Similar to a savings account, or rainy day fund, taxing entities keep some excess funds on hand from year to year, usually around 25 percent, but those balances tend to grow to higher levels for a variety of reasons and spending reserves can sometimes become problematic.
Reasons for the different levels of what are referred to as reserve funds depends on the entity, and carrying an excess of reserves can sometimes be viewed as hording money that rightfully belongs to taxpayers, a view that is not generally accurate.
A rule of thumb followed for many years is to keep three months worth of expenses, 25 percent, in a reserve fund. The 3-month rule can provide the cash to carry over a city of school district during the last three months of a year, between the time property taxes are billed and payments begin in earnest, usually January.
Sachse will end Fiscal Year 2017-18 with a fund balance of $8.2 million, which is 46 percent of the $17.8 million in general fund expenditures.
By Morgan Howard • [email protected]