RESOLUTION NO - Wakulla County, Florida



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AR: 3.04 August 17, 2015

Revenue Stabilization Fund Finance

I. PURPOSE

The County hereby establishes and will maintain a Revenue Stabilization Fund. The purpose of this fund is to smooth the volatility and fluctuations of revenues by setting aside portions of revenues during growth periods to be used during periods of economic decline and to limit growth in expenditures in a given year to three percent (3%) for the General Fund and Fine & Forfeiture Fund for recurring expenditures.

The fund balance of said fund shall be in accordance with Governmental Accounting Standards Board Statement No. 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions and shall be “unassigned fund balance” as defined by GASB 54 and shall be used for any general government purpose.

II. DEFINITIONS

Fund Balance – The difference between assets and liabilities in a governmental fund. For purposes of this policy, the term “fund balance” is used inter-changeably with the term “net position” for entity-wide financial statements and enterprise fund financial statements.

Unassigned Fund Balance – The residual classification representing fund balance that has not been restricted, committed or assigned and is available for general purposes.

Net Revenue Growth – The amount of increased revenues of the General Fund and Fine & Forfeiture Fund from one year to the next excluding inter-fund transfers in, cash forward balances and funds otherwise restricted by Florida Statute, grant agencies or any other legally authorized restriction.

Recurring Expenditures – The expenditures that recur from year to year that are not considered “one-time” or non-recurring in nature. The Board may exclude the growth of expenditures that are due to increases in capacity or services offered for the first year of the increased services.

III. FUND BALANCE POLICY VS. REVENUE STABILIZATION POLICY

The County’s fund balance policy is intended to save funds for emergencies and/or unforeseen economic or disaster events. The County’s fund balance policy requires the County to maintain an unrestricted fund balance in the general fund of no less than three (3) months or twenty-five percent (25%) of regular general fund operating revenues or regular general fund operating expenditures with a maximum of four (4) months or thirty-three percent 33%. In general, fund balances (non-recurring revenue) should not be used for recurring expenditures.

The County’s revenue stabilization fund policy is intended to a) smooth the volatility in revenues that may occur over time by setting aside portions of revenue during good economic times to be used during poor economic times, b) prevent volatile revenues from destroying the County’s fund balance reserves and c) establish a limit on annual expenditure growth of three percent (3%). The fund balances of the revenue stabilization fund are specifically intended to be used for recurring expenditures.

IV. DEPOSITS INTO THE REVENUE STABILIZATION FUND

There are two components to the deposits made into the revenue stabilization fund. The first component is based on the revenue growth of the General Fund and the Fine & Forfeiture Fund. Any net revenue growth over three percent (3%) of unrestricted revenues shall be transferred to the revenue stabilization fund. The second component is a “voluntary” component comprised of any amounts deemed necessary by the Board of County Commissioners or any portion of new, unexpected or non-recurring one time revenues.

Example:

Current FY 2020-2021 GF & FF Fund Revenues: $11,000,000

Proposed FY 2021-2022 GF & FF Fund Revenues: $11,500,000

3% Net revenue growth calculation: $11,000,000 x 3% = $330,000

Amount deposited into Revenue Stabilization Fund: $500,000 - $330,000 = $170,000

Increases in revenues from the General Fund and Fine & Forfeiture Fund must first be used within the respective fund to address any deficiencies in that fund’s fund balance before the increases can be transferred to the Revenue Stabilization Fund.

V. USE OF REVENUE STABILIZATION RESERVES

In the event that net revenue growth of the proposed budget year is less than 3% over the current fiscal year, an amount equal to the difference between actual net revenue growth and three percent (3%) shall be transferred from the Revenue Stabilization Fund to the General Fund. The funds transferred may be used for any lawful purpose for the recurring expenditures of the County.

Example:

Current FY 2020-2021 GF & FF Fund Revenues: $11,000,000

Proposed FY 2021-2022 GF & FF Fund Revenues: $11,200,000

3% Net revenue growth calculation: $11,000,000 x 3% = $330,000

Amount transferred from Revenue Stabilization Fund: $330,000 - $200,000 = $130,000

VI. ANNUAL REVIEW AND DETERMINATION OF FUND BALANCE RESERVE AMOUNTS

Compliance with the provisions of this policy shall be reviewed as a part of the annual budget adoption process. The proper amount of fund balance may change from time to time depending on the various revenues identified as volatile, the particular causes of that volatility and the estimated duration of the volatility.

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ADMINISTRATIVE REGULATION DATE APPROVED:

SUBJECT: DEPARTMENT:

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