Carry Over Funds

It is a good idea to establish carryover funds or reserve funds, which will help provide funds for unanticipated and unbudgeted expenses; funds for emergencies; and allow the PTA to be fiscally responsible.

How much money can or should be carried over?
As a guide, reserve funds should be 3-6 months of budgeted expenses.
In planning the budget, the PTA should have small contingency savings accounts for the following reasons: efficient management of funds, reserve to carry on programs during the summer and fall until dues are collected, and moneys to finance unexpected but approved projects or programs.

Can a standard reserve amount that remains in a separate savings account from year to year be established?
The emergency reserve funds are considered an integral part of each PTA’s planning and budgeting process. The emergency reserve funds are intended to serve as a means to retain financial stability in the event of an unforeseen development such as unplanned expenses arising from a project or an unexpected increase in inflation. The amount of the fund will vary according to each PTA’s size.

If a PTA cannot totally fund large purchases in one year, how are the funds handled without encumbering a future board?
The funds are designated for the specific activity. If the future board does not vote to continue raising money for the activity, the designated funds must then be gifted to the school for partial payment of the activity.
However, before approving proposals for material aid to the school, a PTA should consider whether or not the proposed equipment or services is a public responsibility. If the association approves to raise the funds each year, establish an account that is specified for that particular activity.