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Finance committee backs formal reserve policy and transfer to higher-yield investment account
Summary
Narberth’s Finance & Administration Committee voted to recommend council approve moving excess tax receipts into a higher-yield 'pleot' investment account and asked staff to draft a formal general-fund reserve policy that targets a multi-month operating balance and rules for use and replenishment.
The Finance & Administration Committee on Monday recommended that borough council adopt a formal general-fund reserve policy and authorized staff to move available tax revenues into a higher-yield investment vehicle described in the meeting as a "pleot" account.
Manager summarized the proposal, saying the goal is "to have at least three months of our operating expenses to sit in the reserve fund." The manager said the pleot account is widely used by Pennsylvania municipalities and that, at the time of the meeting, it paid about 3.73% interest.
Committee members pressed for clear rules about when reserves could be used and how the fund would be replenished. Staff said the recommended policy would (1) designate a minimum balance held in the pleot account, (2) allow routine monthly draws to pay operating expenses while keeping the designated minimum intact, and (3) specify a replenishment process if the reserve were dipped into during an emergency.
Staff described mechanics for the transfer: park the bulk of tax receipts in the pleot account immediately after revenue collections and draw down monthly for operating needs while maintaining the untouchable minimum. The manager estimated that, depending on balances and prevailing rates, the borough could earn roughly $50,000 in interest this year by moving funds and reinvesting earnings into capital and general funds.
Members and staff agreed on next steps: staff will present specific numbers for the recommended minimum balance, the conditions under which funds may be used, and an annual review process tied to the capital-improvement plan and the budget calendar. The committee requested the policy include procedures for council to increase or decrease the target balance and to evaluate whether the reserve policy limits capital spending unduly.
The committee did not take final council action at the meeting; it voted to recommend council adoption of the reserve policy framework and the transfers described.
The committee moved on to other business and asked staff to return with detailed figures at the next meeting or a follow-up work session.
