The governing body voted on Dec. 2 to adopt a financial policy that formalizes how unspent school division year‑end balances and capital improvement funds are tracked and used. Staff said the policy converts a previously informal practice into a formal, tracked reserve line in the city’s general ledger (often called a school stabilization fund).

Under the adopted policy the city will maintain a ledger account for school reserves, set minimum and maximum guardrails, and treat interest earned on the reserve as city general fund revenue (staff said the school division agreed to that approach). The presenter said Virginia law does not allow schools to hold a separate reserve, so the account will be held within the city’s general fund.

Council members discussed the cap size; staff recommended a 10% maximum (which for the local schools could represent several million dollars), and some councilors expressed concern the cap could be too large. The motion was amended and the governing body approved the policy; the vote recorded one opposition on the floor, but the motion carried.

Staff said the policy will help stabilize school budgets across years, disincentivize year‑end spending solely to preserve next year’s allocation and provide clear rules for how school year‑end underspending is handled going forward.