Village attorney: Swansea meets rule but ordinance cap should be revisited after eight months of reserves

Village attorney John Karowski told the Swansea trustees on Jan. 20 that the village’s general‑fund reserves exceed the four‑month ceiling in village ordinance 36‑032 but that the ordinance contains no enforcement remedy, so courts typically treat such provisions as directory rather than mandatory. Karowski said Swansea currently holds roughly eight months of reserves and that the money remains the village’s to allocate under board authority except where the ordinance requires a two‑thirds vote to tap the mandatory two‑month emergency reserve.

Karowski said he was asked to investigate after Trustee Tuveno and others raised questions about whether reserves had been “stockpiled” improperly and whether a forensic audit was warranted. After reviewing eight years of audits and legal precedent, Karowski said he found no legal requirement forcing the village to return surplus money and no indication that taxpayer funds were being misapplied. “The ordinance says the unrestricted fund balance shall be maintained at a level amounting to no less than two months nor more than four months,” Karowski read to the board, but he added that where a statute or ordinance imposes a mandate without a remedy, courts often treat the rule as directory rather than mandatory.

Karowski recommended two steps: first, revisit the ordinance (adopted about 2011) to decide whether the two‑month minimum and four‑month cap remain appropriate; second, adopt clear policy or legislation directing how any funds above the required minimum should be managed (for example, earmarking for capital projects or infrastructure rather than leaving language ambiguous). He said the village’s independent auditor and the government accounting standards recognized by Illinois emphasize maintaining adequate fund balances to mitigate revenue shortfalls and unexpected expenditures.

Multiple residents asked for clarity during the public comment period. Charlie Goody asked whether the word “shall” makes the cap enforceable; Karowski answered that legal precedent he cited in his report supports the directory interpretation in the absence of an explicit remedy. Residents also asked how much excess was in dollars; one resident observed an $8 million figure based on back‑of‑envelope math. Karowski and trustees did not endorse a dollar figure at the meeting and committed to publishing Karowski’s full 14‑page report on the village website for transparency.

Next steps: Karowski’s report will be posted to the Swansea website. Trustees said they expect to review the ordinance and consider drafting policy or legislation to govern how amounts above the mandatory reserve are allocated in future budgets.

The trustees took no formal fiscal action at the meeting; the attorney’s review was informational and will be the basis for future board discussion.