Denton staff proposes comprehensive financial policy to guide 10‑year planning and reserve targets

The Denton Public Utilities Board on April 13 discussed a staff proposal to develop a comprehensive financial policy to unify existing standalone policies, set longer-term forecasts and establish reserve and reinvestment targets.

Matt Hamilton, the city’s chief financial officer, said the proposed policy would formalize a long‑term (up to 10‑year) financial forecast, document reserve fund targets across major funds (general, electric, water, wastewater, solid waste), and define capital and reinvestment strategies, including depreciation‑based funding for asset replacement. Hamilton said aligning policy language with best practices from the Government Finance Officers Association, the American Water Works Association and the American Public Power Association would improve transparency and support the city’s high credit ratings.

Hamilton described four implementation phases beginning with a three‑month framework and draft definitions, followed by forecast validation in budgeting, compilation of new policies into a comprehensive document and ongoing monitoring integrated into budget development. He said staff is already performing many of the recommended practices and estimates the city is currently following about 80% of the guidance in practice; full policy adoption and integration are expected by fiscal year 27/28.

Board members asked how depreciation‑based reinvestment targets will be developed and whether the approach risks locking the city into inflexible funding levels. Hamilton said staff will use existing depreciation schedules and accounting data to generate initial targets then revisit the numbers annually as part of the budgeting process. Members also asked for clarity on linking specific revenues to expenditures and for benchmarking data to be documented for consistent year‑to‑year comparisons.

Board members signaled general support for the direction and asked staff to proceed with policy development and milestones; staff will return with drafts and updated forecasts for future PUB and City Council feedback.