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Review of draft Financial Reserves Policy - Part III: Community Development Block Grant, Revolving, Agency, Health Insurance and Dental Insurance Funds
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Submitted by:
John Ruggini, Finance Director
Department:
Finance Department
A. Issue
A financial reserve provides protection from risk. The City of Wauwatosa faces risks like revenue shortfalls during recessions and losses from extra-ordinary events, like a pandemic or extreme weather event. Reserves help make sure that the City can respond quickly and decisively to extreme events. Reserves also support vital public services during revenue declines. A reserve policy describes how much we will try to retain in our reserve. It also describes acceptable uses of reserves. The City has had an informal reserve policy but as a best practice, and to protect our Aaa bond rating, we seek to formalize that policy. This is a continued discussion from January 10, 2023.
B. Background/Options
At the January 10, 2023 meeting, staff introduced a draft fund balance policy and reviewed General Fund balances and policy recommendations. Included in this packet is an updated policy to include the Community Development Block Grant (CDBG), Revolving, Agency, Health/Life and Dental Funds. The table below summarizes the balances of these funds.
The following is proposed for inclusion in the Financial Reserve Policy and included in the attached draft policy.
Community Development Block Grant Fund (13)
The Community Development Block Grant (CDBG) Fund is used expending funds received from the Federal Government's Department of Housing and Urban Development's block grant program. The majority of the funds are provided to third party entities known as sub-recipients. As expenses are paid on a reimbursement basis, any fund balance, is the result of timing delays in receiving those reimbursements and is restricted for already incurred expenses for program activities.
Revolving Fund (14)
Certain funds that are donated or p...
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