N.Y. Education Law § 3651: Reserve fund

§ 3651. Reserve fund. 1. A reserve fund may be established by the

school authorities of any school district, provided, however, that no

such fund shall be established (a) until approved by a majority vote of

the qualified voters of the district voting on a proposition therefor

submitted at a regular or special school district meeting, or in school

districts which do not have such meetings, at an election called for

such purpose, and (b) unless the notice of such meeting or election

shall have stated that a proposition to establish a reserve fund would

be so submitted, the purpose of the fund, the ultimate amount thereof,

its probable term and the source from which the funds would be obtained.

Such reserve fund may be established for financing, in whole or in part,

the cost of any object or purpose for which bonds may be issued by, or

for the objects or purposes of, the school district pursuant to the

local finance law. The proposition shall specify the purpose for which

the fund is established, the ultimate amount, the probable term and the

source from which the funds are to be obtained. There shall be paid into

any such fund an annual amount sufficient to meet the requirements of

the proposition. In addition, the voters may from time to time direct

the school authorities to pay into such fund moneys derived from any

other source.

1-a. Notwithstanding the provisions of subdivision one of this

section, any school district may establish a reserve fund for the

payment of judgments and claims in tax certiorari proceedings in

accordance with article seven of the real property tax law, without

approval by the qualified voters of the district, provided, however,

that the total of the monies held in such reserve fund shall not exceed

that amount which might reasonably be deemed necessary to meet

anticipated judgments and claims arising out of such tax certiorari

proceedings. Any monies deposited to such reserve fund which are not

expended for the payment of judgments or claims arising out of such tax

certiorari proceedings for the tax roll in the year such monies are

deposited to the said fund and/or which will not reasonably be required

to pay any such judgment or claim shall be returned to the general fund

on or before the first day of the fourth fiscal year following the

deposit of such monies to said reserve fund. For purposes of this

subdivision, such monies shall be deemed reasonably required to pay any

such judgment or claim if the proceeding or claim has not been finally

determined or otherwise terminated or disposed of after the exhaustion

of all appeals.

1-b. Notwithstanding the provisions of subdivision one of this

section, where the city or county is not required to pay to the

treasurer of a city school district unpaid taxes during the fiscal year

for which such real property taxes are levied, the board of education of

such city school district may establish a reserve for uncollected taxes

without approval of the qualified voters of the school district,

provided that the ratio of the amount of such reserve to the total

principal amount of the district's tax levy for such fiscal year shall

not be less than the ratio of the principal amount of the school

district taxes as levied by the school district for the last completed

fiscal year but not received by the district before the end of such

fiscal year to the total principal amount of the tax levy for such last

completed fiscal year. If the city or county is not required to pay to

the treasurer of a city school district unpaid taxes pursuant to section

thirteen hundred thirty-two of the real property tax law, the board of

education of the city school district shall establish a reserve pursuant

to this subdivision, provided that such reserve shall not be less than

the amount of taxes for the fiscal year for which such budget is being

prepared which are estimated to be unpaid during such fiscal year under

the aforesaid provisions of the real property tax law.

2. The moneys in each such fund shall be deposited in one or more of

the banks or trust companies designated as depositories of the funds of

such school district and shall be known as the "________reserve fund" of

such district. The school authorities may direct the treasurer of such

school district to invest the moneys in each such fund in the manner

provided in section thirty-six hundred fifty-two of this article. Any

interest earned or capital gains realized on the money so deposited or

so invested shall accrue to and become a part of each such fund. The

separate identity of each such fund shall be maintained whether its

assets consist of cash or investments or both.

3. An expenditure shall be made from a reserve fund only by

authorization of the voters and for the specific purpose specified in

the proposition.

3-a. Notwithstanding the provisions of subdivision three of this

section, any school district which establishes a reserve fund in

accordance with subdivision one-a of this section may make expenditures

from such fund for the purposes specified in such subdivision without

authorization of the voters.

4. The voters may authorize the transfer of all or any part of any

reserve fund to any other reserve fund established pursuant to this

section.

5. Whenever the voters shall determine that the original purpose for

which a reserve fund has been established is no longer desirable, the

school authorities may liquidate the fund by first applying its proceeds

to any outstanding bonded indebtedness and applying the balance, if any,

to the annual tax levy, provided, however, that the amount so applied in

any one year shall not be greater than the amount which will reduce the

tax rate for school purposes below five mills on actual valuation;

provided, however, that the school authorities in any school district

having no outstanding bonded indebtedness may, in any year in which no

state aid is payable thereto under the provisions of this chapter,

liquidate such fund by applying the balance thereof to the annual tax

levy, regardless of the tax rate for school purposes, subject to the

approval of a majority of the qualified electors of the district voting

on a proposition therefor submitted at a regular or special school

district meeting, or in school districts which do not have such

meetings, at an election called for such purpose.

6. The school authorities shall cause a separate account to be kept of

each fund established. Such account shall show:

a. The date and amount of each sum paid into the fund.

b. The interest earned by such fund.

c. The capital gains or losses resulting from the sale of investments

of the fund.

d. The interest or capital gains which have accrued to the fund.

e. The amount and date of each withdrawal from the fund.

f. The assets of the fund indicating the cash balance therein and a

schedule of the amounts invested in federal or state obligations.

7. The school authorities shall render annually a detailed report of

the operation and conditions of each of such funds. Copy of such report

shall be filed with the commissioner of education.

8. a. Notwithstanding the foregoing provisions of this section, if in

any city any taxes raised on real estate for the purposes of the school

district must be included in computing the amount which the city may

raise by tax on real estate for city purposes pursuant to the provisions

of section ten of article eight of the constitution, the establishment

of a reserve fund by the school authorities of the school district shall

be subject to the consent of the legislative body of the city.

b. Notwithstanding the foregoing provisions of this section, in any

school district which is wholly or partly in the Adirondack park and has

within its boundaries state lands subject to taxation assessed at more

than thirty per centum of the aggregate taxable assessed valuation of

the real property within the bounds of such school district, the school

district shall not establish a reserve fund unless, on the

recommendation of the commissioner of education, the state comptroller,

on behalf of the state, shall consent thereto. Upon the expiration of

fifteen days from the date of the filing in his office of the

application for such consent, together with the recommendation of the

commissioner of education, and upon reaching a determination, the state

comptroller shall make an order, in triplicate, granting or denying such

consent. One copy of such order shall be filed in the office of the

state department of audit and control at Albany, New York, another in

the state department of education at Albany, New York, and the third in

the office of the clerk of such school district.

9. Notwithstanding the foregoing provisions of this section, in a city

school district in a city having a population of one hundred twenty-five

thousand inhabitants or more, such a reserve fund may be established,

expenditures may be made therefrom, moneys may be paid into such fund,

all or any part of such fund may be transferred to any other reserve

fund established under this section, and such reserve fund may be

liquidated, all pursuant to the provisions of this section, except that

any such action may be authorized or taken by the board of education of

such city school district, without approval or authorization of the

qualified voters of such district.