Advisory on Special Education Stabilization Fund
Section 24 of Chapter 218 of the Acts of 2016 provides for the establishment of a Special Education Stabilization fund. The law enables municipal and regional districts to establish a reserve fund that can be used in future years for unanticipated or unbudgeted costs of special education, out of district tuition or transportation.
Establishing, funding and making payments from the stabilization fund
In order to establish the fund the law requires a majority vote by both the School Committee and local legislative body. In the case of regional school districts the local legislative body means a majority vote of the legislative bodies in a majority of the member communities of the district. Once the fund is established, the school committee may include a separate line item in their annual budget request to appropriate monies into the stabilization fund. For regions, the amount to be appropriated to the stabilization fund is included in each member municipality's assessment. The balance in the reserve fund cannot exceed two percent of the annual net school spending of the school district.
Funds in the reserve fund can only be expended or transferred out after a majority vote of both the School Committee and Selectmen or City Council or in the case of regional school districts, a majority vote of the boards of selectmen or city councils of a majority of the member communities of the district.
Other areas districts may choose to consider when establishing the fund are:
- Maximum balance in the fund
- A limit on the amount that can be expended in a fiscal year
Reporting of activity in the stabilization fund
Annual appropriations into a stabilization fund should not be reported as an expenditure on the End of Year Financial Report. There is no reporting requirement for increasing the balance in the fund.
Expenditures from the fund should be reported as an additional appropriation of the school committee in the appropriate function codes on Schedules 1 and 3 of the End of Year Financial Report. Expenditures are made directly from the stabilization fund so a transfer into the general fund is not required.
Questions about this advisory should be directed to Jay Sullivan, associate commissioner, district & school finance, at 781-338-6594 or . firstname.lastname@example.org