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Mount Clemens adopts revised fund-balance policy, shifting minimum to expenditure-based calculation
Summary
The commission adopted an updated fund-balance policy that gives assignment authority to the city manager or finance director, changes the minimum unrestricted balance to 16.67% of general fund expenditures for operations, revises restoration rules, and removes the maximum threshold. Commissioners sought procedural and calculation clarifications before adoption.
The Mount Clemens City Commission on May 20 adopted revisions to its fund-balance policy intended to simplify language and align reserve calculations with operations-based best practices.
City staff presented the recommended policy changes and described three main edits: (1) authority to assign fund balance was expanded to the city manager and/or finance director rather than only the city manager; (2) the minimum unrestricted fund balance calculation was revised from a Revenue-based metric (previously 15% of annual city tax or revenue) to 16.67% of general fund expenditures for operations; and (3) restoration and threshold language was altered, including removal of a maximum fund-balance threshold. Staff said the changes aim to improve efficiency and better match reserves to recurring operating needs.
Commissioners asked whether the policy is an ordinance or an administrative policy (staff clarified it is a policy, not an ordinance) and pressed staff on the mechanics of the two-tiered calculation and how capital outlay would be treated. Staff said capital outlay is excluded from the recurring-operating calculation and that some projects may require future budget amendments; one commissioner described the change as "nuanced" and staff committed to follow-up explanations if needed. By roll call vote the commission adopted the updated fund-balance policy.
