The Town of Zionsville conducted a financial policies review in the first quarter of 2024, looking to strengthen internal controls and transparency efforts when it comes to the operating budget. The result is an update of policies and procedures for how funds are organized and spent.
“We have put a strong set of policies in place, and we are committed to following them,” Mayor John Stehr said during the April 6 meeting of the town council.
Cindy Poore, director of Finance and Records for the Town of Zionsville, said one of five areas officially updated this month is the town’s reserve and liquidity policy, intended to maintain appropriate fund balances in order to protect against emergencies, revenue shortfalls and to provide financial stability.
Poore said reserve policy is to maintain a minimum operating balance as a percentage of total annual operating disbursements between 15 and 20 percent.
“This is pretty standard and what our municipal advisors have suggested that we do,” Poore said.
She said the town’s reserves are at 65 percent.
“That’s one of the things that we are addressing,” Poore said. “We’re not going to go out and by next year get that down to 20 percent. That’s what the five-year financial plan is for. We have been saving money for various projects. Departments are presenting these projects to be put into the five-year financial plan, and you’ll be able to see the plan of those projects and the spend-down. So, it’s a gradual process, but the 15 to 20 percent is what we have in our policy as a minimum.”
Poore said Zionsville has enough stable sources of revenue, such as property taxes, so there is not a strong need to reserve above the 15 to 20 percent mark. Council members agreed but were hesitant to reduce the amount of money currently in reserves too quickly.
“I do believe that 60 percent is heavy,” said Councilmember Craig Melton. “I believe that Zionsville is coming into the next phase of its growth and life with this council, with the next council, I believe that we’re going to see this huge growth. I would hate to see us spend money that we could use on some of that expansion and growth. But I think 60 percent is high.”
Councilmember Joe Stein said the previous council was diligent in its reluctance to spend, because of financial uncertainty at the time. In 2022, an audit by the State Board of Accounts of the Town of Zionsville’s finances found several areas of noncompliance with state law, including a lack of proper internal controls that led to bank reconcilements not being completed on time or accurately and overdrawn cash balances in three funds. Town leaders at that time blamed the issue on implementation of new financial software, as well as disbursements from the Town Hall Improvement fund for renovations that were made prior to council approval.
Stein said he would like to see the town move forward with the new reserves policy with caution.
“I would like to exercise caution until we have a clean bill of health from the audit,” Stein said. “I think we’d be making a mistake to (reduce the reserves) now then find out that we’re out of balance or something is awry. This isn’t an accusation. I just think we’d be right to wait to right-side the balance until we know that we’re good.”
Poore said there’s not a solid timeline for when the town would reduce reserves to 15 to 20 percent. She said Zionsville is in the process of creating a five-year financial plan.
“With a financial plan in place, this will show the plan and the spend-down for capital funds,” Poole said. “So, it will be a clear picture for the timing of the spend-down for the capital funds.”
Although the policies do not need council approval for implementation, they will come before elected officials for review in June.
“All of these policies not only help with town functionality when it comes to finance, but it’s a positive step forward for future audits and for regaining the town’s credit rating,” Poore said.
The new policies were added to the town’s website for review by residents. Policies can be viewed at zionsville-in.gov/760/Financial-Policies-Overview.
