Reserve Plan 2025-26.pdf

The purpose of this reserve fund is to pay for compensation benefits and other expenses authorized by the Workers' Compensation Law, and for payment of expenses for administering this self-insurance program. The reserve may be established by board action and is funded by budgetary appropriations and such other funds as may be legally appropriated. (General Municipal Law, §6j). Balance June 30, 2024:​ Balance June 30, 2025:​

Three year’s worth of payments, which average over $1,200,000 per year, plus adequate coverage of the Webster CSD share of the potential yearly deficits that the Rochester Area School Worker’s Compensation Consortium has historically had. Total targeted balance is estimated to be $5.0 million dollars. As of now this reserve has met its targeted levels and should remain funded as is. Discussion: Webster Central School District participates in the Rochester Area School Worker’s Compensation Consortium. Claims can remain open for years so this reserve protects against both the cumulative effect of lagging claims and an abnormally large payout for a settled claim. In recent history, the consortium has run structural deficits, with Webster’s liability for the deficit averaging $500,000. The district also has seen year to year costs in premium payments increase by 103% since the 2008-09 fiscal year, to about $1.3 million dollars annually. Additionally, recent NYS Workers Compensation law changes have increased employer costs significantly.

This reserve fund is used to pay the cost of reimbursement to the State Unemployment Insurance Fund for payments made to claimants. The reserve may be established by board action and funded by budgetary appropriations or other funds as may be legally appropriated (General Municipal Law, §6-m). Balance June 30, 2024:​ Balance June 30, 2025:​

Approximately 3% of payroll or $2,000,000. This would support up to 20 employees’ unemployment claims if extended benefit periods are enacted as they were in the prior recession. With the recent economic forecast, it may be wise to revisit adding additional funds to this reserve in the coming fiscal year. Discussion: Additionally funding was added because of state aid withholdings that began with the fiscal year 2019-20 and were expected to continue into 2020-21 and future fiscal years. However, the likelihood of job cuts that were staved off with federal stimulus. However, economic forecast trends point to a recession and this reserve may need to be funded additionally to prepare for that possibility. This is a reserve that may need a closer look at funding at the end of fiscal year 2026.

TRS SUB FUND Authority: The 2019-20 New York State budget includes language authorizing school districts to have reserve funds for contributions to the New York State Teachers' Retirement System (TRS). It amends Section 6-r of the General Municipal Law, which currently authorizes reserve funds for contributions to the New York State Employees' Retirement System (ERS). The Governor signed the bill into law on April 12, 2019 as Chapter 59 of the Laws of 2019 and was made effective retroactive to April 1, 2019. Balance June 30, 2024:​ Balance June 30, 2025:​

The TRS Reserve was established in June of 2019, with the following limits; not to exceed 2% of teacher salaries in the prior year and to not exceed 10% of the total teacher salaries at any one time. It should be noted that the salaries are to include anyone that is a member of the New York State Teachers Retirement System (Administrators, Teaching Assistants) for the calculation. It is estimated that 2% of salaries would allow for an estimated TRS reserve funding year to year of $1,553,909, with a cap of $7,769,544 for the entire reserve for the district.

The Teacher’s Retirement Pension System has had stable rates the past few years. A majority of the returns come from investment incomes and stock market gains have helped mitigate rate increases. This is a reserve that the district will look to continue to add surplus fund balance when available to offset future increases.

The governing board of any school district, by resolution, may establish a reserve to refund taxes of the current year in tax certiorari proceedings. Establishing or expending the reserve does not require voter approval. Amounts not necessary to refund taxes must be returned to the unreserved fund balance of the general fund by the first day of the fourth fiscal year following the year for which the reserve was created. (Education Law §3651, Sub.1a, 3a) Balance June 30, 2024:​ Balance June 30, 2025:​

100% of open cases, plus future predictions. An estimated $5,000,000 would be an appropriate target to recommend. Discussion: Ideally this reserve should be adequate to cover 100% of the outstanding tax certiorari cases. It is not unusual for a lawsuit to cover multiple years of assessment for large taxpayers so potential judgments may be significant. There are currently 21 open challenges against the district for an estimated $2.6 million total exposure. Industry that has been impacted by shutdowns has increased their challenges, and it is expected to continue. In addition, it is predicted that as the workforce continues to work from home, that commercial real estate will see an uptick in challenges from unleashed or for sale properties that once housed office space. In addition, the presence of a large corporation with a history of property tax litigation with large settlements creates an even greater need. The COVID pandemic has caused an increase in businesses that were shut down to file tax proceedings as well for this fiscal year increasing potential district liabilities. With many municipalities performing reassessments in the coming years, challenges also increase the district's potential exposure necessitating a look at increasing this reserve accordingly.

This reserve is for contractual benefit entitlements that will be paid directly upon an employee’s termination. It does not include post-employment health benefits under GASB 45. New York State has not yet developed a method to fund that multi-million dollar liability. Webster is fully funded in this reserve.

