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Bend MPO to continue building operating reserve; board discussed distinguishing operating, rainy-day and strategic project reserves
Summary
Policy board members discussed a staff proposal to continue setting aside state highway funds to build an MPO reserve. Staff said the board previously agreed to set aside $80,000 and staff will return with options to separate operating reserves from strategic project savings and address cash-flow issues tied to reimbursable grants.
Bend MPO staff briefed the policy board Jan. 24 on reserves, earned interest and options for using those funds. The discussion covered an $80,000 reserve set-aside the board approved in 2023, the city’s 16% operating reserve target, how to separate operating reserves from project savings, and earned interest currently sitting in MPO accounts.
A staff presenter said the board had previously approved “setting aside $80,000 of those state highway funds that we received to start building a reserve” and that the MPO will continue programming that set-aside across fiscal years. The staff presentation contrasted two reserve purposes: (1) an operating reserve to smooth cash flow and cover shortfalls, and (2) a strategic/project reserve for anticipated large future expenses such as modeling, household travel surveys and long-range-plan work.
Board members flagged a key cash-flow issue: many grant-funded projects operate on reimbursement schedules, meaning the MPO and subrecipients can experience short-term cash needs when consultants or contractors invoice before grant reimbursement arrives. Staff said that timing difference was a major reason to consider a larger or more specifically targeted reserve. “We will be building our budget for FY26 right now that includes that $80,000,” staff said, and promised a later package to quantify reserve goals and options.
The meeting also addressed earned interest on funds held in the MPO’s accounts. Staff noted a recent accumulation of funds (including federal COVID-era allocations that were distributed earlier and state funds the MPO now receives directly) and said interest earnings have been helping the balance but are expected to decline as those one-time funds are spent down. City investment policy and the Local Government Investment Pool (LGIP) were described as the operating approach for idle MPO funds; one board member noted a LGIP cap mention during the discussion: “It’s 95,000,” a staff member said when explaining investment limits.
Why it matters: operating reserves affect the MPO’s ability to start reimbursable projects without interruption, meet contract obligations and plan for expensive, multi-year technical work. The board directed staff to return later in the year with more detail on the appropriate reserve size and whether to split reserves into distinct accounts for operational stability and strategic project savings.
Background and next steps: staff said they will return to the board with formal reserve options, likely later in the spring or summer, and will work with city finance to establish a structure that separates operating cash needs from longer-term project savings.
