Section 3651. Reserve fund

1.  A reserve fund may be established by the
  school authorities of any school district, provided,  however,  that  no
  such  fund shall be established (a) until approved by a majority vote of
  the qualified voters of the district voting on  a  proposition  therefor
  submitted  at a regular or special school district meeting, or in school
  districts which do not have such meetings, at  an  election  called  for
  such  purpose,  and  (b)  unless  the notice of such meeting or election
  shall have stated that a proposition to establish a reserve  fund  would
  be  so  submitted, the purpose of the fund, the ultimate amount thereof,
  its probable term and the source from which the funds would be obtained.
  Such reserve fund may be established for financing, in whole or in part,
  the cost of any object or purpose for which bonds may be issued  by,  or
  for  the  objects  or  purposes  of, the school district pursuant to the
  local finance law. The proposition shall specify the purpose  for  which
  the  fund is established, the ultimate amount, the probable term and the
  source from which the funds are to be obtained. There shall be paid into
  any such fund an annual amount sufficient to meet  the  requirements  of
  the  proposition.  In  addition, the voters may from time to time direct
  the school authorities to pay into such fund  moneys  derived  from  any
  other source.
    1-a.  Notwithstanding  the  provisions  of  subdivision  one  of  this
  section, any school district  may  establish  a  reserve  fund  for  the
  payment  of  judgments  and  claims  in  tax  certiorari  proceedings in
  accordance with article seven of the  real  property  tax  law,  without
  approval  by  the  qualified  voters of the district, provided, however,
  that the total of the monies held in such reserve fund shall not  exceed
  that   amount  which  might  reasonably  be  deemed  necessary  to  meet
  anticipated judgments and claims arising  out  of  such  tax  certiorari
  proceedings.  Any  monies  deposited  to such reserve fund which are not
  expended for the payment of judgments or claims arising out of such  tax
  certiorari  proceedings  for  the  tax  roll in the year such monies are
  deposited to the said fund and/or which will not reasonably be  required
  to  pay any such judgment or claim shall be returned to the general fund
  on or before the first day of  the  fourth  fiscal  year  following  the
  deposit  of  such  monies  to  said  reserve  fund. For purposes of this
  subdivision, such monies shall be deemed reasonably required to pay  any
  such  judgment  or claim if the proceeding or claim has not been finally
  determined or otherwise terminated or disposed of after  the  exhaustion
  of all appeals.
    1-b.  Notwithstanding  the  provisions  of  subdivision  one  of  this
  section, where the city  or  county  is  not  required  to  pay  to  the
  treasurer  of a city school district unpaid taxes during the fiscal year
  for which such real property taxes are levied, the board of education of
  such city school district may establish a reserve for uncollected  taxes
  without  approval  of  the  qualified  voters  of  the  school district,
  provided that the ratio of the amount  of  such  reserve  to  the  total
  principal  amount  of the district's tax levy for such fiscal year shall
  not be less than the  ratio  of  the  principal  amount  of  the  school
  district  taxes  as levied by the school district for the last completed
  fiscal year but not received by the district  before  the  end  of  such
  fiscal  year to the total principal amount of the tax levy for such last
  completed fiscal year. If the city or county is not required to  pay  to
  the treasurer of a city school district unpaid taxes pursuant to section
  thirteen  hundred  thirty-two of the real property tax law, the board of
  education of the city school district shall establish a reserve pursuant
  to this subdivision, provided that such reserve shall not be  less  than
  the  amount  of taxes for the fiscal year for which such budget is being

