Madison Taking Close Look At Its Rainy Day Fund

MADISON, CT — Madison officials are planning to take a close look at the town's rainy day fund. The good news is that the fund is currently at $13 million, which puts Madison $5 million above the 10 percent that is required by its regulations.

But officials say there is new information that a town's rainy day fund should be closer to 16 percent.

"It has recently come to (the finance director Stacy Nobitz) attention by the rating agencies and the Town’s bond consultant that the 10% amount in the current regulations is currently antiquated. She suggested that the bond consultant be invited to attend a Board of Finance meeting to discuss possibly raising the amount provided for in the regulation. The GFOA is recommending that a municipality hold two months of operating expenses in the unassigned fund balance but for Madison that would be 16% which seems to her to be high.

"She noted that Connecticut is unique because of its reliance on property taxed so she is currently conducting research to see if a different percentage would be more appropriate," according to recent Board of Finance meeting minutes.

The Board members agreed this is an important issue so the bond consultant should be invited to attend the next meeting to provide input.

Board member Bennett Pudlin requested that information on the average unassigned fundbalance by Connecticut towns, especially those most highly rated, be provided for reference.

Nobitz noted that she will share a score card that will highlight the offset of any changes in the unassigned fund balance and the impact on the bond rating. She requested that Board members forward any questions they might have on this issue to her before the meeting so she can make sure adequate information and answers can be provided at the meeting.