Page 279 - CityofSouthlakeFY26AdoptedBudget

Strategic Initiative Fund

The Strategic Initiative Fund (SIF) was created in FY 2006 for the purpose of taking General Fund
balance reserves in excess of the City identified optimal fund balance level and using them for one-time
expenditures for high-impact projects such as infrastructure maintenance, community enhancement,
technology and capital acquisition.

The City of Southlake is recognized for its strong financial management as evidenced by the assignment
of ‘AAA’ ratings by both Standard and Poor’s (S&P) and Fitch Rating Services and a Aaa from Moody’s. Strategic Initiative Fund
Three ‘AAA’ ratings put the City into a small and elite group of municipalities that enjoy the highest
possible credit ratings assigned from all rating agencies.

In the most recent credit report issued, S&P noted:
“The rating reflects our opinion of Southlake’s:
• Robust economy in the Dallas-Fort Worth MSA with local income metrics that are significantly above
county and national metrics;
• Well-embedded management policies and practices, highlighted by monthly budget-to-actual
reports, quarterly investment reports, and comprehensive long-term financial and capital plans that
are incorporated into the budget; and cyber security practices in line with those of peers;
• Stable financial performance even with the inclusion of sizable transfers out for capital, coupled with
the maintenance of reserves in excess of its formal fund balance policy;
• Manageable debt profile with rapid amortization, with additional debt issuance plans that we don’t
believe will be meaningful, coupled with manageable pension and other post employment benefit
obligations that represent a relatively small amount of total expenditures.”

The Fitch Rating report notes, “Robust planning and prudent cost management support maintenance
of a strong financial position... Fitch expects Southlake to demonstrate exceptionally strong financial
resilience during an economic downturn, consistent with past performance. The ‘aaa’ resilience
assessment is informed by the city’s revenue raising capabilities, solid expenditure flexibility and ample
financial cushion.”

The Moody’s report details why the City’s credit rating was upgraded to Aaa, and states “The upgrade
to the Aaa Issuer Rating reflects...a steady history of robust reserves supported by multiple years of
strong operating performance. The Aaa rating incorporates the city’s modest debt and pension burden
that will remain affordable supported by a stable local economy, and prudent financial practices.” One of
the innovative tools that the City uses to help manage our strong financial performance is the Strategic
Initiative Fund, also referred to as the SIF.

FY 2026 City of Southlake | Budget Book 279