ise ter$inated or disposed o% a%tere*haustion o% all appeals

o 0ther Reser%e &'nds

!ll or part o% balance in %und $ay be trans%erred with voter approval toanother reser'e %und %or$ed under Education La( )ection 1 /e.#.a capital reser'e %und3


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Ta$ Certiorari Reserve Funds: &iuidation

/i'idation)

;ay be li-uidated with voter approval, i% 'otersdeter$ine the ori#inal purpose %or (hich the %und (asestablished is no lon#er needed.

Balance applied %irst to pay do(n any outstandin#bonded indebtedness o% )chool 9istrict and then to

reduce ta* le'y sub>ect to certain li$itations


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/ia"ility Reser%e &'nds andPro$erty /oss Reser%e &'nds

(Education Law Section 170 (!-c)"

150(#)(cc))


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&ia"ility Reserve Funds and #roperty &ossReserve Funds: #urpose and Creation

P'r$ose)

+o co'er property loss or other liability clai$s

;ust be t(o separate %undsA one to co'er property lossand the other to co'er liability clai$s

*o! Created)

Funded by Board action oter appro'al notre-uired

&i "ilit R F d d # t &


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&ia"ility Reserve Funds and #roperty &ossReserve Funds:Fundin% &imitations and )ource of Funds

&'ndin- /i#itations)

)chool 9istricts) ;ay not e*ceed the #reater o% G o%annual bud#et /e*clusi'e o% any planned balance

presently authori"ed3 or 1000 B,CE)A ;ay not e*ceed G o% annual bud#et

Balance in reser'e $ay not be reduced belo( totala$ounts esti$ated to be necessary to co'er incurred

but unsettled clai$s or suits includin# relatede*penses other than by pay$ent o% losses %or (hichsuch a$ounts (ere established.

So'rce of &'nds) bud#etary appropriations

&i "ilit R F d d # t &


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&ia"ility Reserve Funds and #roperty &ossReserve Funds: Transfers to Ot'er Funds;Use of Une$pended *alances

)chool 9istricts Pay$ents $ay not be $ade %or purposes other than those %or (hich the

reser'e %und (as established unless approved by the voters

E*ceptionA school board $ay authori"e use o% the reser'e %und /other

than a$ounts allocated %or unsettled clai$s or suits includin# relatede*penses3 to pay pre$iu$s %or insurance policies purchased to insuresubse-uent losses in areas pre'iously sel%insured in the e'ent o%dissolution o% the sel%insurance plan.

B,CE)

+he board $ay authori"e use o% the reser'e %und /other than a$ountsallocated %or unsettled clai$s or suits includin# e*penses in connectionthere(ith3 to pay pre$iu$s %or insurance policies purchased to insuresubse-uent losses in areas pre'iously sel%insured in the e'ent o%dissolution o% the sel%insurance plan.


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+#$loyee 2enefit (ccr'ed /ia"ilityReser%e &'nd

($eneral %unicipal Law Section 6-p)


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Employee *enefit !ccrued &ia"ility ReserveFund: #urpose

P'r$ose) +o pay %or any accrued ?e$ployee bene%it@ due ane$ployee upon ter$ination o% ser'ice.

!lso can be used to %undthe reasonable costs o% ad$inisterin# thereser'e %und and the cost o% e*pert or pro%essional ser'ices renderedin connection (ith the in'esti#ation ad>ust$ent or settle$ent o%clai$s actions or >ud#$ents relatin# to clai$s %or accrued e$ployeebene%its.

?Employee Benefit@ $eans the cash pay$ent o% the $onetary 'alue

o% accrued and accu$ulated but unused and unpaid sic= lea'epersonal lea'e holiday lea'e 'acation ti$e ti$e allo(ances#ranted in lieu o% o'erti$e co$pensation and any other %or$s o%pay$ent %or accrued but unli-uidated ti$e earned by e$ployees andpayable upon ter$ination o% ser'ice.


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Employee *enefit !ccrued &ia"ility ReserveFund: Creation and )ource of Fundin%

*o! Created) Funded by Board action

oter appro'al notre-uired.

So'rce of &'ndin-) Bud#etary appropriationsa$ounts trans%erred %ro$ other reser'e %undsauthori"ed under the :eneral ;unicipal La(

sub>ect to per$issi'e re%erendu$ other %undsle#ally appropriated.


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Employee *enefit !ccrued &ia"ility ReserveFund: E$penditures

+$endit'res)oter appro'al not re-uired.

o e*penditure shall be $ade %or any e$ployee

bene%it %or (hich a reser'e %und has already beenestablished. Ho(e'er i% the 9istrict pre'iouslyestablished a reser'e %und %or a type o% accruede$ployee bene%it the Board $ay discontinue the

other reser'e %und and trans%er any une*pendedbalance to the e$ployee bene%it accrued liabilityreser'e %und sub>ect to certain li$itations.

