D4021

RESERVE FUNDS: EXCESS & DEFICIENCY (E&D)

At the end of each fiscal year, the District shall close any surplus or deficit in the General Fund to the Reserve Fund (called E&D Fund).  The MA Department of Revenue (DOR) certifies the District’s E&D balance annually, similar to a community’s free cash certification.  In order to have E&D certified, the District shall submit the required information to the DOR at the close of each fiscal year but no later than October 31st.  DOR is then required to certify the District’s E&D balance by December 1st.  

The School Committee's objective is to maintain adequate reserves to ensure operational stability in the school district. As a result, the School Committee shall seek to maintain a minimum balance of three (3) percent of its operating budget and capital cost budget for the succeeding fiscal year in its E&D Fund.  

If the District’s certified E&D balance exceeds three (3) percent of its operating budget and capital cost budget for the succeeding fiscal year, the District must use the amount in excess of the three (3) percent as a revenue source for its ensuing Annual Operating Budget.  Each year, as part of the District’s Annual Budget process, the School Committee will determine the exact amount of E&D Funds, if any, that is in excess of the three (3) percent reserve and will use these funds to reduce the amount to be raised by assessment by the member Towns during the ensuing Annual Budget process (i.e. applied as a revenue source to the following Fiscal Year’s Operating Budget).  This shall occur on the same day that the School Committee is scheduled to adopt, by a two-thirds vote, the Annual Operating Budget for the District (see Policy D4008).  The date of adoption shall not be before February 1st or later than March 31st in any given year.  

The annual certification of E&D, and the District’s Annual Budget process as described herein, shall serve as the standard mechanism for reconciling the E&D Fund and the only process by which funding will be returned to the member Towns.  This includes but is not limited to any funding variances directly attributable to the Chapter 70 and Regional Transportation Programs.      

Finally, the School Committee, on occasion, may approve by a two thirds vote the use of existing E&D Funds as additional revenue within a current fiscal year in order to cover unanticipated revenue shortfalls or to fund non-recurring or unforeseen expenditures that are deemed as either extraordinary or unavoidable by District Administration and the School Committee.  Any vote to increase the current year Budget through the use of existing E&D Funds shall be submitted to both member Town’s for approval in accordance with DESE regulations.

LEGAL REFS: M.G.L. 71:16B; 71:16 ½B; 603 CMR 41.06; 603 CMR 41.05