Cibolo City Council workshop weighs lowering general-fund reserve, staff recommends range

CIBOLO, Texas — City staff presented a risk-based review of the general fund balance to the Cibolo City Council at a workshop meeting, asking whether the city should treat its reserve as a savings account, an insurance policy or a combination of the two.

The presentation, led by Anna Miranda, staff member, and introduced by Mister Reed, staff member, reviewed guidance from the Government Finance Officers Association and the Texas Municipal League Intergovernmental Risk Pool and recommended a reserve target range rather than a single fixed percentage. Miranda told council members, "what is your vision in regards to a fund balance or a fund reserve?" and framed the question around whether the reserve is a "savings account, or is it a risk insurance perspective."

The discussion matters because the fund balance can provide a quick source of money for one-time costs and emergencies but can also be used to support strategic one-time projects. Staff noted the city's current fund-balance policy established in September 2022 set a 35% target, which the council later reduced to 28%. Reed described that change in 2022 as tied to a large one-time expenditure for Cibolo Valley Drive and said the earlier policy "was the first year of the development services fund" changes that affected the percentage. Miranda cited the GFOA minimum of two months (16.67%) and said staff's risk-assessment worksheet produced a composite score placing Cibolo in a low-to-moderate risk category and suggested considering a target somewhat higher than the 17% GFOA minimum.

Staff presented analysis of specific risks and mitigation options. Miranda listed extreme events, revenue stability, expenditure volatility, leverage from interlocal agreements and human capital considerations. She told the council the city pays roughly $365,000 for property and liability coverage and about $200,000 for workers' compensation through TMLIRP and noted an unrestricted Cibolo Public Facility Corporation (PFC) balance that staff said is available for one-time expenses.

Council members responded with a range of views but coalesced around a 25% floor. Councilman Hicks said he would "not go no lower than 25%." Councilwoman Sanchez Stevens and Councilwoman Roberts each said they were comfortable with 25% and discussed reserving any freed-up one-time funds for capital or flood-mitigation purchases rather than recurring costs. Sanchez Stevens asked about the mechanics of returning from the current 23.5% to 25%; staff answered they were reviewing fee schedules and cost reductions to make up the difference.

Several council members pressed staff for context on possible costs from flooding and infrastructure. Reed and other staff noted that insurance (TML) and the city's debt capacity, plus state and federal disaster programs such as FEMA in severe events, are part of the mitigation picture. Reed also reminded council that the city has already signed an AFA that fixes its FM 1103 Phase 2 contribution at $3,400,000.

No formal ordinance or resolution was adopted at the workshop. Council members gave staff directional feedback that a reserve-floor of 25% is acceptable and to return with any additional analysis needed to implement a change in policy. Reed asked whether council needed additional information or a formal action; council members indicated they wanted staff to prepare options consistent with the guidance.

Staff materials cited in the presentation included GFOA guidance on reserves, a June 2024 GFOA webinar titled "Rethinking Reserves Using Data to Determine the Right Level," and partnership details with TMLIRP. Miranda also showed benchmarking with comparable Texas cities and noted the PFC fund balance history: $4.5 million in FY23, a purchase that reduced it to $2.8 million, and an FY25 projection of $2.4 million.

The workshop segment ended with staff asking for any further questions before moving to the next agenda item.