Capital reserve measure facts

Capital reserve measure facts

On May 18, Fayetteville-Manlius voters approved the creation of a Capital Reserve Fund not to exceed $5 million. (Voting results.)

What is a capital reserve fund?

A capital reserve fund would allow the school district to set aside money for future construction projects and major purchases. Most school districts have capital reserve funds.

Will creating a capital reserve fund raise taxes?

No. Without a capital reserve fund, districts must borrow money when voters approve a capital project. That causes a spike in the district’s tax levy for the life of the loan. When school districts use capital reserve funds to pay for capital projects, the impact on property tax payers is greatly reduced. 

Where will the district get the money to put into the capital reserve fund?

The money will come from General Fund monies that remain unspent at the end of each fiscal year. That is, the capital reserve fund will be filled with money voters have already approved to be spent. The fund is limited. It cannot grow larger than $5 million. 

What kinds of projects can the money be used for?

The District Facilities Planning Committee has identified about $40 million worth of work that needs to be completed within the next 15 years. A capital reserve fund would allow that work to be completed with a minimal tax impact.

How much control do voters have over the money in the fund?

Voters approved the creation of the capital reserve fund May 18. Any expenditures from a capital reserve fund would require voter approval through a referendum. After 10 years, the money must either be spent or re-authorized by voters.

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 the districts’ 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.

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