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Council adopts 'saver reserve' policy to cap contingency fund at $2.5 million
Summary
Rochester Hills approved a policy creating a committed 'saver reserve' funded from prior‑year general fund surplus, capped at $2.5 million, with a three‑step approval process and council appropriation required before reserves are spent; council added an evaluation step tied to the 2026 fourth‑quarter budget amendment.
Rochester Hills — The City Council adopted a new financial policy establishing a committed "saver reserve" intended to reduce budget scrambling when capital projects face unexpected cost increases. Finance staff said the reserve would be funded exclusively from prior‑year general‑fund operating surpluses and capped at $2.5 million.
How it works: Mr. Snyder (finance staff) described a three‑gate process for using the reserve: finance validation that a cost increase is a true market variance (not administrative error or scope creep); executive review by the mayor; and council approval to appropriate committed funds. Snyder said the policy will require quarterly status reports and a triennial review of the target cap.
Amendment and vote: Vice President Mongeoli proposed an addition requiring the saver reserve be evaluated with the 2026 fourth‑quarter budget amendment to determine whether it met objectives and whether to renew; Mr. Blair supported that change. The amendment was adopted and the resolution passed. Council members stressed no new taxes or permanent changes to council's appropriation authority; the policy formalizes use of prior surplus dollars.
Financial context: The finance presentation noted the city recorded a $3 million favorable general‑fund variance in the fourth quarter of 2025; the proposal would place up to $2.5 million of prior savings into the committed saver reserve and use the remaining surplus per existing fund‑balance policy. The policy also specifies that funds from the saver reserve are a payor of last resort after indicated fund‑level reserves are used.
