Commission hears staff analysis of fund balances and reserves; staff to examine policy targets

Bernalillo County Finance staff on March 25 presented a comprehensive review of fund balances as of fiscal year 2024, described the legal and accounting categories that define reserves, and explained the composition of the county’s restricted and assigned balances.

Lede: Finance leaders told the Board that the county’s unaudited FY24 fund balance showed a significant assigned component made up of encumbered carryovers, project reserves and contingency amounts and asked commissioners to consider how the county’s policy targets and reserve levels should be adjusted for the county’s size and revenue mix.

Nut graf: The presentation explained GASB‑54 fund‑balance categories (non‑spendable, restricted, committed, assigned, unassigned), the DFA required 25 percent reserve, and an internal one‑month 5 percent operating reserve the county maintains. Staff listed a range of assigned capital reserves, tech investments and public‑safety project set‑asides that existed at year end and described the accounting reasons encumbered and unspent appropriations increase fund balance at the fiscal year close.

Key points from the presentation - General fund: FY24 unaudited general fund balance shows a substantial assigned portion (staff cited a figure for assigned fund balance in presentations); much of the assigned balance are encumbered or unspent carryovers for projects that span fiscal years (software installations, construction, capital). Staff noted turnover of POs and carryovers as typical and requested clarity on policy targets to guide use of those funds. - Capital and special revenue funds: The capital projects fund includes GO bond proceeds, impact fees and open‑space mill levy proceeds with various restrictions. Special revenue funds include dedicated GRT funds (behavioral health, health care GRT) and opioid settlement monies; staff briefed the commission on individual uses and noted the largest special revenue fund balance was behavioral health GRT (presented separately by Behavioral Health staff). - Receivables and write‑offs: The accounting presentation regarding time‑barred receivables (discussed in the nominated write‑off motion) was anchored to state statute on limitations and legal opinions guiding removal from the books.

Board response and next steps: Commissioners praised the transparency and asked staff to return with a recommendation on reserve targets, comparing peer jurisdictions. Chair Olivas asked staff to supply an annual debt report and to highlight transactions that drive large one‑time balances; Commissioners requested additional cash‑flow and turnover metrics so a year‑end snapshot can be interpreted correctly.

Speakers: Deputy County Manager Shirley Reagan led the presentation, with support from staff in Finance, Accounting & Budget and the County Manager’s office. Commissioners pressed for more comparative peer analysis and for a process to recommend policy changes that determine long‑term target reserve levels.

Implementation: Staff committed to brief the commission on a refined proposal that models alternate reserve targets (e.g., a 30% target used by some state governments vs. current combined 30% guidance) and to include debt service implications and recommended offsets if changes are proposed.