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Budget committee votes 3-0 to forward new fund-balance policy to Board of Mayor and Aldermen
Summary
At its January 2026 meeting the Budget and Finance Advisory Committee voted 3-0 to forward a draft fund-balance policy that sets an unassigned fund-balance target of 4 to 6 months and creates a stabilization reserve; staff cited GFOA guidance and a potential sewer moratorium as reasons for the change.
At its January 2026 meeting the Budget and Finance Advisory Committee voted 3–0 to favorably recommend a new fund-balance policy to the Board of Mayor and Aldermen.
The policy draft, presented by Miss Holden (finance staff), replaces a 2022 reserve fund policy with a fund-balance framework that follows Government Finance Officers Association (GFOA) recommendations and the comptroller's guidance. Miss Holden said the proposal sets an unassigned fund-balance target of "4 to 6 months of regular operating expenditures in our savings account," and would formalize classifications such as unassigned, committed, assigned and restricted fund balances.
Miss Holden told the committee the policy includes a move to convert the city's existing "rainy day" account into a stabilization reserve that would grow over time to help cover unforeseen circumstances. She said assigned fund-balance actions would be reported to the committee and that the city administrator, not the finance director, would have the authority to assign certain balances.
Committee members asked how the 4–6 month target is calculated. "Typically, that would be an average of the budget," Miss Holden said, describing a methodology of dividing the annual budget to determine monthly averages. The draft calls for the target to be calculated once a year after the annual audit is published and reviewed annually for revisions.
When the Chair noted the new target is higher than prior policy, Miss Holden said the range aligns with GFOA best practices and is appropriate given fiscal risks the city is monitoring, including what she described as a potential sewer moratorium.
A motion was made and seconded to forward the draft fund-balance policy to the Board of Mayor and Aldermen. The committee approved the recommendation by voice vote, 3–0. The Board will receive the committee's recommendation at a future meeting; staff said they will report back to the committee following Board action.
