I appreciate your post on this topic, Tim.   I agree with your recommendation for a reserve fund. It offers an ideal "home" for any budgetary surplus from the previous year and may be used to reduce the current year's allotment. Your references offer interesting ideas and guidance to private road associations but are applicable to Condominium and Home Owner Associations.  

The Private Ways Statute, 23 M. R. S. §§ 3101-3104, is the Maine law that governs private road associations. Section 3101, 4-A. Road associations, states:

A road association under this subchapter through its commissioner or board may address present and future repair and maintenance of a private road, private way or bridge as authorized by the owners at meetings called and conducted pursuant to this section until the association is dissolved by a majority vote of its members.

I am not an attorney and suggest you run the following by your legal advisor. As you have noted, the Statute is silent on the disposal of surplus funds. Since road associations have the right to address "present and future repair and maintenance ... as authorized by the owners", I believe the Statute allows the establishment of a reserve fund for future road repair and maintenance. I suspect the courts may tolerate relatively high ceilings on the amounts permitted given the prevalence of severe weather patterns. I suggest this fund be authorized in the by-laws or by a vote of the owners at a duly called meeting of the association. 

Our statutory road association approved a reserve fund several years ago to reduce the future need for large assessments to pay for major road repairs. Reserve fund allocations are part of the proposed budget voted on by owners at the Annual Meeting. Our operating funds are kept in a checking account for ready availability. The reserve funds are reported annually by the Treasurer and are kept in an associated savings account for periodic future use. 

Our road association began to include a line item in the proposed budget entitled “Reserves (Resurfacing, Infrastructure)” a year after we voted to approve the by-laws and become a statutory road association. Our by-laws, therefore, do not mention reserves. The need for reserves was apparent after we experienced a second road washout requiring consultation with an engineering firm, large twin culverts, major road repair, and a large assessment.

Our Vice-president prepared a position paper on reserve funds, detailing the reasons and recommending future funding. This report was presented to the membership prior to the annual meeting. The report was discussed and the line item above was approved by the owners with the proposed budget and has been included annually since then.

To your point about needing access to reserve funds between annual meetings ...

Our By-laws state that our 5-member Board “will have the authority to approve up to $1500 for unanticipated road maintenance expenditures between meetings.” Our annual meeting is in the fall. This allows the board to authorize funds to cover costs for most spring repairs. Also, under Article 5, Meetings, Section 4. Emergencies:

An emergency will be, but will not be limited to, untoward events causing the road to be unsafe or impassable for an unacceptable time period. The Board of Directors will declare an emergency and decide upon a course of action. When the course of action requires funds in excess of $1500, the Board will poll Members via telephone or e-mail and must obtain confirmation from a majority of the members for approval.

Under the above direction from the by-laws, the Board declared an emergency last spring to authorize funds for an unanticipated road repair expense exceeding the limit.

As to surplus funds...

Last year’s approved maintenance fees and actual expenses are clearly stated in the proposed budget. (Template may be seen on our Resources Page) This budget also includes anticipated expenses and the reserve fund allocation for the coming year. Surplus funds are not specifically identified, perhaps they should be, but all association funds are accounted for in the proposed budget to facilitate owner decision making.  

Our by-laws further state:

The Treasurer will have custody of the receipts and disbursements. The funds of the Association will be held in a bank account assigning joint custody to the Treasurer and an owner member chosen by the President/Road Commissioner.

Currently, the Treasurer and I, as President, have joint custody of the bank account. We keep enough money in our checking account at all times to cover operating expenses for the coming year. Our members like to see a healthy balance in the Treasury. Any surplus funds are used to fund reserves and decrease member maintenance fees.  The Vice-president, Treasurer, and I, with the awareness of other Board members, recently decided to keep the reserve funds in a separate account for ease of identification and accounting.