Emplo ee *enefit !ccrued &ia"ilit Reser e


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Employee *enefit !ccrued &ia"ility ReserveFund: Transfers to Ot'er Funds; Use ofUne$pended *alances

ransfers to other f'nds se of

ne$ended 2alances) I% the Board deter$ines that such %und is no lon#er

needed the re$ainin# balance $ay be trans%erred tocertain other reser'e %unds /those authori"ed by the:eneral ;unicipal La( or under Education La()ection 13 but only to the e*tent that the $oneys

in the e$ployee bene%it accrued liability reser'e %unde*ceed a su$ su%%icient to pay all liabilities incurred oraccrued a#ainst the reser'e %und.


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Employee *enefit !ccrued &ia"ility ReserveFund: Transfers of E$cess Funds

ransfers of +cess &'nds d'rin- 1613

and 13614 &iscal Years) Board can authori"e (ithdra(al %ro$ %und in an

a$ount not to e*ceed the lesser ofA /i3 the dollara$ount o% e*cess %undin# in such %und as deter$inedby the )tate Co$ptroller or /ii3 a$ount o% 9istrictsre$ainin# #ap eli$ination ad>ust$ent calculated by

)E9. Funds (ithdra(n $ay only be used %or?$aintainin# educational pro#ra$in#@ durin# theapplicable %iscal year that (ould ha'e other(ise beenreduced as a result o% the #ap eli$ination ad>ust$ent.


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7oter ($$ro%al or 0ther Re'ire#ents($$lica"le to

7ario's y$es of Reser%e &'nds


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+oter !pproval or Ot'er Reuirements!pplica"le to +arious Types of Reserve Funds

&or#ation of Reser%e Re'irin- 7oter

($$ro%al Capital &eser'e Fund

+$endit're of f'nds for Intended P'r$ose of

Reser%e re'irin- 7oter ($$ro%al

Capital &eser'e Fund


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ransfers of oneys to other Reser%e &'nds

re'irin- 7oter ($$ro%al Capital &eser'e Fund 8 $ust to other reser'e %unds established

under Ed. La( 1 /#enerally other capital reser'e %unds or ta*certiorari reser'e %unds3

+a* Certiorari &eser'e Fund $ust to other reser'e %undsestablished under Ed. La( 1 /#enerally capital reser'e %undsor ta* certiorari reser'e %unds3

Liability and Property Loss &eser'e Funds 8 e*penditures %or apurpose other than the purpose o% the %und 8 (ould includetrans%er to another reser'e or to the :eneral Fund

Uncollected +a*es &eser'e Fund /)$all City )chool 9istricts3 8$ust be to other reser'e %unds established under Ed. La( 1

/capital reser'e %unds or ta* certiorari reser'e %unds3.


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ransfers of Reser%e &'nd 2alance not Re'irin-

7oter ($$ro%al E$ployee Bene%it !ccrued Liability &eser'e Fund upon

a deter$ination by the Board that the %und is no lon#er needed

the %und $ay be discontinued and $oneys $ay be trans%erred toany other reserve but only to the e*tent o% the e*cess o'er thea$ount su%%icient to pay all liabilities incurred or accrued a#ainstthe reser'e %und )pecial rule %or trans%ers o% e*cess %und balance $ade in FJ 20121

and FJ 20124 %or ?$aintainin# educational pro#ra$in#@


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7oter ($$ro%al cont.:

Insurance &eser'e Fund upon a deter$ination by the Board

that the %und is no lon#er needed the %und $ay be discontinuedand $oneys $ay be trans%erred to any other reserve but only tothe e*tent o% the e*cess o'er the a$ount su%%icient to pay allliabilities incurred or accrued a#ainst the reser'e %und

&etire$ent Contribution &eser'e Fund 8 a portion o% balance heldin the %und $ay be trans%erred to another reserve fundestablished under Ed. Law Section 3!" %ollo(in# a publichearin#


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7oter ($$ro%al cont.: Une$ploy$ent Insurance Pay$ent &eser'e Fund


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ransfers into a Reser%e &'nd fro# another

Reser%e: additional conditions i#$osed:

&etire$ent Contribution &eser'e Fund 8 trans%ers %ro$ a repairreser'e or capital reser'e re-uire a public hearin#

Une$ploy$ent Insurance &eser'e Fund 8 board resolutionauthori"in# trans%ers %ro$ another reser'e sub>ect to a

per$issi'e re%erendu$


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Educational Institutions Client Update


ransfers o't of Reser%e andated 2y /a!

+a* Certiorari &eser'e Fund ;oneys deposited into the reser'e%und $ust be returned to the #eneral 'undno later than uly 1 o%

the %ourth %iscal year a%ter the deposit into the reser'e %und i% theyare not used to pay re%unds arisin# out o% ta* certiorariproceedin#s %or the ta* role in the speci%ic year they (eredeposited andDor (ill not be ?reasonably re-uired@ to pay suchre%unds

E*cess +a* Le'y &eser'e 8 $ust be used to reduce ta* le'y in%ollo(in# %iscal year.

reserve funds presentation

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