MONROE - A set-aside amount from the city's fund balance will be for a disaster - not just a rainy day.
The Common Council approved a fund balance policy Tuesday that will commit 25 percent of the city's annual expenditures as a minimum amount to maintain for "committed working capital."
Committed working capital is defined as funds set aside for cash flow purposes. If any portion is used, it must be replaced by the end of the fiscal year, according to the policy.
"This is a strong policy," said Charles Koch, chairman of the Finance and Taxation Committee.
City officials said the policy will put about $3 million in undesignated funds into the new set-aside fund this year. Suzie Shaw, city accountant, said that amount will cover the city expenses for almost three months, if needed in the event of a disaster. The 2011 expenditures are budgeted at $13 million.
The city had about $6 million in its undesignated fund balance in 2009.
However, the city spent about $1 million of that money in 2010 to fund the new westside fire station. This year, about $700,000 was committed to loan to the Water Department and $140,000 went to build the new trail bridge over 8th Street.
That leaves just a little more than $1 million for the Finance and Taxation Committee to assign to specific purposes or to leave unassigned. Keeping a fixed amount in reserve improves the city's credit rating in reports to bond investors and rating agencies.
Any changes to the policy require a super majority vote of the Common Council.
The Common Council approved a fund balance policy Tuesday that will commit 25 percent of the city's annual expenditures as a minimum amount to maintain for "committed working capital."
Committed working capital is defined as funds set aside for cash flow purposes. If any portion is used, it must be replaced by the end of the fiscal year, according to the policy.
"This is a strong policy," said Charles Koch, chairman of the Finance and Taxation Committee.
City officials said the policy will put about $3 million in undesignated funds into the new set-aside fund this year. Suzie Shaw, city accountant, said that amount will cover the city expenses for almost three months, if needed in the event of a disaster. The 2011 expenditures are budgeted at $13 million.
The city had about $6 million in its undesignated fund balance in 2009.
However, the city spent about $1 million of that money in 2010 to fund the new westside fire station. This year, about $700,000 was committed to loan to the Water Department and $140,000 went to build the new trail bridge over 8th Street.
That leaves just a little more than $1 million for the Finance and Taxation Committee to assign to specific purposes or to leave unassigned. Keeping a fixed amount in reserve improves the city's credit rating in reports to bond investors and rating agencies.
Any changes to the policy require a super majority vote of the Common Council.