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Are Apopka's reserve funds insured?


In Apopka, we are moving from budget workshops and establishing the millage rate to a much deeper dive into the budget in September. One major topic that is always at the forefront of the conversation is our reserves.

Do we have enough? Too much? What event SHOULD trigger the use of reserve funds?

Municipalities traditionally implement a policy establishing how they will maintain their reserve fund. These policies help maintain a stable revenue structure, implement services to the residents of the municipality and establish a process for using any reserve funds should there be a need.

Locally, one topic of discussion has come up more than in other municipalities: are our reserves insured? In short, yes.

Currently, the FDIC (Federal Deposit Insurance Corporation) has a coverage limit of up to $250,000 per account/owner/ownership category at each insured bank. The City of Apopka currently has its reserve and operating funds deposited across three banks and seven different accounts. As of September 30, 2021, the largest deposit was with Synovus Bank in the amount of $62,727,252.22 as of August 4th. That $62M+ is well above the FDIC coverage limit, so how are our public dollars insured against the default or insolvency of a bank? The State of Florida has a statute that details how those funds are insured, Chapter 280, F.S.. Chapter 280, F.S. states that all public funds must be deposited with a qualified public depository (QPD).

To be a QPD, the depository/bank must: have a branch office in Florida, have FDIC deposit insurance, meet the requirements of Chapter 280, F.S. and be designated by the Florida Chief Financial Officer (CFO) as a QPD.

Once a bank is a QPD, they may start to accept deposits of public (municipal) funds. Once received, the bank must file monthly and annual reports to the Florida CFO stating the amount in the account(s).

Additionally, should the QPD become insolvent or default, a claim must be made to the Florida CFO using those same reports. Once all of those hurdles are overcome, the Florida CFO and the QPD enter into an agreement called a collateral agreement.

Basically, the funds that are deposited that exceed the FDIC coverage limit of $250,000, are insured through this agreement by collateral that is pledged to cover those funds should there be a default. That pledged collateral has to be perfected, meaning liens or encumbrances cannot be attached to that collateral. It can only be committed to cover the funds that are being insured under the collateral agreement.

That is a detailed explanation to state what was referenced in the first paragraph: yes our funds are fully insured. I am sure what will be discussed next month during our additional budget meetings are the level of reserves necessary for the City of Apopka. Make sure to tune in on Youtube or in person at Council Chambers on September 7, 2022 at 5:15pm & September 14, 2022 at 6pm.

Apopka City Commissioner Nick Nesta
Apopka City Commissioner Nick Nesta

Nick Nesta is a first-term Apopka City Commissioner (Seat #4). He's lived in Apopka since 1994, and a local real estate broker since 2009. Nesta went to Trinity Christian School, Piedmont Lake Middle School, Apopka High School, and the University of Central Florida for undergrad and graduate degrees in real estate.

Apopka City Council, Commissioner Nick Nesta, Budget, Reserves


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