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27 <br />Orange County, NC <br />Financial Plan and Rate Study for Solid Waste Enterprise Fund <br />2.0 COST OF SERVICE ANALYSIS <br />Since the cessation of waste acceptance at the County's sanitary landfill in June 2013, the <br />expenses associated with the County's existing solid waste management and recycling programs <br />and facilities have exceeded the revenues generated by these programs and facilities. SCS <br />reviewed historical program and facilities expenses (both operating and capital) as well as the <br />historical revenues from various sources that have served to cover these expenses for the past <br />several years. SCS projected the costs necessary to continue implementing these programs and <br />operate existing facilities over the next 5 years (through FY 2020 -21). SCS also projected the <br />revenues likely to be realized during this timeframe in order to develop a "cost -of- service" <br />analysis to identify potential funding deficits or surpluses. A brief overview of the Department's <br />current budget and management practices, along with a description of SCS' assumptions and <br />findings related to this cost -of- service analysis are discussed below. <br />2.1 BUDGET AND MANAGEMENT PRACTICES OVERVIEW <br />2.1.1 Enterprise Fund <br />The County has established the Solid Waste Enterprise Fund (Fund) to account for all <br />Department solid waste and recycling program operations, which are financed and operated in a <br />manner similar to private business enterprises. In other words, the County's intent is that the <br />Fund be managed such that the costs of implementing these programs and facilities (operating <br />and capital expenses, including depreciation) are covered by the monies in this Fund. Money is <br />allocated to this Fund through user charges and revenues generated by the solid waste and <br />recycling programs and facilities supported by the Fund, with limited revenue allocated from the <br />General Fund. <br />The Fund includes potential revenue from approximately 33 distinct sources (line items under <br />the Budget Accounts), which can be associated with one or more of the four cost centers <br />(Divisions) within the Department. Most of these sources contribute revenue into only one of the <br />Divisions. However, line items for some sources contribute revenue into multiple Divisions. <br />For general reference purposes, SCS divided revenue sources into three categories or tiers of <br />sources; primary, secondary, and ancillary. Exhibit 9 displays the three tiers and core revenue <br />streams associated with each. <br />14 <br />