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City has dipped substantially into reserves

City has dipped substantially into reserves

But fund balance still within normal ranges, city officials say

March 24th, 2013 in News

Jefferson City's fund balance has shrunk substantially in the past few months, but its current balance is not out of the norm for previous years.

Former finance director Steve Schlueter, who had referred to the fiscal year 2013 budget as a disaster before the budget process even began, said in June 2012 that after the next fiscal year, the fund balance could exceed $7 million and advised the council to start looking at special projects to spend some of those reserves.

But the city's reserve funds are less than half what Schlueter predicted, and interim Finance Director Bill Betts said that's due to various supplemental appropriations approved throughout the fiscal year, as well as an added $1 million to $1.1 million that has been taken out of reserves to cover expenses in the 2012 fiscal year.

The fund balance, or reserve fund, for the city is currently at $3.5 million or 11 percent, but Betts said he estimates the fund balance will have a total of $3.2 million for the end of fiscal year 2012, once the city's outside audit is concluded next month.

Betts said the city typically has had between $3 million and $5 million in fund balance since 2008.

The city recently approved a series of budget cuts to cover a $1.68 million shortfall for the current fiscal year. During initial discussions on the matter, City Administrator Nathan Nickolaus made mention that the fund balance, which may have been thought of as a separate account, is really whatever is left after all the city's expenses are paid.

Betts said many people likely think of a city's fund balance as the equivalent to a savings account, but the two are not the same.

"To understand the fund balance is difficult for anyone," Betts said. "A lot of people thought fund balance means savings account ... it's not a savings account, it's the balance that's left over."

Betts said having that unrestricted base is necessary for cash flow, as the city waits for incoming revenue from other entities.

"If we moved all of our money to our savings account, we'd have no money in there," Betts said.

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