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Scottsdale staff outlines fund-balance rules, warns reserves below 20% risk rating downgrade
Summary
Sonia, budget staff, told the Scottsdale Budget Review Commission on March 19 that fund balance includes reserves, contingencies, restricted, assigned and unassigned balances and that each component serves a different purpose.
Sonia, budget staff, told the Scottsdale Budget Review Commission on March 19 that —fund balance— includes reserves, contingencies, restricted, assigned and unassigned balances and that each component serves a different purpose.
The presentation explained why the city keeps reserves: to maintain services during revenue shortfalls or emergencies, meet debt covenants and support the city's bond rating. Sonia said, —Rating agencies consider fund balance and reserves of utmost importance for a financially sound and strong city.—
The city's council-adopted reserve policy sets the general fund target at 25% of operating expenditures (5% emergency reserve and 20% operating reserve). Staff noted that Fitch Ratings had told the city its…
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