First U.U. Church of Essex County  
PROPOSED BYLAW AMENDMENT ON EXPENDITURES, 
and PROPOSED RESERVE FUND RESOLUTION
as approved by Board of Trustees, Feb.17, 2010, for consideration by 
Annual Congregational Meeting May 23, 2010
-------------------------------------------------------------------------------------------------------
Article VII, Section 3 of the Bylaws is amended to read:
"The Board of Trustees shall not, without the approval of the Membership, during any fiscal year authorize any expenditures which aggregate more than one percent above the budget, except for emergency expenditures pursuant to the Reserve Fund Resolution."
--------------------------------------------------------------------------------------------------------
     WHEREAS the Church has received from the Estate of Jessie Turk a bequest of one hundred thousand dollars, to be applied exclusively and entirely to the Church's "reserve fund," 
     and WHEREAS the Church did not at the time of that bequest have a fund clearly designated as the "reserve fund,"
     and WHEREAS it is our understanding that the intent of this bequest was to ensure the Church's financial security by providing funds that could be drawn upon in case of emergency,  RESOLVED that:

     (1) There is hereby established a Reserve Fund, with the initial value of one hundred thousand dollars.
     (2) Liquid Reserve
	(a) A portion of the Reserve Fund, not to exceed ten percent of its total value, 
may be kept in a liquid account, which may be the same as that in which regular budgeted funds are kept, and this portion shall be designated the Liquid Reserve.  
	(b) The Liquid Reserve may be used to cover regular budgeted expenses on a temporary basis when other liquid funds are insufficient because actual income has fallen short of budgeted income.
            (c) Any amount thus expended from the Liquid Reserve shall be restored to Liquid Reserve as soon as possible.
             (d) At the annual Congregational meeting, if the amount in Liquid Reserve is less than its initial amount for that fiscal year, the budget for the coming year must provide for replenishment of the Liquid Reserve to the said initial amount.
   (3) Invested Reserve
	(a) At least ninety percent of the total value of the Reserve Fund shall be kept in an account earning interest or dividends.  The nature of such account shall be determined by the Board of Trustees, on the advice of an Investment Committee.  
	(b) Interest or dividends earned on the Invested Reserve shall not be included in budgeted income, but shall be continually reinvested in the Invested Reserve.
    (4) Emergency Expenditures 
	(a) The Invested Reserve may be used only for expenditures for emergency 
situations.
	(b) An "emergency situation" is a situation arising from an unplanned
occurrence, or a newly discovered condition, that imminently threatens the integrity 
of the buildings, the safety or health of occupants or users of the church properties,  
or continuance of the program of the church.   Examples of emergency situations 
include: failure or malfunction of plumbing or heating system components;
damage to walls, windows, roofs, chimneys or foundations sufficient to cause leakage 
or structural instability; infestations; unanticipated governmental penalties; and 
lawsuits against the church.
	(c) With respect to emergency situations involving the buildings and grounds,
the Invested Reserve may be used only if the amount remaining in the regularly budgeted line for major repairs is insufficient to cover the situation.
           (d) An immediate decision to commit Church funds to deal with an emergency situation may be made by the Board, or by an Officer in consultation with as many members of the Board as practicable.  However, the decision whether such expenditure is taken from the Invested Reserve in accordance with this Resolution shall be made by the Congregation at its next meeting. 
     (5) Replenishment 
	(a) Any portion of an emergency expenditure from the Reserve Fund that is recovered from insurance shall be restored to the Reserve Fund.
	(b) Running totals shall be kept of emergency expenditures from the Reserve Fund and restorations to the Reserve Fund.
	(c) At the end of any fiscal year when actual income on budgeted lines has 
exceeded budgeted expenditures, the surplus shall be transferred to the Reserve Fund to
the extent that the running total of emergency expenditures exceeds the running total of 
restorations.  
   (6) The monthly and annual financial reports shall include a report of the amounts
 in the Invested Reserve and the Liquid Reserve, and of the running totals of emergency expenditures and restorations. 
   (7) To reduce emergencies, the Board must attach to the proposed annual budget a priority list of preventive maintenance needs with estimated costs.
   (8) Special contributions designated for the Reserve Fund shall always be accepted, 
with the understanding that such contributions are not in fulfillment of pledges 
toward the operating budget.
   (9) Notwithstanding section (10) of the Endowment Fund Resolution, transfers are not 
allowed from the Reserve Fund to the Endowment Fund. 
   (10) This Resolution may be amended only if a legal opinion is received that the proposed amendment complies with the intent of the Jessie Turk bequest.  Such amendment shall require advance notice of twenty days and a seventy-five percent vote.  

----------------------------------------------------------------------------------------------------------
COMMENTS:
   The cap on the Liquid Reserve in (2)(a) is set as a percentage of the total Reserve, not as a percentage of the budget, to avoid the possibility that a growing budget might deplete the Reserve.
   (2)(d) is intended to prevent the Reserve from being used to cover a continuing deficit.
   (3)(b) is intended to preserve the purchasing power of the Reserve.
   (5)(c) is intended to preserve as much as possible of the Reserve, but does not preclude the possibility that repeated emergencies will eventually deplete the Reserve.