Reserve is likely to be modeled after the state's budget contingency allotment
Caesar Rodney School District will be following in the steps of the state to create its own rainy day fund, once the school board gives the final approval for how the reserve is funded.
The idea was presented at the Board of Education’s Dec. 21 meeting.
Financial Director Ada Carter said last spring she and the superintendent attended state workshops and the subject of budgeted reserves came up, which CR has never formally had. Typically, CR’s carryover has been considered the reserve, but Carter said she wanted to formalize the process.
“There’s always regulation. How do you know if it’s too much? How do you know it it’s too little?” she said.
After researching every school district in the state, Carter turned to the formula that the state of Delaware uses for its Rainy Day Fund.
Delaware follows the practice that only 98% of anticipated current revenue can be budgeted and the remainder is put in the reserve. However, following the way the state calculates anticipated current revenue, Caesar Rodney won’t quite have enough money to put away the maximum amount allowed.
Carter said she wanted to start with the state’s formula and see if it works for the district.
However, once a reserve is in place, she can use it to follow more accurate trends in the budget. For example, the district has to budget $200,000 for its legal expenses every year in case of an emergency, but most years doesn’t come close to spending that. With a reserve available for contingencies, then the legal budget could go down to what CR typically spends.
The school board will vote on the funding for a Rainy Day Fund at a future meeting.
Email Jayne Gest at firstname.lastname@example.org