Moraga committee debates 50% reserve target and approves recommendations to allocate $367,873 in one-time funds to studies
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Summary
Staff recommended allocating $367,873 in unassigned general fund balance to a revenue study ($125,000), an economic development consultant ($75,000), an organizational assessment ($60,000) and the remainder to the asset replacement fund. Committee debated the prudence of a 50% reserve target versus lower alternatives.
Town staff told the Audit & Finance Committee on Dec. 2 that Moraga’s updated reserve policy sets a 50% general fund reserve target calculated on the next fiscal year’s adopted operating budget. That policy — adopted March 2025 — prompted a sustained committee discussion about risk tolerance, bond-rating benefits and tradeoffs for capital needs.
"Our 50% reserve requirement is $6,580,000 based on FY26 adopted budget, and $6,800,000 based on FY27 adopted budget," Administrative Services Director Katie Bruner said. Several committee members questioned whether 50% is excessive and suggested alternatives such as a flat-dollar reserve plus a lower percentage. The town manager and other members said higher reserves help maintain the town’s AAA bond rating and provide a buffer against disaster-related costs that larger cities might be able to absorb more easily.
Staff then presented recommended allocations of the town’s FY24-25 unassigned general fund balance of $367,873 (after the committed reserve of $6.8 million). The package proposed:
• $125,000 for a revenue study to identify new and more resilient revenue streams and evaluate options such as landscape lighting districts, transient occupancy tax (TOT), parcel taxes and other measures;
• $75,000 for an economic development consultant to analyze infill and mixed-use opportunities and infrastructure funding options;
• $60,000 for an organizational assessment to identify service gaps and efficiency opportunities;
• the remaining balance transferred to the asset replacement fund for infrastructure needs.
Staff noted the allocations are intended for one-time uses tied to council-adopted priorities and to inform long-term fiscal planning as the town projects structural deficits beginning in FY27–FY28.
Next steps: Committee members requested clearer justification and evidence that each study will yield commensurate benefits; staff said they would supply scope-of-work descriptions and examples from other municipalities as part of the consultant procurement process.