Reserve funds emptied, to start fresh in 2015

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December 18, 2014 9:03 AM

The majority of the reserve funds that have been in place for years were emptied at Monday night’s city council meeting, in a move to correct old accounting oversights.

Nicole Reiniger, the director of finance, said that her department is cleaning up the reserve accounts to start fresh and hoping to work with council in the future in setting policy in place that will be used to create and manage reserve funds.

“Over the last number of years, there has been money that has been set aside, there are an exorbitant amount of reserve accounts somewhere in the neighbourhood of 35 reserve accounts,” she said.

“Somewhere over the last five to seven years, the annual transfers weren’t happening out of the reserve accounts.”

She added that she, along with finance administration, is trying to establish new reserve levels in the city.

“We want to see how we are going to proceed and how council wants to see us fund those reserves,” she said, adding that this will be a clean slate for the city when it comes to the reserve accounts.

Reiniger said that the transfers that didn’t happen over the past number of years are one of the main reasons to start fresh.

“Most of the reserve money did go to capital projects within the city,” she said.

“We have built an operations building that was through the MSI (Municipal Sustainability Initiative) funds. Those funds are coming in and cash-flowed out the front and by the time we get to 2016, those funds will be back into our hands.”

Reiniger said that some of the projects that council has moved forward with, in the past, have been funded by borrowing money, instead of using the reserve funds.

“We had approved borrowing on the Multiplex, when it was being built, but we never did borrow any money, so there was $7.5 million that we cash flowed that we could have borrowed at that time.

“The sewage treatment, at $4 million could have been borrowed as well, but we cash flowed that as well.”

She said that a number of incidents like that happened that cash could have been borrowed, instead of using cash.

“We had a number of off-site projects as well, those are projects that include third parties and developments.”

Those off-site developments should have been funded through the reserves, according to Reiniger, but those transfers didn’t take place she said.

“At the end of the day, we had $29 million in projects that the city had funded and needed to happen, and we didn’t do the accounting entry to move it out of the reserve account, and put it back into the city surplus,” she said.

Reiniger said that the city is now getting caught up on the accounting error, which will put them in a good position going forward.

According to Reiniger, approximately $21 million will be removed from reserve accounts and put into the city surplus.

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