Just weeks after learning of a possible surplus in a Lansdale Township bank account, officials say not so fast.

“We are still working through the 2022 audit results as 2023 is not yet complete. This will be an ongoing discussion over the next few months as we conduct further investigations,” said Councilwoman Carrie Oglesby.

In July, the City Council heard a report from the city’s new finance director, who said he was developing new guidelines for the city’s cash balances, outlining how much the city should hold in reserve for its general fund and/or other corporate funds, such as the separate accounts for the electric plant and the wastewater treatment plant.

The finance director said at the time that the Government Finance Officers Association recommends that cities keep about 35 percent of their annual operating expenses in reserve in case of an emergency such as the COVID pandemic or a sudden need, and based on 2022 numbers, Lansdale’s general fund balance is much higher.

That discussion is still ongoing, Oglesby reported after the last meeting of the Administration and Finance Committee on August 7. Staff are working to complete the 2023 audit in the next few weeks and determine whether any portions of those reserves have already been allocated, including as an equivalent to grants for projects funded elsewhere.

“The GFOA standard is 35 percent, and we wanted to be cautious and reach 40 percent in the general fund policy. We don’t have a policy, so the first thing we need to do is build a policy,” she said.

“Then we have to focus on how much the council wants to put into this policy. And not just from the general fund: We have money from other departments as well: electricity, wastewater treatment – are those funded? Are they at the right level?” Oglesby said.

Councilman BJ Breish said that as chair of the Public Works Committee, he has spent years in discussions about paving, pipe replacement and sinkhole repair projects throughout the township that could cost tens of millions and require long-term bonds to finance them.

“We are $20 million behind on repairs to roads and critical infrastructure that we own and cannot maintain. So even when we ‘found’ money, it was spent. We have projects that we want to do,” he said. “We don’t have too much money.”

Council President Mary Fuller added that implementing the reserve guidelines and strictly adhering to them could ultimately lead to savings if the city does indeed want to borrow.

“I think this will make us more effective, more efficient and more financially sound. It will also give us a better chance of getting a higher credit rating should we move in that direction,” she said.

Councilman Rich DiGregorio asked why staff had not noticed the large general fund surplus during the tenure of the city’s four finance directors since late 2020. District Manager John Ernst said turnover could be part of the reason.

“Every time a finance director comes on board, he brings his own policies and procedures. And I don’t think we’ve really had a sense of where we stand financially over the last two years, with all the changes,” Ernst said.

“Perhaps on several projects the funds were not fully used even though we had allocated them. So at the end of a project there was money left in accounts that was never reconciled. We reconcile all of those numbers,” he said.

As part of that process, the manager said, staff is looking to see if any accounts have become “dormant, for lack of a better word,” and could be merged or consolidated to make financial tracking easier and more transparent. One example: About $850,000 was allocated as the district’s own contribution to the East Main streetscape project, which has finally begun, stemming from a 2014 federal grant.

“The money could have been fully allocated, and we were aware of it, and we thought it was part of this pool, but it looked like part of that pool — it still takes some research to figure that out,” Fuller said.

In recent years, Breish said, he has reviewed the annual municipal budget and examined each item for possible savings in order to keep any tax increases for citizens as low as possible.

“I’ve been going line item by line item trying to find the money so we can balance the budget and not have to raise taxes. And I’ll do it again every time this conversation comes up. But we haven’t seen that,” he said.

“If there is money out there, it needs to go to fixing the roads and the infrastructure. It needs to go to many of these projects that we already have underway that are immediately actionable and that we need to integrate into the existing infrastructure,” Breish said.

Selling shares could help

Staff have also discovered a potential asset that could have a one-time impact on the city’s bottom line: about $160,000 worth of shares in the financial company Prudential, which the municipality has held since the late 1980s.

“We would like to go ahead and sell those shares because the community is not in the private equity business,” Oglesby said.

Fuller added that the shares “were not something the community ever bought, it was not something they chose to invest in,” but rather they received them when funds left over in a policyholder account from the company’s IPO were converted into shares.

“The municipality does not engage in any speculative business of this kind, so the committee recommends that we proceed with the liquidation of these shares,” she said.

The Lansdale Borough Council will next meet on August 21 at 7:00 p.m. and the Administration and Finance Committee will next meet on September 4 at 6:30 p.m., both at the Borough Hall, 1 Vine Street. For more information, visit www.Lansdale.org.

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