Selectmen Readopt the Town’s Fund Balance Policy

During the April 23 Hudson Board of Selectmen meeting, the Selectmen were asked to reapprove the Town’s Fund Balance policy.
“The Governmental Accounting Standards Board (GASB) issued Statement No. 54, Fund, Balance Reporting and Governmental Fund Type Definitions, to address issues related to how Fund balance is being reported. In order to be in compliance, the Town of Hudson implemented this policy beginning in fiscal year 2011,” Hudson Finance Director, Lisa Labrie, wrote in a memo to the Board of Selectmen.
For the purpose of the policy, it states that the policy “is to ensure that there will be adequate liquid resources to protect the Town of Hudson’s financial stability against emergencies, economic downturns, as well as to contribute to the continuity of financial operations.”
The policy “recommends the minimum required fund balance reserve and the allowable uses of fund balance reserves.”
It explains, as part of the policy, that the Fund Balance is “Accumulated equity balance in a governmental fund resulting from operations over the years. This is the difference between fund assets and fund liabilities.”
It is also stated as part of the policy that “compliance with the provisions of this policy shall be reviewed annually.”
As part of the policy, it specifies the “minimum balance” and “target balance.”
For the minimum balance, it states, “The Town shall manage operations to maintain a minimum unrestricted fund balance of 5% of the general fund operating appropriations, the state education tax amount, the local school net tax commitment, and the County appropriations.”
The target balance states, “The Town shall work toward maintaining an unrestricted fund balance at a minimum of 8% of the general fund operating appropriations, the state education tax amount, the local school net tax commitment, and the County appropriations.”
Also, as part of the policy, it specifies fund balance uses.
“The Board of Selectmen may appropriate any amount of unrestricted fund balance in excess of the minimum balance to offset property taxes as part of the final adopted budget for a fiscal year,” the policy states. “The Board of Selectmen may appropriate unrestricted fund balances for emergency purposes, as deemed necessary, even if such use decreases the fund balance below the minimum balance, subject to the provisions of NH RSA 32:11. Emergency purposes do not include the offsetting of property taxes.”
The Board of Selectmen approved the re-adoption of the Town’s Fund Balance policy, during the consent agenda, without any discussion.
Also during the meeting, the Board of Selectmen was asked to reapprove the Investment Policy.
“I am recommending the proposed Investment Policy be re-adopted by the Board of Selectmen as required by RSA 41-9 VII,” Labrie wrote in a memo.
The policy states that the “Town of Hudson’s investment policy establishes a framework for the safe and prudent investment of public funds.”
“This policy provides guidance and direction for the Town of Hudson to conduct the daily investing activity in addition to improving consistency, creating and defining accountability and in ensuring that laws are followed,” the policy states.
It also states that the policy ” applies to all financial assets in the custody of the Treasurer of the Town of Hudson.”
The policy also states that “These funds are accounted for in the Town of Hudson’s annual audited financial reports and include the following:

General Fund

  • Special Revenue Funds
  • Capital Project Funds
  • Agency Funds
  • Any new funds created by the Town of Hudson, unless specifically exempted by the governing body, in accordance with the law.

“Furthermore, the investment policy applies to all transactions involving the financial assets and related activity of all the foregoing funds,” the policy states.

In addition to a number of objectives that are part of the policy, the policy also outlines the “delegation of authority” which states “Authority to manage the investment program is granted to Town Treasurer and derived from and in accordance with chapter 41:29 of the Revised Statutes Annotated (RSA), (Appendix A).”

The policy also states:

  • No person may engage in an investment transaction except as provided under the terms of this policy and the internal procedures and controls hereby established.
  • Responsibility for the operation of the investment program is hereby delegated to the Treasurer, who shall act in accordance with established written procedures and internal controls for the operation of the investment program consistent with this investment policy.
  • Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions. Employees and investment officials shall disclose any material interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the Town of Hudson.
  • No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Treasurer. The Treasurer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.

The policy was approved by the Board of Selectmen during the consent agenda, without any discussion.

The Board of Selectmen are set to meet again on May 14, at 7 p.m.

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