On November 15, 2011, MBUSD Board of Trustees approved a higher limit for a reserve account. The higher limit increases the minimum dollar amount in the fund’s balance, requiring more of the unassigned funds to be placed in reserves. This move effectively removed $1.3 million from the general fund, thereby shielding the money from being used for salary increases.
The previous limit was set at the state mandated 3% or approximately $1.6 million for MBUSD given the size of its budget. The new limit of 5% was voluntarily set by the Board and was not the result of state requirements. In effect, the Board almost doubled its reserve balance for economic uncertainties to nearly $2.9 million, which means they committed to allocating at least $1.3 million more of the revenues towards this account each and every year from this point forward.
If the reserve is not needed [and it has not been needed], the entire balance of the fund can be moved into unassigned funds at the end of the school year and spent in the subsequent year(s) relatively unnoticed, since each year the reserve account must be replenished at a rate 5 percent of the incoming revenues. As the district expects revenues to increase from the state in the upcoming school years by 3.1% and 2.8% respectively (funded COLA), this will allow for cash accumulation at an increasing rate. Make no mistake about it, this new measure is aimed to keep ongoing revenues away from employee unions.