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Finance director outlines proposed updates to financial management policy, recommends 45% fund balance target
Summary
Staff proposed a series of updates to the city’s financial management policy, including codifying a fund‑balance target (recommended at 45%), formalizing a spending plan for amounts above the cap, and adding a budget‑process section.
The finance director told the Finance Committee on Feb. 19 that staff is preparing a substantial update to the city’s financial management policy to clarify reserves, fund balance spending and the budget process.
Finance staff recommended that the policy set a fund‑balance percentage target — not just a dollar minimum — and suggested a 45% target "or no less than 45%" as a working recommendation. Finance staff said the policy should specify both a minimum and a practical cap or range so that the city has a clear reserve target and a formal process for when funds rise above that threshold. The director said staff would bring a red‑line version of the policy and a chart of proposed changes to the March work session and ask council to adopt the policy language at a subsequent council meeting.
The policy update described three main additions: (1) a defined fund balance percentage (staff recommended 45%); (2) a simple formal process for how to spend down any amount above the cap (for example, staff would bring recommended spending plans to council); and (3) a clear, codified budget process that ties the calendar, charter deadlines and amendment rules into a single policy section so departments and the public can follow the process.
Finance staff said the proposed language will also note charter and state reporting requirements (for example, monthly manager reports required by the charter) and will include a red‑line to show changes. Committee members asked for clarifications about whether the policy should set a single percentage or a range; staff said they could present either and intended to bring a staff recommendation to the March work session.
Ending: Staff will return with a red‑lined policy, a chart of recommended changes and a staff recommendation for the fund‑balance approach at the March work session.
