Committee forwards net-position policy for enterprise funds to Board after unanimous recommendation

The Budget and Finance Committee voted unanimously to recommend a net-position policy for the city’s enterprise funds to the Board of Mayor and Aldermen.

Miss Holden, who presented the draft policy, said the measure applies to enterprise funds such as water, sewer and stormwater and aligns reporting terms with Governmental Accounting Standards Board guidance. “Net position is your enterprise funds,” she told the committee, adding that classifications and the unrestricted net-position target are drawn from GASB 34 and related guidance.

The draft sets an unrestricted net-position target range of three to 12 months of annual operating expenses, with staff noting the state comptroller’s minimum is two months. “I would never ever keep [water and sewer] at three months — that would give me heartburn,” one member said, and Miss Holden acknowledged larger utility funds should target the upper end of the range while smaller, stable funds may be comfortable at lower levels.

Members discussed the desire to mirror the stabilization reserve approach used for the general fund while keeping GASB-appropriate language; Miss Holden said GASB prefers reserve amounts be framed as cash management or cash reserves and that staff is consulting GFOA and the American Water Works Association on recommended wording.

The committee also clarified that the policy does not limit emergency spending authority for the city administrator; Miss Holden said emergency expenditures remain governed by the purchasing policy. The committee approved forwarding the policy to the Board by voice vote, 3–0.

The Board of Mayor and Aldermen will receive the policy recommendation for consideration in a future meeting; staff will continue refining language per GASB and professional guidance before final presentation.