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Council committee considers raising general fund reserve target to 30% under new cash-reserve policy

St. Joseph County Council (committee session) · November 19, 2025

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Summary

Auditor staff presented a revised cash reserves policy proposing to raise the general fund target from 20% to 30% and a waterfall to allocate excess to rainy day, health insurance, workers' compensation and police pension funds; council discussed trade-offs between savings and debt reduction and asked about bond-rating effects.

Auditor staff presented resolution 90-25, an amended cash reserves policy that would increase reserve targets for several property-tax-supported funds and create a transfer "waterfall" for excess balances. The plan would raise the general fund target from 20% to 30% of annual expenditures and set a rainy-day target of $5 million. Excess general fund cash above 30% would move to the rainy-day fund; excess rainy-day funds above $5 million would flow to the county health insurance fund; excess there would go to the workers' compensation fund and then to the county police pension trust, with council appropriation required at each step.

Auditor staff used 12/31/2024 balances to illustrate the policy: the general fund had approximately $46.8 million available and a 30% target would free up about $20.9 million to move through the waterfall. The presenter said the approach is intended to protect the county against revenue volatility (property tax reductions anticipated in 2028), improve self-insurance resilience for health and casualty funds, and reduce long-term liabilities such as police pension and OPEB exposure. "Maintaining a cash reserves policy and updating it periodically to reflect our fiscal realities is a recognized best practice," the auditor’s staff said.

Council members questioned whether increasing reserves would weaken near-term capacity to pay down debt or fund capital needs, how rating agencies would view the parsed reserves, and whether the policy would be reviewed annually. Staff responded that bond rating agencies consider both reserve levels and liability management, and that reserves are flexible—available for emergencies—with the policy intended to guide replenishment and long-term stability. Council did not take a final adoption vote on the policy during this session; the auditors said they intend to return with annual calculations based on year-end balances and to present required appropriation requests to the council.