Commission Adopts General Fund Balance Policy to Strengthen Financial Stability

Jul. 28, 2025—At its July 15 meeting, the City Commission adopted an updated General Fund Balance Policy aimed at reinforcing the City’s long-term financial health and resilience.

The General Fund is the backbone of the City’s day-to-day operations, supporting essential services like public safety and public works. A healthy fund balance or operating cash reserve ensures financial stability, provides for unanticipated expenditures, mitigates revenue shortfalls, supports cash flow needs, and maintains the City's creditworthiness.

What changed? The main change to the policy, recommended by the City’s Budget & Finance Committee, allows the City to maintain the minimum fund balance or operating cash reserve at 25% of the annual operating expenditures. Prior to the change, the City maintained a minimum fund balance or operating cash reserve at 17% --a percentage consistent with the Government Finance Officers Association best practice which recommends no less than two months of operating expenditures.

“Due to the recent passage of North Dakota House Bill 1176 which created a property tax cap, local governments in the state may need to find other revenue sources or to utilize fund balance or operating cash reserves to pay for essential public services on an annual basis,” says Finance Director Greg Welch. “Consequently, the property tax cap could impact the bond rating for local governments in North Dakota since available fund balance and cash reserve ratios comprise a significant portion of a local government’s credit rating.”

Why does this matter? The goal of this policy change is to strengthen the City’s current credit rating by increasing the minimum reserve percentage in the General Fund due to the uncertainty on how the credit rating agencies will view the limitation of property tax collections for local governments in North Dakota.

By maintaining its credit rating, the City is able to borrow funds in the bond market at the lowest possible cost –which in turn benefits property owners for their special assessment projects through lower interest rates from the City.

This policy reflects Mandan’s commitment to fiscal responsibility and proactive planning. By setting clear guidelines and maintaining practical reserves, the City is better positioned to serve residents today and in the future.

To view the full policy see the agenda packet from the July 15 City Commission meeting at cityofmandan.com/meetings, or request a copy from the Finance Department at 701-667-3215.
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