In community college districts situated within or partly within cities having a population of over five hundred thousand (500,000) as determined by the 1920 federal census any board of education may establish a fund in the county treasury for the purpose of covering fire losses to school property in lieu of carrying fire insurance in admitted insurers as provided in Section 81601 of this code. In such fund shall be placed such sums, to be provided in the budget of the district, as will create an amount which, together with investments made from such fund, will be sufficient in the judgment of the board of education upon the advice of competent actuaries to protect such board of education against losses by fire on all or any part of the school property within its jurisdiction. Nothing contained herein shall be construed as prohibiting the board of education from providing protection against fire losses partly by means of such fund and partly by means of fire insurance written by admitted insurers as provided in Section 81601.

Such fund shall be considered as separate and apart from all other funds of the district and the balance therein shall not be considered as being part of the working cash of the district in compiling annual budgets or fixing annual tax rates.

Warrants shall not be drawn on or transfers made from the fund so created except to reimburse the district for losses by fire and then only after resolution duly adopted by the county board of education based upon findings by competent appraisers.

The cash placed in such fund may be invested and reinvested by the county treasurer with the advice and consent of the county board of education in securities which are legal investments for surplus county funds in this state. The income derived from such investments together with interest earned on uninvested funds shall be considered revenue of and be deposited in such fund.

The county treasurer shall make quarterly reports to the county board of education as to the condition of the fund, using as a basis for such report the cost or market value, whichever may be the lower, of the securities held as investments plus the cash in such fund.

(Enacted by Stats. 1976, Ch. 1010.)