Alderwoman and Chair of the City of Salem’s Finance Committee, Kala Sisco, announced the resignation of committee member Sherry Lea during the Nov. 10 meeting. The committee also discussed recommendation possibilities for two proposed financial policies.
Sisco announced Lea’s resignation while thanking her for her service on the committee.
“I’ve been waiting for this meeting, and it’s been a long four months; But Sherry Lea has resigned from the finance committee,” said Sisco. “It’s very unfortunate that we are losing her. She was a huge asset; she was very good with numbers and fine details. So, I’m very sad to say that we are losing her off this committee. We do appreciate all that she has given and dedicated to the committee in the previous years that she has served on it, so I want to thank her greatly for the time and brain muscles that she’s used to punch numbers in.”
Lea was not present at the meeting. No announcement has been made yet as to who will fill Lea’s seat on the committee. Mayor Greg Parker will likely announce his choice for appointment during a future meeting of the Board of Aldermen.
The start of the meeting, which was set for 6 p.m. according to the agenda, was postponed to 6:15 p.m. due to difficulties in gathering a quorum. Present along with Sisco was Alderman Shawn Bolerjack, who, like Sisco, is a non-voting member. By the scheduled start time, only board members David Weiss and Patty McKeown were present, with McKeown attending remotely. After Sisco and city staff made some phone calls, Board Member Bernie Sirois arrived, and Board Member Nathan Kinsey began attending via video call. The meeting began at 6:15 p.m., shortly before the committee began a budget review, wherein Treasurer Stacey Houston went through each fund, telling the board how much of the year’s budget had been spent, and reviewing the city’s debt service payments. Sisco opened the floor for questions and comments from the half-dozen or so citizens in the gallery following each fund.
Following the budget review, the committee held preliminary discussions on two agenda items brought to the board by city staff. The first being a proposed reserve fund policy, and the second being a proposed policy regarding the investment of city funds.
During the budgeting process for the current fiscal year, staff “revived” a utility fund reserve policy, according to a staff summary prepared by City Administrator Sally Burbridge. The policy states that adequate reserve balances allow the city “financial flexibility and security”, and that the city will “strive to maintain electric, water, and sewer reserve fund balances of at least 25%” of the previous fiscal year’s actual expenditures. Another clause in the policy states that the city will include in the annual budget the transfers to the reserve funds of at least 5% of the prior completed fiscal year’s expenditures for that respective department. Spending from the reserve funds requires a simple majority vote of the Board of Aldermen.
Burbridge said that there had been moves made by staff to implement the policy for the city’s general fund as well, but that there was no formal policy in place yet regarding reserve funds other than utilities.
“We just took the stance-- and fortunately the finance committee and the board went along with it— that we’ll apply the same thing to the general fund,” said Burbridge. “But, when we did that, we also wanted to come back with the finance committee and revisit this and try to actually develop a policy for our general fund reserve, and get that formally established.”
Burbridge said that a decision by the committee was not needed that night, but that she wanted to get the discussion started with the goal of producing a committee recommendation at a later meeting. She gave the committee some examples of other city’s reserve fund policies to review.
“When we’re talking about a reserve balance, we’re talking about an unrestricted fund balance, so we can use it for whatever it is that we need to use it for. Whatever emergency or financial decision that we need to use it for,” said Burbridge. “So if something happened, catastrophic, you want to make sure that you can cover whatever responsibilities your city has.”
Said Alderman Bolerjack: “I think we need a reserve for the general fund. I wish we had it a couple years ago, to avoid having to use ARPA [American Rescue Plan Act] funds, we got nearly a million dollars, just to balance the budget. We could have used that towards our sewer treatment plant. So, I think this is a great idea to have a policy for a general fund reserve.”
Sisco asked the committee members who were attending via video conference if they had any questions or comments. Nathan Kinsey offered his opinion. In previous years, the city has made large transfers from the utility funds to the general fund in order to balance the budget. Last April, Salem voters approved an additional 1% sales tax to bolster general fund revenue, and according to city officials and staff, that revenue will help reduce the amount of money transferred each year. Kinsey said he had concerns that a reserve fund policy for the general fund might endanger efforts to reduce the transfers and build utility reserves.
“I’m not opposed to the idea of having essentially a reserve account or a backup account if [something] were to go wrong. However, until we get to the point where we aren’t getting so much money from the utility funds, I don’t know that it’s a great idea to start going down that path,” said Kinsey. “Where’s the money coming from that we’re going to replenish to get that account back where it’s going to go? Because if we pull from the utility account, […] I don’t feel that’s the right answer. We’re trying to get that side of the house to where the utility department isn’t giving so much money to the general fund.”
Kinsey said he was concerned that implementing such a policy before the utility transfers were reduced might lead to the same circumstances that placed the city in its current financial situation. Burbridge told the committee that specific language could be included in the policy to prevent such a situation.
“I’m glad you brought that up, Nathan, because that is a thought that I had previously. Neither of these two draft policies address that at all, and these cities may or may not have had their own utilities,” said Burbridge. “Something within our own policy could also say that all utilities, their reserves have to be fully funded. […] There can be language crafted to help safeguard that. Again, it’s kind of at the pleasure of the committee members what you’d like to see in there.”
No action was taken by the committee on the policy; Burbridge asked the committee to review the sample policies and to think about possible recommendations for the next meeting.
Also tentatively discussed during the meeting was a proposed investment policy. According to Burbridge’s summary, the city has had no funds invested for the past few years.
“I think almost all cities invest funds when appropriate. The most common way this happens is usually CD’s [Certificate of Deposit] because they are fairly liquid and you can do them for short periods,” she said.
Burbridge shared with the committee the current investment policy for the city, and said that she and Houston had reviewed it. Burbridge stated that the policy was “lacking” and that it was unknown when the policy was created.
“We are proposing that we need to amend this,” said Burbridge, who also said that she had included policies from other cities for review, as well as the model investment policy released by the office of the State Treasurer.
No action was taken by the committee, and Sisco said that she hoped that the committee members would return at the next meeting with recommendations. The next meeting has not been scheduled yet, but Sisco said it would likely occur in February or March.
