Agenda - 11-13-2008 - 2 - Laserfiche WebLink

Browse Search

as- you -go revenue had been transferred from the General Fund, the fund balance would be less than it currently stands. Staff recommends the Board approve a two -year funding plan to replenish the shortfall by appropriating General Fund available fund balance. Based on preliminary estimates, the County's General Fund available fund balance at the end of FY 2007 -08 is projected to be approximately 14.4% of expenditures or $24.7 million. If this plan is implemented, based on conservative projections, the projected available fund balance at the end of FY 2008 -09 could be approximately 12% of expenditures or $21.85 million. The appropriation of $2.4 million in FY 2009 -10 would decrease the fund balance to 11.1 % or $21.64 million. While this percentage amount is higher than the Local Government Commission recommendation of a minimum 8 percent of expenditures, it is well below the County's informal target of 15 percent of expenditures. Staff will bring budget amendments to the Board to implement the recommended action if approved by the Board. Additionally, budget amendments will be brought to the Board in those cases where project expenditures have exceed the project budgets and where appropriation of other identified sources, such as the transfer of the remaining School Capital Reserve Funds, is necessary. As best practice, local governments should only appropriate fund balance for non - recurring purposes such as capital. While it is preferable to be able to achieve the fund balance goal in order to meet needs in time of fiscal stress the use of the fund balance to meet non - recurring priorities is understandable. It would be prudent to not let the fund balance fall below 11 % in order to provide for cash flow as well as maintaining the County's excellent bond rating. Once funding the shortfall is completed it will be necessary to take steps to rebuild the fund balance of the General Fund. As a point of reference, North Carolina counties with populations of 100,000 and above had an average available fund balance of more than 19 percent at the end of FY 2006 -07. Another benchmark to consider is that the average fund balance for all North Carolina counties at the end of FY 2006 -07 was in excess of 21 percent. FINANCIAL IMPACT: The financial impact of the recommended action is the projected reduction of the fund balance of the General Fund to as low as 11.1 % of projected FY 2009 -10 expenditures. RECOMMENDATION(S): The County Manager recommends that the Board approve the two year funding plan which includes 1) Appropriating $3.5 million from the fund balance of the General Fund for transfer to the School Capital Project Fund 2) Include the remaining appropriation of $2.4 from the fund balance of the General Fund needed to complete the correction of the shortfall in the Fiscal Year 2009 -10 budget and 3) Direct staff to take those actions necessary to reallocate available funding to correct the project shortfalls.