Wat. Code, § 44032

If a contract with the state, the department, any other district, or the United States requires the establishment of a reserve fund for the payment by the district under the contract of periodic service charges or capital charges, or both, or if the board finds it to be necessary or desirable in the interest of the district, the board may determine to levy an assessment to provide such a reserve fund. In that event the board shall also determine the amount of the initial deposit or deposits to be made in the reserve fund and the amount of the balance, if any, to be maintained therein. The total amount of the initial deposit or deposits to be made in the reserve fund may be levied at one time, or in a series of installments from time to time, in the same manner as periodic service charges, as provided in Section 44030. Any later deposits necessary in order to maintain a required balance in the reserve fund shall be levied in the same manner. The reserve fund shall be used solely for the payment of the charges for which it is established, until all the charges have been paid. Any balance then remaining in the reserve fund shall be transferred to the general fund of the district.