Officials explain $922 million year-end fund balance, rainy-day target and steps to limit year-end supplementals

At the Committee of the Whole hearing Sept. 17, finance officials outlined how the city categorizes fund balance, described a $922 million total reported fund balance for FY24 and explained why the city has relied on year-end supplemental appropriations to cover agency overspending in past years.

Deputy Finance Director Bob Senamy said the city's FY24 total fund balance reported in the ACFR was $922,000,000 and explained how amounts are categorized as nonspendable, restricted, committed, assigned and unassigned. "For us, what largely gets reported there is an unassigned fund balance is our rainy day fund. The reason it's unassigned is because it's there, but we don't know what it's going to ultimately be used for," Senamy said. Finance staff said the city's rainy-day reserve target is roughly 8 percent of the subsequent year's budget, about $170,000,000.

City budget director Laura Larson described why year-end supplementary appropriations have been used to cover agency deficits: when agencies overspend appropriations during the fiscal year, the charter requires the city end the year in balance and the supplemental process has been used to reconcile those differences. Larson said the budget office has reinstated tighter pre-approval reviews for hiring and procurement after earlier high thresholds and relaxed checks during Workday implementation.

Larson and Moxton outlined steps to reduce retroactive supplementals in future years: earlier budget monitoring, reactivated thresholds and closer review of procurement and hiring (controls reintroduced July 1) and commitments to bring materially deviating items to the council earlier in the fiscal year. "Starting on July 1, my team has been involved in reviewing all purchasing activity at a much lower threshold," Larson said.

Officials also described how assigned fund balance has funded capital appropriations and legal liabilities in prior years (examples cited at the hearing included a $35 million settlement reportedly paid in one case and a $48 million wrongful imprisonment payout in another). The council asked for clearer presentation of fund-balance numbers and for continued reporting to distinguish assigned versus unassigned balances and planned uses.