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Council committee adopts clearer, expanded fund-balance reserve policy with sustainability reserve
Summary
The Budget & Finance Committee approved a revised fund-balance reserve policy that keeps existing 17% operating and 50% debt-service targets and adds a new budget sustainability reserve (1% minimum, up to 6%), plus clarified use and replenishment rules.
The Budget & Finance Committee voted to adopt a revised fund-balance reserve policy for the Metropolitan Government of Nashville and Davidson County, keeping the general operating reserve target at 17% and the debt-service reserve at 50% while adding a new budget sustainability reserve that will range from a 1% minimum up to 6% of budgets as determined by the finance director.
The policy update, introduced by Davenport & Company municipal advisor Roland Kooch and presented by Metro finance staff, frames the sustainability reserve as a flexible layer intended “to be calculated in an amount that’s estimated to be sufficient to cover transfers to help support the two key reserves,” and to help the city remain in compliance with credit-rating expectations. “Metro received an upgrade in July of 2023 to a double A plus,” Kooch said, describing how reserve policy supported that rating and noting agencies cite reserves when assessing creditworthiness.
Why it matters: the committee’s presentation emphasized that clear reserve targets and…
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