Last year the state adopted legislation to (1) cap school district reserves following deposits in the state school reserve recently established by Proposition 2 and (2) require districts to disclose additional information about their reserves each year. This report analyzes how district reserve levels have changed over time and describes some of the key factors that cause reserve levels to vary from district to district. After assessing recent changes, this report recommends the Legislature repeal the reserve caps and modify the disclosure provision.