The City of Fair Oaks Ranch on Oct. 2 reviewed an updated Financial Management Policy that consolidates and clarifies the city’s budgeting, accounting, debt and reserve practices and adds a standalone Debt Management Policy and a Fund Balance Reserves Policy.

Summer Fleming, director of finance, said the revisions refine language for clarity, add internal controls monitoring and quarterly financial reporting, and formalize long‑term planning and capital replacement schedules. Fleming said the city’s investment policy required no change and noted the updated financial management policy includes a “basis of budgeting,” encumbrance accounting language and expanded guidance on grants, donations and surplus property.

Key recommendations in the proposed reserves policy include splitting the general‑fund reserve into an emergency reserve equal to four months of operating expenditures and a budget stabilization reserve equal to two months (together equal to the council’s prior six‑month target). For the utility (enterprise) funds, staff recommended a six‑month operating reserve rather than the existing one‑year target; staff said the utility can respond more quickly to revenue shortfalls via rate adjustments.

The draft debt policy sets standards to limit borrowing to capital assets and infrastructure, avoid balloon payments, preserve debt-service coverage for self‑supporting debt, and favor pay‑as‑you‑go financing when possible. The city’s financial advisor, Samco Capital, has reviewed the draft and is comfortable moving forward. Staff will return a resolution for formal adoption at the Oct. 16 meeting and asked council whether additional clarifications were needed before bringing the resolution forward.