SUBJECT:
Title
A Resolution of the Board of Trustees of the Town of Erie Repealing Resolution 10-40, the Resolution Establishing the General Fund Stabilization Reserve Account
Body
DEPARTMENT: Administration
Department
PRESENTER: Malcolm Fleming, Town Administrator
First Name, Last Name, Title
TIME ESTIMATE: 10 minutes
only required for non-consent items
POLICY ISSUES:
Repealing Resolution 10-40 will remove the requirement for the Town maintain a General Fund Stabilization Account of $7.5 million. Instead of maintaining that $7.5 million separate reserve, staff proposes updating the Town's reserve policy as proposed below and in the attached DRAFT resolution. The policy issues to consider are (1) what is the appropriate level of reserves to maintain the Town's ability to respond effectively when faced with unanticipated economic events or opportunities without maintaining unnecessarily high reserves (which could be better allocated for projects of benefit to the community or reduced through lower levels of taxation), and (2) what is the best structure for the reserve so funding is available when needed and if used it is replenished in a reasonable period of time?
STAFF RECOMMENDATION:
Recommendation
Approve resolution repealing resolution 10-40 dated March 9, 2010
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
Staff believes current reserve levels are higher than necessary for responsible fiscal planning. This perspective is informed by a report published this year by the Government Finance Officers Association (GFOA) titled Should We Rethink Reserves? This report summarizes GFOA's and various universities' research on new opportunities for local governments to get the best value from their reserve strategies. The report lists four reasons to rethink reserve policies:
First, we live in an increasingly volatile and uncertain world. More uncertainty gives rise to more risk. Reserves are one of the tools used to manage risk, chiefly by "self-...
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