According to Board Policy 3050, "the District will operate at a positive certification by keeping at least 5% of the operating budget in a Reserve for Economic Uncertainty (Fund 17) and increase that reserve by 0.5% of the general fund expenditure budget each year thereafter until two months of general fund expenditures is reached."
Furthermore, Board Policy 3050 asserts that "the Board will commit annually to seek efficiencies in all areas of the budget."
Acknowledging that school districts will soon be in a cost-of-living adjustment (COLA)-only environment, and that increased demands on an LEA's base funding (e.g. pension contributions, the cost of step and column increases, and increases in health benefit obligations) will outpace those COLAs, it is important that districts consider options to offset the impacts of decreased purchasing power as these obligations grow.
An irrevocable trust is one way to address these two goals outlined in Board Policy 3050. Contributing funds into an irrevocable trust adheres to the Board's desire to establish a reserve for economic uncertainty, and efficiently enables greater investment flexibility and risk diversification than typical LEA investing options. To date, over 80 LEAs, cities, counties, and special districts around the state, have set aside funds in PARS' Pension Rate Stabilization Program.