(a) It is the purpose of this section to reduce the effects of annual variations in State revenues upon the Education Fund budget of the State by reserving certain surpluses in Education Fund revenues that may accrue for the purpose of offsetting deficits.

(b) There is hereby created an Education Fund budget stabilization reserve determined on a budgetary basis and administered by the Commissioner of Finance and Management. Any budgetary basis undesignated Education Fund surplus occurring at the close of a fiscal year shall be reserved within the Education Fund budget stabilization reserve, provided that the balance reserved shall not exceed five percent of the prior fiscal year education fund appropriations, reduced by the amount distributed to school districts by municipalities for netting purposes under 32 V.S.A. § 5402(c), and any additional amounts as may be authorized by the General Assembly. Any undesignated Education Fund surplus and accrued interest remaining after the Education Fund budget stabilization reserve has been brought to the maximum authorized level shall remain in the Education Fund. When the General Assembly next meets, it may specifically appropriate the use of the undesignated Education Fund surplus for increased support for education.

(c) In any fiscal year, if the Education Fund is found to have an undesignated fund deficit, the Education Fund budget stabilization reserve shall be used by the Commissioner of Finance and Management to the extent necessary to offset the undesignated fund deficit as determined by generally accepted accounting principles.

(d) Determination of the amount of the undesignated Education Fund surplus or fund deficit in any fiscal year for the purposes of this section shall be made by the Commissioner of Finance and Management. Adjustments shall be made to the amounts authorized in subsections (b) and (c) of this section upon receipt of the final audited annual report of the Commissioner of Finance and Management.

(e) The enactment of this chapter and other provisions of the Equal Educational Opportunity Act of which it is a part have been premised upon estimates of balances of revenues to be raised and expenditures to be made under the act for such purposes as adjusted education payments, categorical State support grants, provisions for property tax income sensitivity, payments in lieu of taxes, current use value appraisals, tax stabilization agreements, the stabilization reserve established by this section, and for other purposes. If the stabilization reserve established under this section should in any fiscal year be less than 5.0 percent of the prior fiscal year's appropriations from the Education Fund, as defined in subsection (b) of this section, the Joint Fiscal Committee shall review the information provided pursuant to 32 V.S.A. § 5402b and provide the General Assembly its recommendations for change necessary to restore the stabilization reserve to the statutory level provided in subsection (b) of this section. (Added 1997, No. 60, § 18, eff. July 1, 1998; amended 1997, No. 71 (Adj. Sess.), § 94, eff. March 11, 1998; 2001, No. 63, § 265; 2001, No. 110 (Adj. Sess.), § 46, eff. May 23, 2002; 2003, No. 68, § 26, eff. June 18, 2003; 2019, No. 6, § 83, eff. April 22, 2019.)