Public law 2021, chapter 213, An Act to authorize an increase in the maximum annual fund balance for public school districts was signed by Governor Mills on June 15, 2021. This law will come into force 90 days after the end of the session and will have no impact on the 2020-2021 fiscal year. This legislation updated the law to say:
“Notwithstanding any other law, the balances of the general operating fund at the end of the financial year of a school administrative unit must be carried over to meet the needs of the unit for the following year or over a period not exceeding 3 years. Unallocated balances greater than 5% of the previous year’s school budget should be used to reduce the state share and the local share of the total allocation for the purpose of calculating the state grant. School boards can carry forward unallocated balances in excess of 5% of the school’s budget for the previous year and disburse these funds the following year or over a period not exceeding 3 years ”
Please note the increase from 3% to 5%.
This law also provides that for fiscal years 2021-2022, 2022-23, 2023-24 and 2024-25, unallocated balances greater than 9% can be carried forward for the same use.
The advantage of this law is that it allows Maine UAS to keep more funds to cover any unforeseen financial need. Although current law provides a mechanism to increase reserve funds in an emergency, this increase in the annual fund balance allows Maine UASs to access cash resources without incurring the cost of borrowing funds. in case of emergency.
The Maine Department of Education has fully supported this bill as it helps Maine UASs effectively meet recent or future financial needs.
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