Cross Plains committee agrees on principle: water and sewer keep interest, staff to draft clearer allocation policy

The Village of Cross Plains Finance, Advisory and Enhancement Committee on Jan. 6 recommended that interest from enterprise funds — specifically water and sewer — and from capital project borrowing be kept in those accounts while directing staff to draft a clear policy for allocating remaining pooled investment income to the general fund.

The committee's discussion focused on fairness to enterprise funds and practical limits imposed by levy caps. Unidentified Speaker 1, who introduced the issue, said enterprise funds should receive interest because they are 'user-fee supported' and that proceeds borrowed for the new village hall should be held in a separate account and applied to that project's debt. 'Sewer should get their money because that's an enterprise agency,' the speaker said, characterizing enterprise funds as self-supporting.

Staff cautioned that allocating more pooled interest to the general fund is a common practice that can help with levy-limit constraints. Unidentified Speaker 2 noted auditors and bond documents often expect capital borrowing proceeds to be managed in a separate account and recommended the capital interest be used to offset capital debt costs.

The committee asked staff to produce a working spreadsheet documenting a monthly/prorated allocation method based on ending fund balances and to propose clearer, memorialized policy language. The draft should identify which accounts receive interest monthly and which funds are excluded (for example, active capital-borrowing accounts and enterprise accounts).

Members discussed practical examples: keeping interest on the $3,000,000 borrowing for the new village hall in a dedicated capital account so it reduces borrowing costs; making sure water and sewer rate calculations and Public Service Commission reporting remain transparent; and limiting routine allocation to the library only in ways consistent with existing audit and statutory rules.

The committee agreed in principle that water and sewer enterprise funds and capital borrowing accounts will retain earned interest, that other investment income be allocated to the general fund under a defined formula, and that staff return with a written policy and spreadsheet for the committee to review at a future meeting.

Next steps: staff will prepare the proposed allocation methodology and revised policy language for the committee to consider at a future agenda.