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33 Overview Orange County Solid Waste Enterprise Fund (9 -26 -2014) Generally Accepted Accounting Principles (GAAP) requires state and local governments to use the enterprise fund type to account for "business -type activities" – activities similar to those found in the private sector. Business type activities include services primarily funded through user charges. The Governmental Accounting Standards Board (GASB) defines the purpose of enterprise funds as: "...to account for operations (a) that are financed and operated in a manner similar to private business enterprises — where the intent of the governing body is that the costs(expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through users charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and /or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes." State and local governments should use an enterprise fund to account for its activities when the criteria of either (a) or (b) are met. In most cases, State and Local Governments should use enterprise funds because their activities closely resemble the characteristic described in (a) above. Moreover, it is important to note that the total cost of the activity does not have to be paid for by the user charges. The government (or other governmental entity) may subsidize a significant portion of the costs of the enterprise fund. Background The Solid Waste Enterprise Fund was established in the 1970 "s by the Towns of Carrboro and Chapel Hill and Orange County to finance county landfill operations. Over the years the fund was a relatively simple device consisting of tipping fee revenue, landfill operations and capital reserves. In the late 1980's the governments initiated curbside recycling program, followed by a series of other recycling and waste reduction programs and services that have grown and expanded until the present and achieving tremendous success and popularity. In the early 1990's federal and state environmental regulations significantly increased the present and future costs of landfill operations. Therefore, solid waste expenditures and revenues increased significantly and the enterprise fund became more complex over time. Closing the landfill last year has also had a significant impact on revenue and expense allocations. The current enterprise fund is organized as follows: Environmental Support Division Fiscal 2014/15 Budget = $2,019,730 This division includes: equipment maintenance labor & shop operations, environmental enforcement, departmental education & outreach, solid waste planning and reporting, safety administration, development review, accounting (billing and receiving), purchasing, customer service, office expenses, utilities, building maintenance including mowing and janitorial services, insurance and workers compensation, retiree health, special events, charges by the general fund, training, etc., departmental administration /management, etc. Sources of revenue include: interest on reserves, regulated recyclable material ordinance permitting, licensing and certification, facility rental, telecom tower site leasing and charges to 3 operating divisions