Brookfield looks to boost its reserves

BROOKFIELD — Officials are looking to double the town’s reserves over the coming years to build its fund balance and help improve its financial security.

So while many towns across the state dipped into their reserves to offset taxes and coronavirus expenses, Brookfield opted for a slight tax increase instead to prevent drawing from that fund. The decision translated to an additional $126 for the average homeowner this year over last year.

The boards of selectmen, finance and education are considering the town’s latest step toward improving its reserves by adopting a formal fund balance policy.

“This is a much more refined and arduous look at this,” First Selectman Steve Dunn said at a recent meeting. “We have had an informal policy of trying to

grow our fund balance, which has worked really well.”

A healthy fund balance is needed to cover unexpected town expenses in cases of state cuts and emergencies, such as the macroburst in 2018 and the coronavirus crisis. It is a key tool in determining interest rates when towns borrow money.

The state has issued guidance on what makes a healthy balance, going from about 5 to 8 percent years ago, then up to 10 percent and now the recommendation is a minimum of 16 percent, though it presents cases in which towns would want that figure even higher, Brookfield Finance Director Marcia Marien said.

Some reasons for more would be cash flow needs, big additions to the budget, debt, capital projects and overall growth in town, Marien said.

Based on today’s criteria, the state recommends Brookfield have 22 percent of its revenue in the fund, which is nearly double the latest amount.

“That is significantly higher than what we have now,” Marien said, adding the fund was at 11.89 percent as of June 30, 2019.

Under the proposed policy, the town would aim to have 18 to 20 percent of revenue set aside in the fund. Marien said they plan to get there by splitting any unspent money at the end of the fiscal year between that and additional spending for that year.

This would include revenues coming in higher than budgeted, as well as expenses coming in lower than planned.

Town officials have taken a new approach in general in recent years towards spending by adding more to this fund and borrowing less.

Dunn said they’ve grown the fund balance from nearly 2 percent to 12 percent in the past several years.

The other selectmen welcomed a formal policy.

“We talk about the fund balance every year when talking about the budget, but I was very happy to see this in writing so that it’s something we could refer to,” Selectwoman Sue Slater said.

Standard and Poor’s has also requested a formal policy though they’ve given the town a AAA bond rating.

“They haven’t formally been dinging us, but they do compare us to our peers and we are less than our peers,” Marien said. “This modernizes our policy, formalizes our policy and they are looking at us to do it.”