Title
Be it ordained by the Malden City Council that the Code of the City of Malden (MCC) Title 3 REVENUE AND FINANCE is hereby amended by adding 3.10 RESERVE AND STABILIZATION FUND FRAMEWORK
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3.10 RESERVE AND STABILIZATION FUND FRAMEWORK
3.10.01 Purpose
The purpose of this Section is to establish a consistent framework for the establishment, administration, funding, review, and use of the City of Malden's stabilization funds and other designated reserves.
The framework is intended to promote long-term fiscal stability, provide appropriate resources for unforeseen or extraordinary financial needs, support prudent pay-as-you-go funding of eligible capital needs, and establish a regular process for reviewing the City's reserve position and making annual funding recommendations.
3.10.02 Authority
This Section is established pursuant to applicable provisions of Massachusetts General Laws, including M.G.L. Chapter 40, Section 5B, and other applicable law governing municipal stabilization funds, appropriations, and financial administration.
Ordained by a vote of the Malden City Council on October XX, 2026 with Paper #___ adopting the local option of M.G.L. c. 40, s. 5b to establish the city’s General Purpose Stabilization Fund and Paper #___ adopting the same to establish the city’s Short-Term Capital Needs Special Purpose Stabilization Fund
Nothing in this Section shall be construed to limit or supersede the statutory or charter authority of the Mayor or City Council, including the City Council's authority to appropriate funds as provided by law.
3.10.03 Applicability
This Section shall govern the City's General Purpose Stabilization Fund and Short-Term Capital Needs Special Purpose Stabilization Fund established by the City Council pursuant to M.G.L. Chapter 40, Section 5B, and such other reserve funds as may subsequently be established by the City in accordance with applicable law.
The detailed financial standards, target balances, funding methodologies, eligible expenditures, and other operating guidelines governing these funds shall be established through the City's Reserve and Stabilization Fund Policy.
3.10.04 General Purpose Stabilization Fund
The General Purpose Stabilization Fund shall serve as a financial reserve for the City's long-term fiscal stability and may be used for lawful municipal purposes consistent with M.G.L. Chapter 40, Section 5B.
The Fund is intended to provide financial capacity to address unforeseen emergencies, significant revenue shortfalls, economic or fiscal disruptions, extraordinary one-time expenditures, and other circumstances for which the use of reserves is determined to be appropriate.
3.10.05 Short-Term Capital Needs Special Purpose Stabilization Fund
The Short-Term Capital Needs Special Purpose Stabilization Fund shall provide a dedicated source of funding for capital assets, equipment, infrastructure, and major component replacements that are appropriately financed on a pay-as-you-go basis rather than through long-term borrowing.
The Fund shall be used only for purposes consistent with its designation as a special-purpose stabilization fund and shall not be used for recurring operating expenditures.
3.10.06 Annual Funding Recommendation
The Mayor, through the City's financial management team, shall annually review the City's reserve position and shall make a funding recommendation to the City Council for the stabilization funds.
The annual recommendation shall consider, at a minimum, the City's current reserve balances, certified Free Cash, financial condition, revenue and expenditure trends, anticipated fiscal risks, capital needs, debt position, and the City's Reserve and Stabilization Fund Policy.
The annual recommendation shall be submitted to the City Council in connection with the City's annual review of certified Free Cash and stabilization fund balances.
Nothing in this Section shall require the Mayor to recommend a particular amount or percentage for appropriation in any fiscal year. Any appropriation shall remain subject to applicable law and the respective authority of the Mayor and City Council.
3.10.07 Annual Reserve Review
Within sixty (60) days following certification of Free Cash by the Massachusetts Department of Revenue, the Mayor, through the City's financial management team, shall conduct an annual review of the City's reserve position.
The annual review shall include, at a minimum:
a. The balance and recent activity of each stabilization fund;
b. The City's certified Free Cash and other available unrestricted resources;
c. The City's current and anticipated fiscal conditions and risks;
d. Anticipated capital and other one-time financial needs;
e. The City's debt position and debt capacity;
f. The City's Reserve and Stabilization Fund Policy and any recommended changes; and
g. The Administration's preliminary funding recommendations for the stabilization funds.
3.10.08 Annual Financial Management and City Council Review
Within sixty (60) days following certification of Free Cash by the Massachusetts Department of Revenue, the City's financial management team may meet with the City Council to provide an update and overview of the City's reserve position and stabilization funds.
The annual presentation may provide an opportunity to review:
a. The purpose and intended use of each stabilization fund;
b. Current fund balances and activity;
c. The results of the annual reserve review;
d. The City's Reserve and Stabilization Fund Policy and any applicable changes or updates;
e. The City's financial condition, anticipated risks, and capital needs; and
f. The Administration's funding recommendations and the financial considerations supporting those recommendations.
3.10.09 Administration
The City's financial management team, under the direction of the Mayor and in accordance with applicable law, shall be responsible for the ongoing financial administration and monitoring of the stabilization funds.
The City Treasurer shall maintain appropriate accounting records for each stabilization fund and shall administer the funds in accordance with applicable Massachusetts law and City financial policies.
3.10.10 Appropriations and Use of Funds
Appropriations from stabilization funds shall be made only in accordance with applicable Massachusetts law, the purpose for which the applicable fund was established, and the City's Reserve and Stabilization Fund Policy.
Nothing in this Section shall be construed to create an automatic appropriation, transfer, or expenditure authority. All appropriations shall remain subject to the legal authority and procedures applicable to municipal appropriations.
3.10.11 Reserve and Stabilization Fund Policy
The Administration shall maintain a Reserve and Stabilization Fund Policy establishing the City's detailed financial standards and guidelines for the management of reserves and stabilization funds.
The Policy may establish, among other matters, target reserve levels, funding methodologies, recommended annual contributions, conditions for the use of reserves, procedures for evaluating extraordinary circumstances, and reporting requirements.
The Policy shall be reviewed periodically by the Administration and may be updated as necessary to reflect changes in the City's financial condition, applicable law, financial practices, or municipal priorities.
3.10.12 No Limitation on Statutory Authority
Nothing in this Section shall be interpreted to diminish, restrict, or transfer any authority granted by Massachusetts law or the Malden City Charter to the Mayor, City Council, Treasurer, or any other City officer or body.
This Section establishes a financial-management framework and shall not be construed as requiring the City Council to appropriate any particular amount, requiring the Mayor to make any particular appropriation recommendation, or otherwise limiting the lawful discretion of the Mayor or City Council.