Pursuant to Ark. Code Ann. § 6-20-2210, established by Act 1105 of 2017, if at the close of the fiscal year a public school district has a net legal balance that exceeds twenty percent (20%) of the public school district’s current year net legal balance revenues, the public school district shall within five (5) years reduce its net legal balance to no more than twenty percent (20%) of the public school district’s current year net legal balance revenue.
A public school district may reduce its excess net legal balance by:
(1) Transferring funds into the public school district’s building fund to be used for construction, renovation, repair or other planned building fund expenditure or project; or
(2) Spending funds on pre-kindergarten programs, remediation programs, career and technical education or workforce readiness programs or any other program or for any other purpose authorized by law.
The Division shall monitor on a yearly basis each public school district’s compliance with the net legal balance requirements and withhold subsequent state funding from a public school district for each year the district fails to make required reductions.
A weekly report listing each district’s 20% net legal carry forward balance can be found on the apscn website (Reports tab > District Informational Reports > Net Legal Balance Act 1105).