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Reserves: What Every Board Member, General Manager, Finance Staff AND Taxpayer Should Know

By Tom Scaglione, MBA, CPA, Chief Administrative Officer, Grossmont Healthcare District

Finance professionals write policy guidelines for finance professionals. Financial professionals write policies for normal people. Finance professionals are not normal. No offense intended.

The point is that very few, if any, of your special district constituents are finance professionals. You as a Board Member, GM, or CFO may know what is meant by “designated fund balance,” “GAAP,” “GASB 54,” “unrestricted classifications,” and “Net Position,” but those are not the kind of words your constituents understand, nor that should be written into your policies. Normal people know “money,” “cash,” “investments,” “monthly expenses,” “budget,” “$1 million,” “$10 million,” “$50 million.”

Some policy writers confuse Government Finance Officers Association Fund Balance Guidelines and Government Accounting Standards Board Statement Number 54 for reserve policy guidelines. They are standards and guidance for reporting the difference between assets and liabilities on a balance sheet, and there is no need to communicate accounting standards to constituents concerned about how much of their money you have and what you intend to do with it.

The reserve policy is more intuitive and too individualized to be dictated by pervasive standards. How much money do you need to set aside and for what purposes? How do you determine the amounts to set aside? How do you fund what you set aside? And what are permissible uses of the money you set aside? Answer those questions in plain, nonaccounting language, and you have an effective reserve policy.

During the session, “Reserves: What Every Board Member, General Manager, Finance Staff AND Taxpayer Should Know” at the 2023 CSDA Annual Conference, participants will be reviewing real-life special district reserve policies (agency and author names redacted) to consider policy provisions worthy of imitation and those to avoid.

One agency (to be discussed and remain nameless) has a simple two-paragraph reserve policy with a total reserve maximum of “six months of average general fund expenditures,” an operating budget of $2 million, and unrestricted cash and investments on their audited balance sheet of $55 million. There may be good reasons to have $54 million in excess of your operating reserve maximum, but those reasons need to be justified, categorized, quantified, and communicated in the policy. No agency wants to invite undue scrutiny by constituents, advocacy groups, or oversight agencies like the Little Hoover Commission.

Another agency (to be discussed and remain nameless) uses capital acquisitions as reported in audited financial statements as far back as the Eisenhower administration to predict future capital replacement costs for their capital replacement reserve without regard to asset condition or even if the assets still exist. Reserves are for the future and reserve methodologies need to be forwardlooking. Your district engineers put a great deal of thought and planning into capital replacements requested in the budget. Use a methodology that involves adopted budget requests or valid commitments and obligations for your reserve policy, not ancient and irrelevant history.

Some areas of your reserve policy help ensure compliance with regulations and covenants, as with restricted debt service funds. Other areas help navigate strategies for effective financial planning like managing debt service coverage with a well-written rate stabilization fund provision.

Special districts rise to the level of “Gold Standard” when their policies are worthy of imitation. Is it time to review your agency’s policies to ensure they are structured for their intended audiences?

Future-Ready Influence: A Heart-Centric Approach to Transformational Leadership

By Seth Mattison, CEO and Founder of FutureSight Labs

In today’s rapidly evolving landscape, the nature of work is undergoing a profound transformation. Technological advancements, shifting demographics, and the demands of an interconnected global economy are reshaping the way we work. As traditional models and structures evolve, organizations find themselves in need of future-ready leadership to navigate the complexities of this new era. The moment requires a deep understanding of both the science and the human aspect of leading, especially during periods of deep uncertainty and hyper transformation like we face today.

Traditionally, a good leader was someone who could inspire a team, boost productivity, command respect, and ultimately deliver results. What these qualities often failed to achieve though was tapping into the human connection element required to unlock the dormant and unmet potential of people.

The challenge arises as our new ways of working blur the boundaries between our work and home lives. As our mental health declines and lack of connection to organizational culture continue to accelerate, it’s becoming more important than ever for leaders to take a humancentered and heart-led approach by putting people first. But what exactly does this approach to leadership look like and what could it mean for you, the team, and the organization?

In short, human-centered, heart-led leadership can be defined as prioritizing people at the forefront of leadership. It goes beyond a mere catchphrase, and its practical implications hold immense value.

