School District Operating Reserve Reporting

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.