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1 <br /> ORD-2023-003 <br /> ORANGE COUNTY <br /> BOARD OF COMMISSIONERS <br /> ACTION AGENDA ITEM ABSTRACT <br /> Meeting Date: January 17, 2023 <br /> Action Agenda <br /> Item No. 6-a <br /> SUBJECT: Allocation of $12 Million in Excess Fund Balance from FY 2021-22 through <br /> Budget Amendment #5-A <br /> DEPARTMENT: Finance and Administrative Services <br /> ATTACHMENT(S): INFORMATION CONTACT: <br /> Attachment 1. Year-to-Date Budget Kirk Vaughn, (919) 245-2153 <br /> Summary Gary Donaldson, (919) 245-2453 <br /> Attachment 2. FY 2021-22 Budget vs. <br /> Actual Results and Fund <br /> Balance Classification <br /> PURPOSE: To approve the allocation of $12 million in excess fund balance that was created by <br /> a budget surplus from FY 2021-22. <br /> BACKGROUND: At the end of FY 2021-22, the County has identified $12 million of fund balance <br /> that exceeds the County's 16% unassigned fund balance policy. This budget adjustment is <br /> recommended by the County Manager to reduce the tax impact of increasing debt service while <br /> investing in both School and County capital needs. <br /> Reduce the Tax Impact of Debt Service <br /> The FY 2022-33 Capital Investment Plan and the Long Range Financial Model both anticipate the <br /> need to raise the property tax rate by one (1) cent in FY 2023-24 to fund an increase in debt <br /> service that persists over the next three years. This amendment would transfer $6,000,000 of the <br /> FY 2021-22 excess fund balance to a new Debt Service Fund to negate the need for a one (1) <br /> cent tax increase in FY 2023-24. These funds will be appropriated over the next three fiscal years <br /> to fund the scheduled spike in debt service during that time. The Capital Investment Plan currently <br /> includes the first tranche of borrowing for a general obligation bond to occur in FY 2026-27 when <br /> a tax rate increase may be required to fund related debt service. <br /> School Capital Reserve Fund <br /> The School Capital Needs Work Group has identified the need to diversify funding for School <br /> Capital. This amendment transfers $3,500,000 of the excess fund balance to the School Capital <br /> Reserve Fund to provide additional pay-as-you-go (cash)funding to the school districts. The funds <br /> will be used to pay for the upcoming School Capital Needs consultant, and the remainder will be <br /> allocated between the school districts based on FY 2022-23 Average Daily Membership. <br /> County Capital Reserve Fund <br /> This amendment allocates the remaining $2,500,000 to a County Capital Reserve Fund to provide <br /> additional pay-as-you-go (cash) funding for one-time or capital needs. The first use will be funding <br />