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Monroe committee clarifies fund-balance rule, keeps 25% target
Summary
The Finance and Taxation Committee approved a clarification to Section 5.8 of the comprehensive finance policy that retains a 25% fund-balance target but specifies it applies to operational expenditures and excludes debt service and capital outlay; the final figure will be confirmed after the audit.
The Finance and Taxation Committee of the City of Monroe approved a clarification to Section 5.8 of the city's comprehensive finance policy that keeps the existing 25% fund-balance target but narrows how the target is calculated.
Administrator Rindy told the committee the change is intended to make clear the 25% requirement applies to operational expenditures and does not count debt service or capital outlay. "The state recommends maintaining a minimum of 16.7%, which I think, like, correlates to maybe 2 months typically," Administrator Rindy said, explaining the city's policy will continue to target a higher cushion. She also said the city used $1,500,000 of general fund balance in 2025 to support the expansion of the industrial park and does not want that one-time capital purchase folded into the operational calculation for the reserve.
Rindy said staff will finalize the exact fund-balance amount after the completion of the annual audit. "The audit you always happens kind of that 1st week of March... just after the completion of the audit, we finalize what that amount is," she said. The committee discussed a liquidity concern from a member who noted that shifting funds into land purchase makes them less liquid, but the member acknowledged the funds continue to exist as an asset.
The committee approved the clarification by voice/roll call and will hear the audit presentation at next week's council meeting, after which staff will finalize the operational fund-balance calculation.
