An Act To Allow Public Schools To Reserve Funds Designated for Operating Costs
Maine Legislature, Session 128, LD 0737
Committee: Education and Cultural Affairs
Sponsors: STEARNS, AUSTIN, HIGGINS, WARD
Amends: 20-A MRSA §1312, 20-A MRSA §1312-A, 20-A MRSA §15689-B

Legislative Document
No. 737
H.P. 517
House of Representatives, March 2, 2017
An Act To Allow Public Schools To Reserve Funds Designated for 
Operating Costs
Reference to the Committee on Education and Cultural Affairs suggested and ordered 
printed.
ROBERT B. HUNT
Clerk
Presented by Representative STEARNS of Guilford.
Cosponsored by Representatives: AUSTIN of Gray, HIGGINS of Dover-Foxcroft, WARD of 
Dedham.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  20-A MRSA §1312, as amended by PL 1987, c. 737, Pt. C, §§42 and 106 
and PL 1989, c. 6; c. 9, §2; c. 104, Pt. C, §§8 and 10; and c. 132, §§1 and 2, is further 
amended to read: 
§1312.  Reserve fund for capital projects 
School administrative districts may establish a reserve fund for capital projects as 
follows. 
1.  Establishment.  A school administrative district may establish a reserve fund for 
school construction projects, financing the acquisition or reconstruction of a specific or 
type of capital improvement or financing the acquisition of a specific item or type of 
capital equipment by including a request in the district budget and receiving voter 
approval.  The board of directors shall be is the trustee of the reserve fund.  The reserve 
fund shall must be deposited or invested by the treasurer under the direction of the board. 
2.  Deposit or investment.  All district funds, including reserve funds and trust funds 
to the extent that the terms of the instrument or vote creating the fund do not prohibit, 
shall must be deposited or invested by the treasurer under the direction of the board of 
directors according to the requirements for the deposit or investment of municipal funds 
contained in Title 30-A, chapter 223, subchapter III-A 3-A. 
3.  Expending money from reserve funds.  The board of directors may expend the 
sum in the reserve fund when authorized to do so by a vote of the district at a district 
meeting or a district budget meeting, when an article for that purpose is set out in the 
warrant calling the meeting. 
Sec. 2.  20-A MRSA §1312-A is enacted to read: 
§1312-A.  Reserve fund for operating costs 
School administrative districts may establish a reserve fund for operating costs as 
follows. 
1.  Establishment.  A school administrative district may establish a reserve fund for 
up to 3 months' operating costs, including salary and benefits.  The board of directors is 
the trustee of the reserve fund.  The reserve fund must be deposited or invested by the 
treasurer under the direction of the board. 
2.  Deposit or investment.  All district funds, including reserve funds, must be 
deposited or invested by the treasurer under the direction of the board of directors 
according to the requirements for the deposit or investment of municipal funds contained 
in Title 30-A, chapter 223, subchapter 3-A. 
3.  Expending money from reserve funds.  The board of directors may expend the 
sum in the reserve fund when authorized to do so by a vote of the district at a district 
meeting or a district budget meeting, when an article for that purpose is set out in the 
warrant calling the meeting. 
Sec. 3.  20-A MRSA §15689-B, sub-§6, as amended by PL 2009, c. 571, Pt. 
XXX, §1, is further amended to read: 
6.  Balance of allocations.  Notwithstanding Except for reserve funds for operating 
costs established pursuant to section 1312-A, and notwithstanding any other law, general 
operating fund balances at the end of a school administrative unit's fiscal year must be 
carried forward to meet the unit's needs in the next year or over a period not to exceed 3 
years.  Unallocated balances in excess of 3% of the previous fiscal year's school budget 
must be used to reduce the state and local share of the total allocation for the purpose of 
computing state subsidy.  School boards may carry forward unallocated balances in 
excess of 3% of the previous year's school budget and disburse these funds in the next 
year or over a period not to exceed 3 years.  For fiscal years 2008-09, 2009-10, 2010-11, 
2011-12, 2012-13, 2013-14 and 2014-15 only, the carry-forward of a school 
administrative unit's unallocated balances is not limited to 3% of the previous fiscal year's 
school budget. 
SUMMARY 
This bill allows a school administrative district to establish a reserve fund for 
operating costs of the school administrative district, including salary and benefits.