County Comment/County Upgrades Cash Reserve Policy

by Norman Basssett
Washington County Public
Information Officer

In its regular meeting on February 3rd, the Washington County Board of County Commissioners took steps to bolster the County's already positive financial stance.

Budget and Finance director Debra Bastian and Financial Advisor Lester Guthorn brought the Cash Reserve Policy before the Board for revision. Those revisions would incorporate all reserve functions of governmental operations and refine the County's management practices.

Bastian told the Board that prudent levels of reserves should be maintained to meet anticipated and unanticipated expenditures. As part of the Department's annual review of policies, the Reserve Policy was expanded to incorporate the full spectrum of reserves found within all County operations. Major additions include contingency reserves, self-insurances, capital expenditures, closure and post-closure reserves, and fund policies.

Revisions also include the requirements for each fund, and how each reserve may be used. Guthorn told the Board that the County should set the reserve amount at the peer group median for the general fund, and set amounts for each of the enterprise funds. A strong reserve policy helps receipt of positive feedback from financial ratings agencies such as Moody's and Standard and Poor's, Guthorn said. Last year Moody's gave the County a "positive outlook" based in part on the reserve strategy and fiscal responsibility that the County shows, the only such accolade awarded in the state of Maryland.

Guthorn said that many other counties in Maryland do not utilize the prudent fiscal policies that Washington County employs, and some do not abide by their written policies. Two months operating reserve is called a "rational level" of reserves by financial rating agencies. The requested revisions call for a 14.8% reserve level, or approximately 50 days of working capital as a goal.

The reserve policy was created in 2001, and reserves are maintained in all County funds. Looking at the history of the County, a dramatic change in the way Washington County does business can be seen as compared to the 1980s, Guthorn said.

Support for the Reserve Policy as outlined and amended was approved by Commissioners' unanimous vote.