The Repair Reserve Fund is used to pay the cost of repairs to capital improvements or equipment, which repairs are of a type not recurring annually. Voter approval is required to fund this reserve. Expenditures from this reserve may be made only after a public hearing has been held, except in emergency situations. If no hearing is held, the amount expended must be repaid to the reserve fund over the next two subsequent fiscal years (General Municipal Law, §6- d). Balance June 30, 2024:​ Balance June 30, 2025:​

Projected costs of future repairs on non-instructional buildings. Discussion: Webster Central School District has not maintained large amounts in this reserve because no state aid is paid for expenditures from this reserve. Since school renovations tend to generate building aid it is more advantageous to fund from capital reserves. The district is also utilizing the $100,000 capital outlay program that a repair reserve would typically be used to cover the items in those projects. All funds were transferred from this reserve to the TRS sub reserve.

The Capital Reserve Fund is used to pay the cost of any object or purpose for which bonds may be issued. Voter authorization is required for both the establishment of the reserve and for payments from the reserve. The form of the required legal notice for the vote on establishing the reserve and the form of the proposition to be placed on the ballot are set forth in§3651 of the Education Law. Balance June 30, 2024:​ Balance June 30, 2025:​

may not exceed the voter authorized limit of $15 million dollars, plus accumulated interest earnings over the next ten years (renewal in May of 2026). The balance of $3,257,794 transferred into the newly authorized reserve in 2016, $1,500,000 in 2017, and $250,000 in 2018, no additional funds were added in fiscal years 2019 and 2020 except interest, $1.5 million in 2021, $4,002,395 in 2022 and $4,366,042 in 2024 funds which fully funded the reserve over the remaining 3 year period. It is noted that interest earnings on the reserve account allow the total to go over the authorized limit of $15 million dollars.

The Webster Central School District has used capital reserves to its advantage for many years. A capital reserve allows the District to save money in anticipation of a renovation or addition to a building. Using saved cash, rather than borrowing, for building projects offers the district two advantages: 1. The use of cash financing avoids the interest charges and debt issuance costs associated with borrowing to accomplish the same result. 2. The current building aid formula provides state aid to the District for cash expenditures as if it had borrowed. That is, state aid is provided on interest expenses, even though those expenses were avoided. This provides a future revenue stream. In short, the use of cash financing through capital reserves is prudent financial planning, avoids the expense of bond interest, and increases state aid available to the district. As part of the 2023 Capital Project authorization, the district has transferred $10 million from this reserve into the project fund for the reasons outlined above. However, a school district managing a budget of approximately $220 million should ideally maintain a significantly larger reserve for capital items to adequately address long-term needs, emergency repairs, and large-scale, ongoing building maintenance required for facilities of that size and value. To put this into context, the average total reserve balance for all Monroe County school districts has been reported at approximately 16% of their operating budgets, which would suggest a target capital reserve of roughly $35 million for the Webster Central School District to maintain financial stability and adequate capital planning capacity. The sound financial nature of this strategy, including the benefit of state aid on avoided interest, was discussed with the District's external auditors and the Audit Committee in the fall. Given that the current capital reserve has reached its established maximum funding level, it is recommended that the Board of Education put forth a proposition to the voters in May 2026 to establish a new Capital Reserve Fund. This action will ensure the District can continue its strategic financial planning by accumulating cash for future capital projects without interruption.

The Mandatory Reserve for Debt Service Fund is used to hold the proceeds of a bond issuance in excess of the capital expenditures funded by the bonds. A Board of Education resolution is required for the establishment of the reserve and payments can only be made for debt service or retirement of outstanding bond obligations. The legal basis of this reserve is set forth in §6-1 of General Municipal Law. Balance June 30, 2024:​ Balance June 30, 2025:​

any bond proceeds not fully expended for its targeted capital expenditure must be placed in this reserve. There is no exact dollar amount to target for this reserve.

The Webster Central School District issued bonds to fund projects throughout the years. An example of one would be the roof renovations at ten buildings in 2014. At the completion of the project $35,000 of borrowed funds had not been expended. Therefore, these funds, plus accumulated interest, must be kept in reserve and used to fund debt service for the bonds issued for this project. Over time, the same scenario played out for many of the borrowings the district undertook and the balance has accumulated over time. A large increase for 2021 was based on the finalization of the 2016 $43.5 project. Additional funds were deposited in 2024 and 2025 based on earnings from short term borrowings the district undertook as part of the 2018 project debt service plan.

