School District Operating Reserve Reporting

Published On: February 26th, 2024Categories: Accounting, Auditing Standards

Starting with the 2024-2025 school year, most school districts will be required to report their operational funds’ combined cash reserve balance (which is calculated with the district’s average annual expenditures from the past three years). School Code Section 17-1.10 defines “operational funds” as the Education, Operation and Maintenance, and Transportation Funds, and the average expenditures will be taken from the audit report.

If the cash reserves exceed 2 ½ times the annual average expenditures, the school board will be required to adopt and file a “written operational funds reserve reduction plan.” The plan will detail how the excess reserves will be spent down within three years and will be due to ISBE on December 31st each year (beginning in December 2024).

This law is capping the reserves that school districts carry and will hopefully minimize the tax objections for reserves under 2.5 years. It is still unknown how it will affect future objections since the objections are looking at individual fund reserves while the new reporting calculates the combined reserves. ISBE has not provided further details on this reporting but we will let you know once they do. If you have questions on the calculation or the impact of this law on your District, please reach out to us.

About the Author: Cheryden Juergensen

Cheryden Juergensen, CPA, has been with Eccezion since 2002, earning Partner status in 2013. An audit specialist with nearly 20 years of experience, she researches new auditing standards and implementation, and serves as the firm’s quality control partner, ensuring that the team follows proper procedures in all financial statements. “I work with our non-profits and governmental clients, but also several small businesses,” she explains.