Oswego staff recommends retaining 30% general-fund reserve; board asks about bond-rating effects

Andrea, a village staff member, presented an overview of fund-balance concepts and the village's current targets to the Committee of the Whole. She described fund-balance categories (nonspendable, restricted, and unrestricted, with the latter subdivided into committed, assigned and unassigned) and reviewed Government Finance Officers Association guidance that governments should maintain a minimum of about two months of operating expenditures in unrestricted reserves.

Andrea said the village's current fund-balance policy uses a 30% target for unrestricted balances and a 25% minimum cash-reserve target. Citing audited figures in the presentation, she said total fund balances were "just over $30,000,000" and that about $28,000,000 was in unrestricted fund balance as of 12/31/24 in the transcript presentation; Andrea noted that assigned amounts included $575,503 for the public-works facility expansion and a $1,000,000 assignment for unbudgeted facility repairs in 2026.

Andrea used the village's estimated 2025 general-fund operating expenditures of $26,000,000 (as used in the presentation) to show targets: 25% cash reserve equals about $6,500,000 and a 30% unrestricted target equals about $7,800,000. She said that, even after planned transfers to capital for a public-works expansion (budgeted transfers noted in the presentation as $10,500,000 in 2026 and $5,000,000 in 2027), the village would still exceed the 30% target in the near term given the current balances.

Board members asked whether the 30% level affects bond ratings. Andrea said a 30%–40% fund balance would generally be neutral to ratings while an unusually large reserve could be positive. A board member asked whether a recent $400,000 contribution to the general fund raised the unrestricted percentage from roughly the low 30s to about 39%; Andrea said she could not compute that off the top of her head but would provide a precise calculation on request.

Members also discussed revenue variability and diversification. Andrea cited average monthly revenue of about $2,700,000 over the last 12 months (with month-to-month values between roughly $2,500,000 and $3,000,000) and noted that grocery sales tax provided a reliable cushion during downturns because grocery spending is less discretionary.

Andrea recommended retaining the 30% target as a reasonable, conservative policy for Oswego while making minor policy-language updates to reflect the fiscal-year change; she invited board questions and said staff would return with any requested numeric clarifications. The committee recessed after concluding the item.