This reserve fund is used to pay judgments, claims, incidental costs and professional services connected with the investigation and settlement of claims relating to cybersecurity activities. The reserve was established by the Board of Education through resolution in Spring of 2024. The reserve is funded by budgetary appropriations or any other permissive referendum. The amount that can be paid into the reserve during each fiscal year is limited to 5% of the annual budget. There is, however, no limit upon the amount which may be accumulated in the fund (General Municipal Law, §6-n).

approximately 5% of the annual budget would provide protection against large deductibles and sharp premium increases. The total for 2025-26 would be $11,013,321 if fully funded on a year to year basis. Discussion: School districts are low hanging fruit for cyber criminals as we are heavily dependent on internet usage and human interaction as an industry. There are multiple examples of local, regional, and national cases where municipalities are targeted repeatedly. The creation of this reserve will not only put the district in a stronger position to offset future claims and certain increases in additional cybersecurity insurance rates, but will also cover the district’s liability against any potential technology and software damages or replacement. This reserve is just one tool available in the ever increasing cyber threat to the district and is used as one part of a multi-pronged approach to risk mitigation.

This reserve fund is used to pay for property loss and liability claims incurred. Separate funds for property loss and liability claims are required and these reserves may not in total exceed 3% of the annual budget or $15,000 whichever is greater. (Education Law, §1709, Subdivision 8-c). Balance June 30, 2024:​ Balance June 30, 2025:​

This reserve is not intended for use on an ongoing basis; rather, it protects the District in the case of a catastrophic event. Webster carries $10 million of liability insurance but would be responsible for any judgments in excess of this amount. However, there are growing instances where there is district liability for expenditures that are not covered under liability insurance. For example, state administrative judgements for student placements is the largest liability area for the district. In addition, Child Victims Act Lawsuits from 60 years ago do not have insurance coverage. It is recommended that the district continues to fund this reserve towards the maximum amount as there is no longer a statute of limitations for Child Victim Act Lawsuits.

This reserve fund is used for property loss claim payments that are self insured. This fund is separate from liability and insurance claims and together it is required that these reserves may not in total exceed 3% of the annual budget or $15,000 whichever is greater. (Education Law, §1709, Subdivision 8-c). Balance June 30, 2024:​ Balance June 30, 2025:​ Targeted Balance:​

Establishing this reserve will mitigate the impact of rising commercial insurance costs by establishing a dedicated self-insurance fund, thereby increasing fiscal autonomy and reducing long-term premium volatility. The district is currently subject to a "Hard Market," where insurance carriers are both increasing premiums and mandating higher deductibles. By establishing this reserve, the district moves from a transfer of risk model (paying a carrier to handle everything) to a risk retention model. This reserve acts as a shock absorber, ensuring that a single large deductible payment does not cause a mid-year budget crisis in the General Fund. By funding our own deductible layer, we change the math of our renewals for the districts benefit: ●​ Small claims are expensive for carriers to process, so they charge high premiums to cover them. By paying these internally, we stop paying the carrier's administrative overhead on small losses. ●​ When the district can say, "We have the liquid reserves to handle the first $100k of any loss," we become a lower-risk profile, which invites more competitive bidding from top-tier carriers. A district’s "Loss Run" (claims history) is the primary driver of premium costs. Utilizing the reserve for minor repairs prevents them from being recorded as "claims" on the district's permanent record. A cleaner claims history leads to lower experience modifiers, which translates directly to lower annual premiums over a 3-to-5-year horizon.

Governmental Accounting Standards Board (GASB) requires the district to recognize purchase commitments that will be expended in a future period. The Reserve for Encumbrances is the amount of purchase commitments made at year-end where the goods will not be received until the following fiscal year. Balance June 30, 2024:​ Balance June 30, 2025:​

This reserve must equal the value of outstanding purchase obligations that are to be satisfied. Discussion: This required reserve recognizes that purchase commitments were made from a current budget but the goods will not be received until a future period. This ensures that funds used to pay for purchases are aligned with their intended funding sources (budget year or identified capital project). The reserve sets aside the funds for these commitments. Under GASB 54 there is no longer a reserve for encumbrances but rather these commitments are identified in “Assigned” fund balance.

The planned reduction in fund balance to reduce the property tax levy necessary to support the current budget. Balance June 30, 2024:​ Balance June 30, 2025:​

An appropriation of fund balance represents a non-recurring revenue that cannot be anticipated to be available in the ensuing year’s budget. Overuse can cause the depletion of available fund balance, ultimately leading to spikes in the property tax rate. Therefore, there should be a consistent use rather than large variation in application. As the Property Tax Cap continues there will be ongoing budget reductions so it is believed that the amounts available for appropriated fund balance will be constrained over the upcoming years.

Used to fund expenditures from July through September of the ensuing year prior to the inflow of property tax receipts. Also provides a source of funds for unanticipated increases in expenditures, decreases in revenue and interruptions in cash flow. Balance June 30, 2024:​ Balance June 30, 2025:​

By law, the unassigned fund balance is limited to 4% of the ensuing year’s budget. This is generally considered to be the ideal balance.