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Board approves reserve policy adding emergency fund after debate over liquidity
Summary
Directors approved an updated district reserve policy that creates an emergency reserve fund; discussion focused on liquidity, whether funds should earn interest and a $3,250,000 illiquid account cited by a director.
The Montecito Sanitary District approved a resolution establishing an emergency reserve fund as part of its reserve policy. Directors debated whether certain funds should be held in accounts that earn higher interest and whether board approval should be required to access illiquid reserves in an emergency.
Staff explained the change was primarily the addition of an emergency reserve category. "It differs just that it adds the emergency reserve fund," staff said, explaining the new subsection's purpose. Director Barrett pressed for language to require board review before funds in an illiquid account are used and suggested moving some funds to an interest-bearing account rather than leaving them idle.
The board voted to approve the policy after discussion, with staff noting the funds are held in monitored investment accounts intended to be accessible in a timely manner.
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