TWO COUNCILMEN QUESTION EMERGENCY RESERVE FUND

At least two city councilmen are perplexed that money for Cape Girardeau's emergency reserve fund is not sitting in a bank and immediately accessible in the event of a disaster or other crisis.

Councilmen Richard Eggimann and Jay Purcell say they believe emergency reserve money should be in a separate account that can be accessed on a moment's notice instead of being in accounts used for operating expenses.

"If I have an emergency fund for myself, it's in the bank separate from anything else," Eggimann said. "If it's in the regular, normal money area in my general fund, in a sense, I'd be afraid I'd spend it or offer it up to buy a new car or what have you."

For years, city finance officials have inferred from language in the city's charter that the fund, which was established in 1996, does not have to be set aside in a separate account and can exist in the form of fund balances as opposed to cash on hand.

The emergency fund is to be used for crises such as earthquakes, floods or storms, provided the mayor and city council unanimously declare a state of emergency.

The emergency reserve fund currently has about $4.9 million, roughly 15 percent of total city operating expenditures of $32.8 million.

Charter requires fund

Cape Girardeau's charter called for officials by 1999 to build up an emergency reserve fund equal to 15 percent of the city's operating expenditures.

Finance director John Richbourg said the emergency fund money is used to pay for various operating expenses and flows in and out of city coffers instead of sitting in a bank.

The fund accounting also includes receivables, some of which may be temporarily outstanding at any given point.

"Most of these are receivables from the state of Missouri that would be paid within the month," Richbourg said, explaining that in the event of an emergency the city likely would charge all purchases as opposed to paying cash, alleviating much of the need to have immediate access to a cash account.

But Eggimann, who said he is somewhat confused by the accounting, believes the emergency money should be separate and untouchable until an emergency is declared. He said the current procedure defeats the purpose of designating an emergency fund in the first place.

Differing views

"My understanding was that the money would be in the bank eventually over a period of time and building the fund up," he said, "even though it seems like some of our legal people have looked at it differently."

Eggimann said, however, that he does not believe the current accounting practice is wrong or illegal. Eggimann and Purcell suggested during Monday night's city council meeting that the fund be built up gradually, a half percent or percent at a time.

Richbourg said such a plan likely would require the city to budget a surplus or cut services.

"Right now to do what was discussed you'd have to budget a surplus to get to the point where they'd have enough cash to do it," he said. "Right now we've got balanced budgets, but they're tight budgets."