Thursday, April 10, 2014

Finance dept. wants commission to create rules tied to reserve funds

Chris Caldwell
Knox County finance officials have long said that they don’t want to use reserve funds on reoccurring costs, like employee raises.

Now they want it in writing.

The county’s finance team has asked the County Commission to create a formal policy that sets the rainy day fund at 25 percent of the county’s general fund – the account that typically covers much of the day-to-day operations.

Right now that would mean setting the floor at $40 million, which would cover the county for four months if things went bad – real bad. (The fund now sits at a just over $50 million.)

Top county finance guru Chris “Money Bags” Caldwell said the county has long kept “an informal policy,” regarding how it would use reserve dollars, but its external auditors recently suggested that officials should set it in stone.

The bond rating agencies also like when local governments do this, he said.

The timing, however, is interesting. The school system is asking the county to foot the bill for teacher raises, since it supposedly doesn’t have the money. (And not to mention that Gov. Big Bill declined to give raises, so that throws things even more out of whack.)

Since, the county isn’t going to raise taxes to cover any salary bumps, the only other place to go is the reserves.

Put it in writing that you can’t mess with the rainy day account, and the commission has a semi-easy out for why it won’t support raises and why the responsibility should go back to the school system to fund.

Caldwell, though, says it’s all a coincidence. I’ll take him at his word. He’s always been a standup guy.

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