Board of Directors Regular Meeting Agenda


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Meeting Date: 02/26/2014  

SUBJECT MATTER:
Receive, consider and act upon review of a resolution establishing guidelines for operating, capital replacement, transportation fund and economic development reserves;
FISCAL IMPACT:
The budget may be impacted if revisions are made to the current Reserve Guidelines.
BACKGROUND:
At the Board retreat on February 20, 2014, the Board discussed the Township’s current reserve guidelines, which were adopted by the Board in August 2013 in Resolution No. 014-13 Establishing Guidelines for Operating, Capital Replacement and Economic Development Reserves. The resolution is attached along with a chart summarizing the current funding guidelines for various reserves and funds.

During the meeting, the Board discussed various options for allocating projected 2013 year end favorable budget variances totaling $6.2 million to the Township’s reserve accounts. One of the options was to continue to allocate based on current policy guidelines. Because the operating reserve is already fully funded at $13.3 million and thus requires no additional monies, the resulting allocations would be as follows:

Allocations Based on Current Policy

Capital Replacement Fund
Beginning Balance (1/1/2013)                               $17,630,871
Funding for recreational amenities                          (2,521,349)
75% allocation of favorable budget variances         4,664,491
Ending Balance (12/31/2013)                                $19,774,013

Economic Development Reserve
Beginning Balance (1/1/2013)                                $ 5,615,345
25% allocation of favorable budget variances          1,561,217
Ending Balance (12/31/2013)                                 $ 7,176,562


Another option discussed by the Board was to allocate 100% of the 2013 year end favorable budget variance to the Capital Project Fund.

Capital Replacement Fund
Beginning Balance (1/1/2013)                                $17,630,871
Funding for recreational amenities                           (2,521,349)
100% allocation of favorable budget variances        6,225,708
Ending Balance (12/31/2013)                                 $21,332,230


Economic Development Reserve
Beginning Balance (1/1/2013)                                  $ 5,615,345
0% allocation of favorable budget variances                            0
Ending Balance (12/31/2013)                                   $ 5,615,345


Regardless of which method is used to allocate 2013 year end favorable budget variances, the Board has the authority to subsequently transfer monies among existing and newly created reserves or funds as it deems appropriate. Accordingly, as funding priorities are established during the upcoming budget process (or anytime throughout the year), reserve balances can be reallocated in order to meet the financial and service objectives of the Board. As discussed at the retreat, however, it is recommended that funds not be allocated to the operating reserve or debt service reserve unless the intent is to keep the funds in those accounts until they are disbursed for their defined purpose.
RECOMMENDATION:
To be determined by the Board of Directors.
Attachments
Reserve Funding Current
Resolution


    

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