  prepared which are estimated to be unpaid during such fiscal year  under
  the aforesaid provisions of the real property tax law.
    2.  The  moneys in each such fund shall be deposited in one or more of
  the banks or trust companies designated as depositories of the funds  of
  such school district and shall be known as the "________reserve fund" of
  such  district.  The school authorities may direct the treasurer of such
  school district to invest the moneys in each such  fund  in  the  manner
  provided  in  section  thirty-six hundred fifty-two of this article. Any
  interest earned or capital gains realized on the money so  deposited  or
  so  invested  shall  accrue  to and become a part of each such fund. The
  separate identity of each such fund  shall  be  maintained  whether  its
  assets consist of cash or investments or both.
    3.  An  expenditure  shall  be  made  from  a  reserve  fund  only  by
  authorization of the voters and for the specific  purpose  specified  in
  the proposition.
    3-a.  Notwithstanding  the  provisions  of  subdivision  three of this
  section, any  school  district  which  establishes  a  reserve  fund  in
  accordance  with subdivision one-a of this section may make expenditures
  from such fund for the purposes specified in  such  subdivision  without
  authorization of the voters.
    4.  The  voters  may  authorize the transfer of all or any part of any
  reserve fund to any other reserve  fund  established  pursuant  to  this
  section.
    5.  Whenever  the voters shall determine that the original purpose for
  which a reserve fund has been established is no  longer  desirable,  the
  school authorities may liquidate the fund by first applying its proceeds
  to any outstanding bonded indebtedness and applying the balance, if any,
  to the annual tax levy, provided, however, that the amount so applied in
  any  one year shall not be greater than the amount which will reduce the
  tax rate for school purposes  below  five  mills  on  actual  valuation;
  provided,  however,  that  the school authorities in any school district
  having no outstanding bonded indebtedness may, in any year in  which  no
  state  aid  is  payable  thereto  under  the provisions of this chapter,
  liquidate such fund by applying the balance thereof to  the  annual  tax
  levy,  regardless  of  the  tax rate for school purposes, subject to the
  approval of a majority of the qualified electors of the district  voting
  on  a  proposition  therefor  submitted  at  a regular or special school
  district meeting,  or  in  school  districts  which  do  not  have  such
  meetings, at an election called for such purpose.
    6. The school authorities shall cause a separate account to be kept of
  each fund established. Such account shall show:
    a. The date and amount of each sum paid into the fund.
    b. The interest earned by such fund.
    c.  The capital gains or losses resulting from the sale of investments
  of the fund.
    d. The interest or capital gains which have accrued to the fund.
    e. The amount and date of each withdrawal from the fund.
    f. The assets of the fund indicating the cash balance  therein  and  a
  schedule of the amounts invested in federal or state obligations.
    7.  The  school authorities shall render annually a detailed report of
  the operation and conditions of each of such funds. Copy of such  report
  shall be filed with the commissioner of education.
    8.  a. Notwithstanding the foregoing provisions of this section, if in
  any city any taxes raised on real estate for the purposes of the  school
  district  must  be  included  in computing the amount which the city may
  raise by tax on real estate for city purposes pursuant to the provisions
  of section ten of article eight of the constitution,  the  establishment

  of a reserve fund by the school authorities of the school district shall
  be subject to the consent of the legislative body of the city.
    b.  Notwithstanding  the  foregoing provisions of this section, in any
  school district which is wholly or partly in the Adirondack park and has
  within its boundaries state lands subject to taxation assessed  at  more
  than  thirty  per  centum of the aggregate taxable assessed valuation of
  the real property within the bounds of such school district, the  school
  district   shall   not   establish   a   reserve  fund  unless,  on  the
  recommendation of the commissioner of education, the state  comptroller,
  on  behalf  of  the state, shall consent thereto. Upon the expiration of
  fifteen days  from  the  date  of  the  filing  in  his  office  of  the
  application  for  such  consent, together with the recommendation of the
  commissioner of education, and upon reaching a determination, the  state
  comptroller shall make an order, in triplicate, granting or denying such
  consent.  One  copy  of  such  order shall be filed in the office of the
  state department of audit and control at Albany, New  York,  another  in
  the  state department of education at Albany, New York, and the third in
  the office of the clerk of such school district.
    9. Notwithstanding the foregoing provisions of this section, in a city
  school district in a city having a population of one hundred twenty-five
  thousand inhabitants or more, such a reserve fund  may  be  established,
  expenditures  may  be made therefrom, moneys may be paid into such fund,
  all or any part of such fund may be transferred  to  any  other  reserve
  fund  established  under  this  section,  and  such  reserve fund may be
  liquidated, all pursuant to the provisions of this section, except  that
  any  such action may be authorized or taken by the board of education of
  such city school district, without  approval  or  authorization  of  the
  qualified voters of such district.