 School districts are required by state law to keep 5 percent of their annual spending in the undesignated reserve funds to preserve bond ratings.By law the state limits the total unreserved-undesignated fund balance at 8% of the annual budget for school districts that have budgets over $19 million a year.According to the Pennsylvania Department of Education, from 2003 to 2010, as a whole, Pennsylvania school districts amassed nearly $3 billion in reserved funds.