The Lawrence school district ended the last fiscal year with $55 million in unencumbered cash reserves, or about 32 percent of its total expenditures, according to an annual audit report that will be presented to the school board Monday night.

Much of that, however, was in restricted, special-purpose funds, including debt service payments, special education and employee health benefits.

Within the general operating fund, the audit shows, the Lawrence district ended the year with $5 million in reserves, or 7.5 percent of expenditures, which is the same level of cash reserves that the Kansas Legislature requires of itself when it sets the state’s annual budget.

It also carried over another $6.6 million in a “contingency reserve” fund, the maximum amount allowed under state law.

The audit report will be presented to the Lawrence school board when it meets at 7 p.m. Monday at the district headquarters, 110 McDonald Drive.

School districts in Kansas are often criticized for maintaining large unencumbered cash reserves while, at the same time, lobbying the Legislature for increases in general state aid.

Last year, lawmakers passed a bill allowing districts to transfer money out of certain funds into their general operating funds in order to make up for recent cuts in the base state aid formula.

And a report issued earlier this week by Gov. Sam Brownback’s School Efficiency Task Force recommended changing state laws to reduce the number of separate cash reserve accounts that districts can keep and allowing more flexibility to transfer money between them.

Kathy Johnson, the district’s finance director, did not respond to requests for comment Friday.

Kansas school officials generally have argued that cash reserves are necessary to meet cash flow requirements and to maintain a good credit rating for when they issue bonds.

Although schools have regular expenses throughout the year, their revenues come at irregular intervals. The bulk of the money they get from local property taxes, for example, comes in two disbursements: one in December and another in June, just before the end of the fiscal year.

In addition, the first state payments in a fiscal year for special education services arrive in October. That means when a fiscal year ends on June 30, districts have to have enough money in their special education fund to pay for at least three months of operation.

Of the $55 million that the Lawrence district carried over on June 30, $11.6 million was in the debt service fund; $9.8 million was in the special education fund; and $7 million was in the health care services reserve fund.

Superintendent Rick Doll explained that the health care fund comes from employee payroll deductions. The money is used to pay health insurance premiums, and the year-end balances are used to defray future premium increases or are rebated to employees.

In December, the district spent down some of that balance by issuing rebates to employees of about $500 each, Doll said.

In other business, the school board vote on approval of next year’s middle school course selection forms and high school course description and planning guide.

Beginning this year, the high school guide will be available online, district officials said.