The Englewood Budget Advisory Committee on Wednesday discussed detailed guidance to clarify the city's general fund reserve policy, including specific eligible uses, numerical triggers to prompt review and a proposed replenishment strategy for any drawdowns below the committee's 16.7% target.

The guidance under consideration would spell out when reserves may be used (for example, declared emergencies, loss of a major revenue source, local revenue shortfalls or one-time inflationary spikes), set metrics that would trigger a review or recommendation to ratchet reserves up or down, require documentation for drawdown proposals, and establish a multi-year plan to replenish balances.

The recommendations were developed by Laura Cooper, a member of the Budget Advisory Committee, and circulated to the committee alongside research from outside sources such as the Government Finance Officers Association (GFOA) and Pew Research that Cooper referenced during the meeting. Cooper said the draft guidance is intended as a starting point for a recommendation that the committee can present to city council.

"I put together, some policy guidance and recommendations at least as a starting point for our discussion," Cooper said. She summarized components the group requested: clarifying the acceptable range and target, specifying eligible uses, defining trigger thresholds for ratcheting or sliding the target, documenting drawdown proposals and adopting replenishment guidance.

Committee members and staff discussed which base the reserve should reference for the percentage calculation'16.7% has been the target and 12% the stated minimum in previous policy language'1and they generally agreed that operational expenditures (rather than operating revenues) would be the clearer and more stable metric for calculating the reserve percentage. "We have a little more control over expenditures than we do revenues because they're internally generated," said Tim Dodd, Deputy City Manager.

Kevin Ingalls, director of finance, provided context on recent figures: using the amended 2024 budget, Cooper estimated the two-month unrestricted fund balance equivalent would be about $11,568,000 based on gross revenue of roughly $69,500,000 in 2024. Ingalls said the city's July 2025 monthly report indicated an early-year estimate of about $500,000 in unrestricted reserves for 2025, though he cautioned it was early in the year.

Committee members reviewed candidate trigger indicators the draft lists for when to review or recommend changing the reserve level. Cooper highlighted three external indicators she had researched: the CBO/VIX (volatility index), gross domestic product (GDP) trends and the Economic Policy Uncertainty Index (EPU). Members also proposed locally oriented indicators, including:

- Year-over-year revenue declines or flattening compared with expenditures;
- Operational spending overruns (for example, a threshold such as 2% over budget);
- High inflation shocks measured by the Consumer Price Index; and
- Repeated use of reserves for more than two consecutive years as a signal of structural issues.

"Reserved reserves tap greater than 2 consecutive years signals a possible structural issue," one council liaison said, reflecting concern that repeated drawdowns could mask ongoing structural imbalance.

The committee discussed how triggers would function as "baby triggers" to prompt a formal review rather than as automatic actions. Several members said the indicators should be considered together; a single indicator would prompt a review but not necessarily an immediate policy change.

On documentation and repayment, the committee discussed requiring a public justification when reserves are drawn below the target but remain within the acceptable range. Proposed documentation elements include the cause of the drawdown, steps already taken to reduce operating costs, a proposed repayment schedule (members discussed a multi-year horizon such as three years with discretion to extend during slow recoveries), and sign-off by the finance director or city manager for transparency.

Members also discussed an annual guideline for allowable drawdowns (Cooper proposed a preliminary 2% annual guideline as a qualitative starting point) and whether to adopt a rule that dedicates a portion of any general fund surplus in subsequent years to replenishment. Several committee members said the replenishment rule should avoid being so rigid that it prevents needed flexibility during an extended recovery.

Committee discussion referenced other municipal examples, notably the City and County of Denver's reserve policy language for steps to take if reserves fall below an acceptable range (including spending freezes and repayment plans) and state-level examples that use percentage-of-recovery or multi-year repayment approaches.

Procedural and next-step items: the committee asked staff to circulate Cooper's spreadsheet and related materials and asked Tyson Thornberg, budget and financial analyst, to receive and distribute notes. The committee voted to hold a follow-up Budget Advisory Committee meeting on Sept. 18 at 5:15 p.m. in the same meeting room to refine the guidance and prepare an issue brief for city council; the motion to schedule that meeting passed.

Votes at a glance

- Motion to approve minutes from the August meeting: motion moved and seconded; outcome recorded as approved (verbal "Aye" votes recorded in the transcript; specific roll-call names were not specified in the record).
- Motion to schedule a BAC reserve-policy follow-up meeting on Sept. 18 at 5:15 p.m.: motion moved and seconded; outcome recorded as approved (verbal "Aye" votes recorded in the transcript; specific roll-call names were not specified in the record).

Why it matters: The committee's recommendations would give Englewood city council clearer, more measurable guidance on when and how to use general fund reserves, improving transparency for the public and giving staff and council a defined process for addressing economic downturns, unexpected revenue losses or short-term spikes in inflation. Committee members repeatedly cited the importance of protecting the city's credit rating and avoiding "knee-jerk" operational actions such as widespread layoffs by having a clear drawdown and replenishment framework.

What happens next: Committee members will circulate a simplified draft outlining the three main deliverables they agreed on (eligible uses, trigger metrics and replenishment strategy), gather feedback, and meet Sept. 18 to finalize recommendations for an issue brief to present to city council. Staff will include comparative policy language (for example, Denver's approach) and the spreadsheet Cooper referenced in the materials circulated before the follow-up meeting.