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Council adopts new 35% fund-balance policy to align with LGC guidance
Summary
The City of Washington moved from a fixed-dollar fund-balance requirement to a percentage-based minimum of 35% of expenditures and transfers out; based on FY 2025 audited figures, that raises the minimum from about $5.05 million to an estimated $6.41 million.
The Washington City Council on April 13 adopted an updated Fund Balance Policy that sets a minimum available fund balance of 35% of expenditures and transfers out, a shift from the city’s prior fixed-dollar requirement.
Staff explained the change aligns the city with Local Government Commission (LGC) guidance and general best practices; the LGC expects units Washington’s size to maintain at least 25% and peer municipalities average approximately 49%. Using FY 2025 audited figures, staff said the 35% threshold would raise the city’s minimum fund balance from about $5,052,060 to roughly $6,409,326.
Councilmember Max Perreault moved adoption of the updated policy and Council approved it on a recorded vote. Supporters said a percentage-based approach adjusts automatically with expenditure growth and helps ensure stability; no amendments were made during the vote.
The policy change affects budget planning and the calculation of available fund balance during annual audits; staff said the percentage and its calculation will be reported as part of year-end audit procedures.
