O'Fallon finance director outlines reserves policy, cites strong bond ratings

O'Fallon — Finance Director Vicky Bosshert presented an overview of the city’s fund balance reserves to the council on March 26, stressing reserves’ role in cash‑flow management, capital planning and bond ratings.

Bosshert told the council that the city’s general fund reserve policy requires a minimum target of 40% of annual operating expenditures; she said the adopted 2026 budget reflected roughly 55% in the general fund. She noted property tax revenue of about $8,000,000 is recorded annually but often received in the following fiscal year, creating timing needs that reserves address.

She walked council through how reserves are set and used across governmental and enterprise funds, noting the water fund target will be increased over time toward a $4,000,000 reserve by 2030 because of recent capital work. Bosshert said the city’s conservative reserve position contributed to rating upgrades from S&P and Moody’s; she described S&P's report crediting consecutive audited surpluses and the city’s proactive budgeting practices.

Council members asked for more debt detail and for a quarterly summary of budget vs. actual figures; Bosshert said the detailed debt figures and fund‑by‑fund budget reports are available in the budget binder appendices and offered to circulate summarized statements. On use of reserves for capital, she reiterated that one‑time capital purchases are allowable uses and that staff prefers to preserve reserve targets when practical.

Why it matters: Fund balance policy affects the city’s ability to respond to emergencies, to fund one‑time capital needs without immediate tax increases, and to secure favorable borrowing costs. Bosshert framed the current reserve position as a fiscal strength and recommended continued conservative management.

Next steps: Finance staff will provide council with the requested debt details and consider a quarterly, one‑page summary of budget vs. actuals for council use.