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Memorandum
South King Housing and Homelessness Partners
SUBJECT: Reserve Policy
SUMMARY
Several options of interest were discussed at the March 21, 2025 SKHHP Executive Board Meeting regarding
the use of interest earned in 2024 and ongoing. The preferred choice of the Board was to establish a reserve
policy which sets aside a portion of the funds to be used to mitigate the impacts of a recession or for larger,
unanticipated expenses with the remaining interest being applied to the annual funding round of the SKHHP
Housing Capital Fund. The Board further discussed the options on April 18 and May 16, 2025.
BACKGROUND
From 2019 to 2023, contributions to SKHHP in the operating and capital fund accrued $153,529 in interest. To
spend interest earnings requires the approval of each SKHHP member council with allocated earned interest
based on their contributions. In 2024, this was done through the annual work plan and budget adoption
process and member councils gave their approval for the use of these funds to be applied to SKHHP’s
operating fund balance. Interest earned in 2024 on all SKHHP funds totaled $540,377. At the March 21, 2025
Board meeting, the Board provided direction that the preferred option was a reserve policy that would put a
percentage of expenditures into reserve and the remaining would be applied to the Housing Capital Fund. At
the May 16, 2025 Executive Board meeting, the Board adopted Option 3 below and $501,975 was allocated
towards a reserve. To spend the reserve does not require approval of the member City Councils as they have
already provided their authorization to use the funds towards an unrestricted fund balance int reserve. The
Executive Board should provide support and weigh in on the use of the reserve.
POLICY OPTIONS
1. Adopt policy that applies annual interest earnings to maintain equivalent of 30% of annual
expenditures in reserve and apply remaining to SKHHP Housing Capital Fund.
a. Reserve in 2026: $150,593
b. Housing Capital Fund 2025: $389,784
2. Adopt policy that applies annual interest earnings to maintain equivalent of 60% of annual
expenditures in reserve and apply remaining to SKHHP Housing Capital Fund.
a. Reserve 2026: $301,185
b. Housing Capital Fund 2025: $239,192
3. Adopt policy that applies annual interest earnings to maintain equivalent of 100% of annual
expenditures in reserve and apply remaining to SKHHP Housing Capital Fund.
a. Reserve 2026: $501,975
b. Housing Capital Fund 2025: $38,402
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TABLE 1: Aggregated Allocation of Interest Earned from 2024 and Beyond by Policy Option
Policy
Option Total
2026
Housing
Capital Fund
Increase in
Reserve 2027
Total 2027
(est.)
Housing
Capital Fund
30%
Expenses
in Reserve
higher $ HCF in
2025; ongoing HCF
Expenses
in Reserve
between reserve $
and HCF $ in 2025;
Expenses
in Reserve
lower $ HCF in 2025;
ongoing HCF similar
*Note: Assumes a conservative estimate of 2025 interest earnings totaling $200,000 to be applied to the 2027
reserve and 2026 Housing Capital Fund round.
As shown in Table 1, applying the interest earnings from 2024 to reserve 30% of expenses in 2026 with the
remaining contributed to the 2025 Housing Capital Fund funding round, would allocate less funds towards the
reserve and more towards the Housing Capital Fund in the first year (Option 1). Applying interest earnings
from 2024 to reserve 60% of expenses in 2026 with the remaining contributed to the 2025 Housing Capital
Fund funding round, would allocate a similar amount between the two with slightly more going towards the
reserve (Option 2). Applying interest earnings from 2024 to reserve 100% of expenses in 2026 with the
remaining contributed to the 2025 Housing Capital Fund funding round, would allocate most of the funds
towards the reserve with less funds going towards the Housing Capital Fund. Ongoing, all options would result
in similar amounts being allocated to the Housing Capital Fund.
Since spending the interest earnings from 2024 requires the approval of each member jurisdiction with
allocated interest, the Executive Board would make a recommendation on use of funds as part of the 2026
work plan and budget development process. The reserve amount would be listed in the operating budget as
“Reserve” and would be considered an unrestricted fund balance in reserve. This means that the Executive
Board could use those reserve funds for any purpose it deems appropriate without the need for approval for
that specific purpose by the member Councils, since those member Councils would already have provided their
approval. For the funds allocated to the Housing Capital Fund, use of those funds would follow the same
process in place and would be added to each member jurisdictions’ Housing Capital Fund balance.
Ongoing each year, the incremental difference between the amount in reserve and the amount needed to
maintain the adopted percentage in reserve would be allocated to the reserve. The remaining amount would
be allocated to the current years’ Housing Capital Fund funding round. During the future annual budget
development processes, the Board would have the opportunity to weigh-in on the policy and adjust as desired.
APPENDIX
• Interest Earned by Jurisdiction 2024
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APPENDIX
TABLE 2: INTEREST EARNED BY JURISDICTION 2024
$28,512
$13,489
$31,298
$5,767
$24,417
$352,134
24,013
$734
$39,001
14,408
$6,603
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