The annual tax levy may include a reserve for contingencies not to exceed 10 percent of the total levy. The contingency reserve shall be available for expenditure during the fiscal year for which the levy was made for necessary expenses of the district for which no specific appropriation has been made. The board may provide for the cancellation of the contingency reserve at the end of each fiscal year and for the establishment of such reserve as a specific appropriation or reserve or both or may carry it forward as encumbered surplus and add to it.
Source:
Section 4891.1, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=HSC§ionNum=4891.1..