The Town of Olive has mismanaged its special reserve funds according to a report from the New York State Comptroller's office.
Points from the above report that should have been brought up at the October 10, 2011 meeting:
Currently, the Town of Olive does not budget reserve funds in its annual budget. This is poor practice. Written reserve fund policies ought to be developed. Legal counsel concerning the establishment and continuation of funds needs to be sought on an ongoing basis. The board should be provided with ongoing reports of reserve fund activity. There should be ongoing review of reserve funds and on-the-record discussion of whether the reserves are reasonable and necessary. Reserve balances should only be retained at appropriate levels. The board should openly discuss whether the needs of taxpayers are being met. Boards should also periodically assess the reasonableness of the amounts accumulated in their reserves. All reserve fund transactions should be transparent to the public. When conditions warrant (subject to legal requirements), the board should reduce reserve funds to reasonable levels or liquidate and discontinue a reserve fund that is no longer needed or whose purpose has been achieved.
In general, boards should behave as though they have fiduciary duties to the public. That means disclosure and reasonable discussion of management policies that are public. Reasonable discussion includes evaluation of the purposes and limits of the reserve funds, and whether the funds ought to be discontinued.
Quotations from the above report:
1. Reserve funds should be used for appropriate, stated purposes that are well designed. They should not be parking lots for excess cash.
2. Local governments and school districts should balance the desirability of accumulating reserves for future needs with the
obligation to make sure taxpayers are not overburdened
3. There should be a clear purpose or intent for reserve funds that aligns with statutory authorizations.
4. Each statute that authorizes a reserve fund should set forth a particular underlying purpose for the fund.
5. All too often, however, reserve funds are established and substantial cash is accumulated without due diligence in monitoring the reasonableness of reserve fund balances.
6. Is the board provided with periodic financial reports on reserve fund activity?
7. Are reserve balances at an appropriate level?
8. finance reserve funds on a regular basis should develop a written policy that communicates to taxpayers why the money is being set aside, the board’s financial objectives for the reserves, optimal funding levels, and conditions under which the assets will be utilized. Boards should also periodically assess the reasonableness of the amounts accumulated in their reserves.
9. Boards should also periodically assess the reasonableness of the amounts accumulated in their reserves. When conditions warrant (subject to legal requirements), the board should reduce reserve funds to reasonable levels or liquidate and discontinue a reserve fund that is no longer needed or whose purpose has been achieved.
10. All reserve fund transactions should be transparent to the public.
11. Ideally, amounts to be placed in reserve funds should be included in the annual budget.
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