North Huntingdon commissioners consider reserve fund cap
By Brad Pedersen
Published: Wednesday, Feb. 20, 2013, 9:00 p.m.
The North Huntingdon Commissioners are considering a plan to cap the township's reserve fund at no more than 25 percent of its general fund budget.
This year, the general fund balance is $11.4 million, meaning the township's $7 million reserve fund would need to be reduced to $2.8 million to meet the new policy, if it is approved.
This year, the commissioners spent $2.2 million of the reserve fund to provide an additional $400,000 to the 2013 road program, and to pay off the public works building's $1.8 million mortgage.
The commissioners also cut the borough's property tax rate by 1 mill.
Locally, Murrysville is the only community imposing a reserve fund policy, limiting its fund to 20 percent, said borough manager John Shepherd said.
The township accrued a $3.4 million surplus between 2007 and 2011, a stretch where it spent less money than it brought in, Shepherd said. He attributed the excess funds to a growing tax base because of an increase in residential housing plans, a higher collection rate of delinquent earned income taxes and frugal spending habits within each department.
The largest surplus came in 2007, when the township spent $8.5 million of its $10 million budget.
In 2011, the most recent records available, the township's budget contained an $817,563 surplus, which ended up in the general fund reserve.
Despite spending a portion of the fund balance in the 2013 budget, Shepherd said he expects the fund balance to remain at $7 million, because of another projected budgetary surplus.
“I expect we had a good year,” Shepherd said. “But we won't know an exact number until later this year, when the township goes through its annual audit.”
The Chicago-based Government Finance Officers Association, or GFOA, an association of financial officials, recommends reserve funds do not exceed 17 percent of the general fund.
“There is no right or wrong answer, it all depends on what they are comfortable with,” GFOA senior manager John Fishbein said. “It all depends upon recurring revenues, regional economic activity, and potential planned and unplanned expenditures – there's lots of reasons to exceed the suggested 17 percent.”
Fishbein said it is up to individual entities to establish and maintain their own reserve fund management policies.
Board president Lee Moffatt said the commissioners plan to spend the reserve fund over the course of several years to come into accordance with the new policy.
“There's other ways to spend down the reserve, like by cutting the millage rate, which would allow us to pull out about $350,000 for each mill reduced,” Moffatt said. “Or we could start using it to fund portions of our operating budget.”
The commissioners might consider additional funding for more road improvements, making more capital purchases, or paying off financed vehicles, such as the township's street sweeper, Moffatt added.
“We might want to push up some projects, like purchasing cameras for the police vehicles,” Moffatt said. “But we don't want to just spend money just for the sake of spending it.”
The commissioners are expected to vote on the policy during last night's meeting.
Brad Pedersen is a staff writer for Trib Total Media. He can be reached at 412-856-7400, ext. 8626, or email@example.com.
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