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GFOA presents Monte Carlo reserve study; consultant says Bloomington’s reserves are near a ‘Goldilocks’ ceiling
Summary
The city’s finance team presented a GFOA‑led Monte Carlo analysis of fund reserves, which concluded Bloomington’s general fund reserve is near a modeled ‘ceiling’ (about 53% confidence threshold) and that the city could hold slightly less and still maintain AAA expectations.
Bloomington finance staff and the Government Finance Officers Association (GFOA) presented a risk‑based reserve analysis to the City Council on Oct. 20 that used Monte Carlo simulation to test how the city’s fund balances would perform against a wide range of adverse events over a 10‑year horizon.
Shane Kavanaugh, senior manager of research at GFOA, told the council the analysis treats reserves like an insurance policy: they exist "to help us manage volatility and risk — those unplanned unavoidable costs and losses." The model runs thousands of simulated 10‑year scenarios varying the frequency and severity of events (recessions, storms,…
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