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31 Orange County, NC Financial Plan and Rate Study for Solid Waste Enterprise Fund 2.1.4 Reserves According to the County's Solid Waste Fund Revenues /Reserves sheet, March 15, 2016, the total estimated ending balance for the Solid Waste Enterprise Fund was $8,867,042 ($3,492,631 of which is the Equipment Reserve balance) on June 30, 2016. This amount represents the ending Fund balance without loan proceeds including those from building construction, rural expansion cart procurement, a rural truck purchase, Eubanks Road W &R Center loan, balance from closure of the Orange County Landfill, and another prior loan. The total estimated Fund balance is $12,751,990 when these additional loan proceeds are accounted for. Use of Fund balance has been required in order to balance the Department budget over the past several fiscal years including the current FY 2016 -17. The goal of the Department is to enable the Fund to be structurally viable and sustainable without contributions from the General Fund or allocations from the Fund balance. 2.1.5 Rate Model At the outset of the work effort, SCS developed a Microsoft Exce1TM spreadsheet- based, pro - forma model (Rate Model) to assist in the completion of the financial analysis. This model includes the following facets: • An analysis of operational expenditures (facility operation, staffing, recycling tonnages, tipping fees, etc.); refer to Appendix E for 5 -year estimated Department expense projections. • Analysis of capital outlays (equipment replacement and capital projects) • Revenue analysis (annual revenue projections, net expenditures, and rate plan to provide sufficient revenues); refer to Appendix D for 5 -year estimated Department revenue projections. • Rate Benchmarking Analysis • Transfer Station Implementation Analysis 2.1.6 Methodology Overview The following methods were utilized by SCS to conduct the cost of service analysis: • Collect Historical Actual Expenses and Revenues for the County System — This task involved gathering available historical actual revenue and expense data for the Fund, compiling these into a financial database, and incorporating the data into the Rate Model. • Develop the "Test Year" — The second task was the development of an annual revenue requirement for a "Test Year ". The revenue requirement represents the total revenue for the System needed to recover all System costs. SCS worked with County staff to select a period that reflected a typical year for the System. Budgetary expenses for FY 2016 -17 were used as the basis of the Test Year for the Study. SCS then worked with County staff to make these costs more representative of anticipated conditions during the upcoming 5 -year financial planning horizon. The resulting Test 18