Finance staff proposes seven "buckets" to modernize Hanover's reserves

Yelena Savick presented a proposed reserves and reserve-fund framework meant to align reserve structure with asset-management priorities and a long-term financial strategy. The proposed seven "buckets" are: financial stability; life-cycle funding; growth and economic development; strategic programs; capital flexibility; studies and technical planning; and mandatory/restricted reserves.

To illustrate the funding gap, Savick used the fire equipment reserve: current annual contributions of $15,000 would not fund a new pumper truck costing roughly $1,000,000 within the vehicle's useful life. "If we put $15,000 a year aside, it'll take us about 65 years to set aside enough funds for a new fire truck," she said, noting that the example shows why the town needs a clearer, risk-based reserve structure.

Savick proposed mapping the town's existing reserves into the seven categories without moving funds immediately and recommended the finance committee endorse the framework as the basis to modernize reserve structure, then direct staff to prepare an implementation plan, specific transfers or consolidations and target balances for council approval.

Council discussed how centralizing contributions but preserving departmental transparency would affect budgeting and emphasized the need for granular, asset-level reporting at budget time. The committee moved to receive the reserves-structure report and to recommend council approve the proposed framework; the motion carried.

Next steps: staff will prepare a detailed implementation plan and propose target balances and operational guidance for transfers and consolidated reserves.