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Council advances fund balance policy (Resolution 260604R) in first reading, sets 20% minimum target
Summary
Finance Director Jordan McQuillen presented Resolution 260604R, proposing a banded general fund reserve with a 20% minimum (15% operating + 5% stabilization) and an upper range to 35%; council approved first reading and asked how staff would respond if reserves fell below the guideline.
Finance Director Jordan McQuillen presented a proposed general fund reserve and fund balance policy (Resolution 260604R) and recommended the council approve it on first reading. McQuillen said the policy does not create a new fund or restrict future councils; instead, it defines how the city will measure, maintain and report reserves. "The policy establishes three reserve concepts," he said, outlining a 15% operating reserve for liquidity, a 5% stabilization reserve for economic downturns (together a 20% minimum), and a capital reserve band up to 35% that could be used for one‑time capital designations after minimums are met.
McQuillen said the proposal is grounded in Aberdeen's historical experience over the prior 10 years rather than simply adopting another community's target. He described the policy's treatment of GASB fund balance categories and explained that non‑spendable and restricted balances are not included in the reserve calculation. When asked what would happen if fund balance fell below 20%, McQuillen said he would inform the council and the city manager could pursue spending reductions, travel cuts, capital deferrals or other steps to return reserves to policy levels.
Councilmembers asked clarifying questions about the policy's assumptions, history of reserve levels and the relationship to airport and other funds. After discussion, the council approved the first reading by roll call.
