The City of Philadelphia ended FY26 with a $982.3 million preliminary fund balance, its second highest ever, but a decline of almost $200 million from the FY25 fund balance. The Parker Administration had forecasted that the fund balance would decline because of a combination of the end of federal American Rescue Plan Act (ARPA) funds and inflationary pressures on spending. 

“Maintaining fiscal health, as demonstrated through having a healthy fund balance, is crucial to everything my administration wants to accomplish,” Mayor Cherelle L. Parker said. “While we are pleased that we have met the City’s internal reserve target, we acknowledge that we have fallen short of the industry standard.” 

At 15.4 percent, the preliminary fund balance, which was reported in the City’s Annual Financial Report, meets the City’s internal target of having reserves equal to at least six percent to eight percent of revenues but is slightly below the Government Finance Officers Association guidance that unrestricted fund balance equals at least 16.7 percent, or two months, of revenues. 

Having that fund balance is particularly important as the City faces unprecedented risks including continued economic uncertainty, federal policy risks, an upcoming pension bond balloon payment and collective bargaining agreements. 

The Annual Financial Report, which the Charter requires be released within 120 days of the end of the fiscal year, includes unaudited fund balances for all the City’s funds and information on the City’s outstanding liabilities. 

The fund balance, which refers to the amount of money remaining in a fund at the end of a fiscal year, after accounting for all the revenues and expenditures of the completed year, provides governments with a necessary cushion for economic uncertainty.