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The Office of the Chief Financial Officer on the Importance of Reserves

Thursday, March 21, 2024

The responsibility of the Office of the Chief Financial Officer (OCFO) is to manage the District’s financial operations and maintain its financial stability. The OCFO does not make decisions about which, or by how much, a program is increased or reduced. These decisions are made by the elected leadership.

For the District, Reserves serve two important purposes: to pay costs resulting from emergencies; and to pay routine bills during a fiscal year. Approximately 10 and 15 percent of the Reserves are set aside for emergencies. The remaining 85-90 percent act as “working capital” during a fiscal year. Therefore, these funds do not sit idly in a “savings account” collecting interest.

The availability of Reserves is particularly important during the FY 2025 – FY 2028 financial plan because the District will spend roughly $2.3 billion or approximately half of its accumulated fund balance during the period, leaving only the Reserves to address both routine and unexpected obligations.

To ensure the District has sufficient cash to meet its obligations in the future, a full replenishment of Reserves must occur before FY 2028.