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46 Orange County, NC Financial Plan and Rate Study for Solid Waste Enterprise Fund 5.0 FINDINGS AND RECOMMENDATIONS This findings and recommendations, including revenue increase strategies, expense reduction strategies, and rate benchmarking from the Study are presented below. SCS offers the following findings and recommendations for the County's consideration: • As outlined in Scenario 1, the Fund's current financial structure is unsustainable and maintaining the current Program Fee amount ($107) along with the Status Quo program services will yield significant annual deficits over the next 5 -year period, both with the current practice of General Fund contributions (Scenario B) and without (Scenario A). • The exercise of allocating monies from the Fund's balance ( "Reserves ") to cover the annual budget deficit each year will deplete the entire Fund balance in approximately 5 years. Furthermore, this jeopardizes Fund liabilities such as landfill post - closure care. • As outlined in Scenario 2, increasing the current amount of the Program Fee to $130 per year, which represents a 23 percent escalation, is anticipated to be insufficient to eliminate significant annual deficits, both with the current practice of General Fund contributions (Scenario B) and without (Scenario A). • As outlined in Scenario 3A, even increasing the current amount of the Program Fee to $150 per year (43 percent increase) is projected to be insufficient to eliminate significant annual deficits unless the General Fund continues to contribute nearly $2 million per year. • In the spirit of a true enterprise fund, the County would need to implement a Solid Waste Program Fee between $170 and $180 to fully fund all anticipated program expenses over the next 5 years. This is reflected in Scenario 4A and anticipates no General Fund contribution and no Appropriated Fund Balance revenues other than the identified loan proceeds for Waste and Recycling Center construction. • As an alternative to solely increasing the Program Fee, the County could take a "dual approach" by increasing the General Fund as well as increasing the Program Fee. The increase of the General Fund contribution should occur within the Sanitation Services Division to raise the Division's revenue from approximately $2 million to approximately $3 million to cover the annual deficit incurred in that Division. A Revenue and Extension (R &E) Fund should be established to enable the Department to fund a reserve of 25% of its annual operating costs. This Fund would be designed to provide potential funding for unforeseen operational costs and declines in generated revenue. This would provide a buffer against financial obstacles such as declining recyclable material sale revenue and reduced C &D Landfill tipping fee revenues. Note that the R &E fund would require an increase in the Program Fee above and beyond the break -even fees identified in Scenarios 4A and 4B and could 33