Fund Balance and Reserves
Fund Balance Defined
Fund Balance is the difference between revenues and expenditures from previous years, i.e., unspent funds from the previous year. For example, while personnel costs are budgeted under the assumption that positions will be filled the entire year, retirements and other personnel moves occur leaving unspent funds which then accrue to Fund Balance.
This is a non-recurring revenue source. State statute requires expected fund balances be budgeted.
Reserves Defined
Reserves represents the balance of funds resulting from prior year funds carried forward (or Fund Balance), added to current year revenues, less current year expenses. Another way to look at reserves is through the three categories of restricted, committed, or assigned Fund Balance for the current year.
The use of Reserves is restricted by external resource providers (such as grantors or creditors), commission designation, State statute, or local ordinance, all of which stipulate the purpose for which those reserves can be spent.
Major Changes in Fund Balance
Below are the major changes in Fund Balance for Fiscal Year 2024, grouped by fund name or type.
Major Funds
General Fund
The anticipated decrease in General Fund reserves is estimated to be $36 million, or 34.2%. The decrease is due to The American Rescue Plan Act (ARPA) that was a one time payment in FY 2022 for $107.6 million to Pasco County, where the majority of that was applied to the General Fund. The County will use those funds in three primary areas to include Public Safety and County Operations, Health Expenditures and Revenue Replacement during FY 2024.
Water & Wastewater Unit Fund
The anticipated increase in the Water and Wastewater Fund reserves is estimated to be $32.8 million, or 12% The increase is to accommodate for growth and keep the same ratio of reserves to align with the growth.
Solid Waste System Fund
The anticipated increase in the Solid Waste Fund reserves is estimated to be $24.4 million, or 15.9% This is due to the planned expansion of the Waste to Energy plant, the 7 for 7 plan, which is estimated at $230 million for capital improvement.
Non-Major Funds
Capital Project Funds
The increase in the Capital Projects Funds (combined) is estimated to be $5.73 million, or 4.3%. The majority of the increase is related to impact and mobility fees which will have an overall increase to the group that allow unspent capital project balances to be automatically carried forward from one fiscal year to the next.
Debt Service Funds
The decrease in the Debt Service Fund is estimated to be $84 thousand, or 4.1%.
Internal Service Funds
The decrease in the Internal Service Funds (combined) is estimated to be $14 million, or 24.4%. A large portion of the decrease is related to the County Insurance Fund used to insure all assets and risk.
Special Revenue Funds
The decrease in the Special Revenue Funds (combined) is estimated to be $14.9 million, or 10.6%. The majority of the increase is associated with our Community Development Funds for Home Program and Housing Partnership.
Reserves
The Board of County Commissioners (BCC) has given policy guidance to maintain 16.7% in the Reserves for all County Operating Funds, such as the General, Municipal Services, Fire Municipal Service Taxing Unit, and Transportation Trust Funds. This Reserve is known as the Committed Reserve and provides the County a “rainy day” fund for use in unforeseen, unbudgeted emergency situations.
A Countywide Reserve Policy, currently under development, describes these emergencies as well as the formal actions that must be taken to make these funds available. In addition, the Reserve Policy, once adopted by the BCC, will formalize their policy decision given to date. As the budget is developed, the restrictive nature of the fund as well as the County Reserve Policy must be considered.
The tables below show the Reserves set aside for each Fund in accordance with the County’s financial policy. A majority of the Reserves are being set aside for future capital projects. The remainder has been set aside for the “rainy day” fund as mentioned above.