“The fund balance property is intended to serve as a benchmark or frame of reference,” according to a city memorandum. Official policies will aid the council in making future financial decisions.
Under the policy statement, West Lake Hills will maintain a set cash reserve fund balance of $2.4 million, the equivalent to nearly six months of operating expenses.
This amount is the same as last year, according to Vonda Ragsdale West Lake Hills Finance Officer.
The limits for the committed fund balance also establish a wastewater revenue bond refunding reserve of $265,000 and a capital improvements cash reserve of $200,000.
Maintaining various cash reserve fund balances is an important signifier of the financial stability of the city.
The total committed fund balance amount will total $3.5 million.
“The city should maintain a prudent level of financial resource to protect against service reductions or tax increases because of temporary revenue shortfalls or unforeseen expenditures,” according to a city memorandum.
Fund balance policies are established to provide general direction and are subject to review and modification by the council. Fiscal year 2019-20 policies have not been modified from the previous year.
“I continue to think this is one of the best things we’ve done,” Mayor Linda Anthony said.