According to a fund balance reduction proposal, the projected unreserved fund balance will be $975,000 at the end of the fiscal year, June 30.

New York State Real Property Tax Law requires that school districts maintain unreserved fund balances of not greater than two percent of the subsequent year’s budget, or about $317,000 this year.

According to the plan, the district will use $650,000 to reduce the 2007-2008 tax levy increase.

The proposed spending plan calls for a 4.93 percent increase over the current year’s budget, up $15,828,044. With the fund balance money, the proposed average tax levy increase is 2.64 percent.

Unreserved fund balance money is used every year to reduce the tax levy, with amounts of $500,000 being used in the previous two years.

The plan also calls for placing $196,000 in an existing reserve for employee benefits and creating three new reserves, including $100,000 for retirement contributions, $25,000 for unemployment insurance and $6,000 for tax certiorari.

Business manager Jim Collison said the money will not be transferred until the new fiscal year begins, July 1.

He said there might be some confusion when that happens because the money will still be in the fund balance, just in reserved funds and not the unreserved portion.

The amount of money in the district’s fund balance was first questioned at a board meeting last April and brought up at meetings for several months as residents criticized the district for retaining more money than was legal to do so.

District officials estimated the unreserved fund balance amount at $1.29 million at the start of the 2005-2006 fiscal year, almost $1 million more than it was allowed to have.

Board president Anthony Scalici said the fund balance became an issue recently because increased state aid and unexpected reduced expenses resulted in more money going into the fund balance.

And because it grew so large, it drew more attention, he said.

"It’s a tough issue," he said. "Yes, there’s an official rule, but it’s not enforced and there are benefits to holding onto the money. But that’s not what people want us to do."

He said the board was happy to deal with this in an straight-up manner and had not been trying to conceal anything.

Superintendent Mary Jo McPhail said the board is still concerned that two percent is not enough of a reserve to deal with unforeseen costs in today’s economic climate.

"Two percent is not sufficient in today’s economy," she said. "They still have that concern, but they are sensitive to wanting to be very transparent as far as their fiduciary responsibility."