We are very conservative and prefer to maintain at least one year's worth of expenses within reserve. That's approximately $75k. This allows us to make strategic decisions in a time of uncertainty with CA state budget.
Our PTC bylaws indicate we must leave at a minimum $2000.00 for a start up fund for the next year. If we have funds that are not allocated at the end of the year we will either vote to move to savings or transfer it to the general fund for the upcoming year so they can utilize it
HI,
We've heard of groups keeping in reserves an amount that will help them start up each school year. So, this would depend on how an individual PTO is set up. Some will have very basic start-up costs, while others might have a big outlay right off the bat with a few field trips that they pay for. So, a group can figure out what those early-in-the-year expenses will be plan accordingly. Some groups say they like this approach so they don't have to do a fundraiser right as the school year starts.
I don't think anyone has ever developed any PTO-specific reserve recommendation. Generally speaking, what I've done in the past is consider that each year is a "stand alone" year. But the bulk of our funding comes at the beginning of each school year, and there are some expenses we have before that funding gets going. So, let's say that every year I usually have about $1,000 of expenses (completely random number here) that get incurred before any income comes in. I would want to make sure that I finished up the prior year with at least $1,000. I don't see any need to hold over any more than that, unless of course you are saving up to buy playground equipment or something like that, where you are saving up money over the course of several years.
This works for us because we do one major fundraiser at the beginning of the year. If it doesn't do as well as we hope, we hunker down and look at our projected expenses and cut them accordingly.
Other people might say that they keep a bit more in reserve, so that if they have a bad year, they don't have to go back and adjust expenses or do another fundraiser. That approach is fine, too, but you have to then figure out what a reasonable amount is to set aside to tide you over.
At some point, if you keep carrying over a bunch of money from year to year, you have to ask what good that is doing anyone. If you do 4 or 5 fundraisers every year just because you have always done them, cut some of them and use your reserve instead.
Does anyone have knowledge about how to manage financial reserves? Are there guidelines for how much should be held in reserves and/or when reserve funds should be released to the overall budget? Is there a standard percentage of budget that needs to be held in reserves for each year?
Thank you from DC!