Being human-centered entails recognizing and appreciating individuals for their unique qualities and honoring their personal circumstances. In the realm of work, this translates into perceiving employees as human beings, not just job titles. It involves compassion and active listening to extend support whenever required.

What it doesn’t mean is lower standards of excellence or minimizing accountability. Putting people first means calling people up to their place of highest potential. It means establishing a culture of ownership and bias for action while balancing the pressures of home life. And the impact extends beyond improving humans lives to driving bottom line results.

In fact, new data reveal that employees who feel cared for and connected to others at work are:

• 3.2x more likely to be happy at work

• 3.7x more likely to recommend working for their company

• 93% are motivated to do their best at work

• 88% reported feeling engaged

So how do we activate a human-centered, heart-led approach to our leadership practices?

We can start by:

Cultivating Emotional Intelligence and Strengthening Connections:

Emotional intelligence forms the foundation of effective leadership, enabling leaders to connect with their team members on a deeper level. By incorporating the following tips, leaders can enhance their emotional intelligence and forge genuine connections within their teams.

• Practical Tip 1: Active Listening and Empathy: Practice active listening and demonstrate genuine empathy. Create a safe space where team members can openly express their concerns, fears, and aspirations. By actively listening and empathizing, leaders validate the emotions of their team members and foster trust and psychological safety within the team.

• Practical Tip 2: Transparent Communication and Authenticity: Communicate openly and transparently, sharing the vision, objectives, and challenges with your team. Be honest about the realities, setbacks, and potential risks. This transparency builds trust and inspires confidence in your leadership. Combine this with authenticity, showing your true self and encouraging open dialogue. This authenticity fosters connection and helps team members feel comfortable sharing their thoughts and ideas.

Recognizing and Valuing Contributions:

One of the great drivers of human connection can be found in the power of recognition to motivate and engage team members. By incorporating the following insights, leaders can create a culture of appreciation that fuels enthusiasm and fosters a deep sense of belonging, which according to research is our collective highest held value in United States.

• Practical Tip 1: Tailored Recognition: Customize recognition to individual preferences. Some team members may appreciate public praise, while others prefer a more private acknowledgment. By personalizing recognition, leaders show their genuine interest in the well-being and preferences of their team members, strengthening the bond between leader and employee.

• Practical Tip 2: Timely and Meaningful

Appreciation: Offer genuine and timely recognition. Regularly acknowledge the accomplishments and efforts of your team members, whether it’s a public commendation during a team meeting or a personalized note of appreciation. Genuine recognition reinforces positive behavior and fosters a culture of gratitude, motivating individuals to perform at their best.

Unleashing Potential with Empowerment and Heart:

To be a truly future-ready leader, trusting and empowering others to do their best work is required. While it can be hard at times to let go and give up control, for others to flourish and tap into their unmet potential, empowerment is required. By activating these strategies, leaders can create an environment where team members feel valued, understood, and trusted to do their best work.

• Practical Tip 1: Develop Emotional Intelligence and Self-Awareness: Cultivate self-awareness and emotional intelligence. Understand your own emotions, triggers, and biases, allowing you to manage your responses effectively and recognize when holding on to tasks, responsibilities, and titles for fear of giving up control limits the team’s development and long-term growth.

• Practical Tip 2: Empower and Activate Others: Empowering others to make decisions and drive outcomes is a catalyst for remarkable impact. When we trust and enable individuals to take ownership of their work, we unlock their full potential and foster a culture of innovation and collaboration. By empowering others, we create an environment where diverse perspectives are valued, and creativity flourishes. This approach not only distributes leadership responsibility but also nurtures a sense of ownership and accountability among team members. As a result, we witness increased engagement, higher levels of motivation, and ultimately, the collective achievement of exceptional outcomes.

The heart of leadership in our new world of work lies in our ability to inspire and influence others through genuine connections, transparent communication, and a deep understanding of the human experience. And together we’ll usher in a new era of work.

Opening Keynote Speaker: Seth

Mattison

CEO and Founder of FuturSight Labs

The Heart of Leadership: The Secret & Science to Influencing & Leading During Transformation

August 29, 2023