Section 61112 Of Chapter 2. Finance From California Government Code >> Division 3. >> Title 6. >> Part 3. >> Chapter 2.

. (a) In its budget, the board of directors may establish a designated reserve for capital outlay and a designated reserve for contingencies. When the board of directors establishes a designated reserve, it shall declare the exclusive purposes for which the funds in the reserve may be spent. The funds in the designated reserve shall be spent only for the exclusive purposes for which the board of directors established the designated reserve. The reserves shall be maintained according to generally accepted accounting principles.
  (b) Any time after the establishment of a designated reserve, the board of directors may transfer any funds to that designated reserve.
  (c) If the board of directors finds that the funds in a designated reserve are no longer required for the purpose for which it established the designated reserve, the board of directors may, by a four-fifths vote of the total membership of the board of directors, discontinue the designated reserve or transfer any funds that are no longer required from the designated reserve to the district's general fund.
  (d) Notwithstanding any other provision of this section, in a state of emergency or in a local emergency, as defined in Section 8558, a board of directors may temporarily transfer funds from the designated reserve for capital outlay or the designated reserve for contingencies to the district's general fund. The board of directors shall restore these funds to the designated reserves when feasible.
  (e) The board of directors of each district that has designated an alternative depositary pursuant to Section 61053 and appointed a district treasurer shall adopt and annually review a policy for the management of reserves.