New Castle committee formalizes reserve funds, reviews banking and investment options

The New Castle Finance Committee met to review the city's fiscal position and the implementation of funds created by Council under Ordinance 553.

Council adopted Ordinance 553 in July, staff said, creating a budget stabilization fund with an initial allocation of $4 million taken from the city's money-market retention account and directing establishment of a capital and infrastructure fund with a proposed $2 million starting balance to be finalized after the midyear budget review. Committee members said the council intends to fund those accounts incrementally so operating liquidity is preserved while building longer-term reserves.

Courtney Taylor, the city finance coordinator, described the city's account structure and restrictions. Taylor said the city distinguishes restricted accounts (grant funds, ARPA-designated dollars and council-designated reserves) from unrestricted operating cash. She noted the money-market account was reported in committee materials at roughly $7 million, and staff later characterized the total unassigned cash in accounts as "nearly $8 million," with part of those balances already earmarked for specific uses such as ARPA-funded capital projects.

Taylor and members discussed two newly created budget lines in the FY26 package: a comprehensive-plan fund intended to accumulate roughly $50,000 over five years to pay for a future plan update, and a $35,000 special-projects-and-grants line to be used for grants matches and nonprofit support; both were adopted by resolution as part of the budget.

The committee also reviewed the city's banking and investment strategy. Staff said the city currently banks with MNT but has contacted other institutions including PNC and money managers such as Creative Financial Solutions to evaluate options for preserving principal, meeting liquidity needs and improving yield. Members emphasized any invested portion of the funds must remain sufficiently liquid to support payroll and near-term obligations.

Committee members raised standard custodial and safety questions: whether deposits above FDIC limits are collateralized, whether the city should accept slightly lower yields in exchange for full insurance, and how a repurchase-agreement collateral structure might operate. Staff said statements and custodial arrangements currently demonstrate security but recommended the committee adopt a formal investment policy to guide duration and liquidity decisions.

The committee asked staff to schedule presentations at an upcoming meeting from PNC and other managers, to draft an investment policy and a financial-policy statement, and to return with proposals that distinguish daily operating banking from longer-term investment custody. The committee also noted the city's next financial audit is scheduled to begin in October.

Next steps: staff will circulate bank and manager proposals, draft the new policies, and return to the committee for decisions about custody, liquidity targets and the incremental timeline for funding the stabilization and capital funds.