Callander adopts reserve fund policy

Callander’s council has adopted a municipal reserve fund policy to help offset future expenses, and protect “against significant fluctuations in the tax levy,” municipal staff explained. Sufficient reserves will “promote financial stability, flexibility and reduce vulnerability.”

Overall, the purpose of the policy is to govern the municipality’s management and administration of reserves and reserve funds and establish management and administrative responsibilities associated with overseeing the reserve.

Callander currently has 11 reserve funds. There are two for Equipment and Fleet Operations, both save to replace vehicles and equipment. One fund is earmarked for municipal operations, the other is for the Fire Department.

The Information Technology reserve is to replace equipment associated with information technology and there are two Infrastructure Reserves—one for general infrastructure such as road projects, and the other dedicated to maintaining the water and wastewater systems.

There are also two Facility Maintenance Reserves, one dedicated to water and wastewater, and the other to maintain all other facilities owned by the municipality. There’s a General Parks Reserve to maintain parks and help with the town’s Recreation Master Plan, and the Working Funds Reserve is a general fund available for unexpected situations or emergencies.

Water and wastewater also has a dedicated Working Funds Reserve, which is meant to cover emergencies with that system. Finally, there is a separate reserve to save for items in the Downtown and Waterfront 20-year capitol plan. That reserve is aptly titled the Downtown and Waterfront Community Development Reserve.

The new policy does not set any amounts that must be added to the reserves each year. However, “reserve fund balances and associated targets shall be reviewed periodically to ensure adequate reserve and reserve fund levels can be maintained,” staff outlined.

The policy also emphasized that maintaining adequate reserves to replace and repair major municipal assets as required will be the Municipality’s goal. Long-term, “reserve funds shall form an integral component of all the Municipality’s budget and long-term financial plan.”

Callander has around $7.5 million in reserves, and once the budget is passed later this month, the municipality expects to add another $1.2 million.

See: Callander’s budget keeps reserves healthy, but levy will rise

Maintaining strong reserves, the policy notes, “impacts the Municipality’s credit rating,” so the policy details that “fund balances shall be maintained at levels that support the maintenance of the Municipality’s credit rating awarded by Bond Rating Agencies.”

Along those lines, the new policy commands that reserve funds cannot go into the red, all reserves must have a balance above zero. As for creating new reserves or removing or renaming an existing one, council can do that through the budget process or by by-law.

However, if a reserve fund is set to be closed—say the project is completed—council must review and approve the closure, and decide where any remaining fund balances will be allocated.

David Briggs is a Local Journalism Initiative reporter who works out of BayToday, a publication of Village Media. The Local Journalism Initiative is funded by the Government of Canada.

David Briggs, Local Journalism Initiative Reporter,