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Home My WebLink AboutAgenda - 11-15-2004-b2 aR~a~ ~~n ~_" ~ ~t~~ ~•4 w.A RJCHARD H. MOORS TREASURER April 5, 2004 TO: FROM: SUB.TECT: State of North Carolina ®epartn~ent of State Yrea~urer State and Local Government Finance Division and the Local Govermnent Commission Officials of Cities and Counties and Certified Public Accountants T. Vance Holloman, Director Fiscal Management Section Fund Balance Available for Appropriation JAMCE T BURKE DEPUTY TREASURER Memorandum #1014 Each yeaz the staff of the Local Government Commission analyses the financial statements of cities and counties to determine the amount of fund balance available for appropriation in the General Fund, and the amount of fund balance available for appropriation as a percentage of prior yeaz expenditures.. These numbers aze significant because the property tax is a major source of revenue in the General Fund. The majority of property tax revenues are received in the latter months of the calendaz yeaz. Therefore, there should be reserves on hand in the form of fund balance available for appropriation at Tune .30th to prevent the unit from experiencing cash flow difficulties dwing the first two quarters of the next fiscal year. The minimum level of fund balance available far appropriation that should be on hand to enable the unit to meet current obligations and to prevent the unit from experiencing cash flow difficulties is 8% of the prior yeaz's expenditures. In addition to the 8% needed to prevent cash flow difficulties, units also maintain fund balance available for appropriation in the General Fund in case unforeseen needs or opportunities should arise. Fund balance available for appropriation at.Iune 30th is a source that may be budgeted in the following year to address these situations. There is not an established minimum amount that should be in reserve for these purposes. The officials of the individual units should make that determination.. The amount of fund balance available for appropriation maintained by a particulaz unit would be influenced by such factors as the size of the unit, economic conditions within the unit, future capital outlay needs, stability of revenue sources and susceptibility of the unit to natural disasters. The staff sends letters to units if' the amount of fund balance available for appropriation as a percentage of prior year expenditures in the General Fund falls below 8%, The staff' also compazes the percentage of fund balance available for appropriation to the prior year percentages for similar units. If that percentage is materially below the average of similaz units, the staff will send a letter to alert the unit of this fact. Units will be encouraged to evaluate the amounts in reserves and determine if the level is adequate. 3'3 North Salisbury Street, Raleigh, North Carolina 27603.1385 Telephnnc (~/9J 807-2350 Fox. (919)807-2352 fdrebsite-www treasurerstatenc us An Eguat Opportunity/A~rmative Action Employer Memorandum #1014 Apri15, 2004 Page 2 The chart that follows shows the average percentage of fund balance available for appropriation for similazly grouped counties and cities for the fiscal year ended Tune 3Q 2003. We noted that for counties, the overall percentage decreased slightly. The percentage decreased for the lazgest and smallest population groups, while it increased for the other groups. For cities without an electric system, the overall percentage increased slightly. The percentage decreased slightly for the two lazgest population groups while all other groups increased. For cities with an electric system, there was a more noticeable increase in the percentage. The percentage increased for all population groups exceh~t the largest.. Officials should use these figures to compaze their unit to similar units and evaluate the adequacy of their unit's current reserves. If you have any questions please call John Herron at 919-807-2397. Average Available Fund Balances of North (-arolina Counties and Cities .Tune 30, 2003 Average Balance Average As a Percentage of 2002-2003 Average Average Type of Unit Nwnber of Avemge Available 2002-2003 2002-2003 Mtssing by Size Units Fund Balance lrxpenditures lixpenditures Units Cowrhes"` All 98 13,425,725 76,314,676 17.59 2 100,00Dortnore 23 :33,053,265 210,657,508 15.69 SO,000to99,999 27 11,]68,327 57,688,864 19.36 25,ODD to 49,999 24 7,213,250 31,080,430 23..21 Under25,000* 24 3,368,046 13,757,746 24.48 2 Cities - nonelectric* All 456 1,754,357 4,829,425 .36.3.3 17 SO,000ormore l0 .30,623,820 13],016,240 23.37 10,000 to 49,999* 28 -4,795,028 ]3,665,329 35.09 I 500 to9,999* 2 109 1,858,.369 3,087,808 60.18 I , 1,000 to 2,499* 105 829,734 1,083,643 76.57 2 500 to 999* 87 452,931 380,499 119.04 6 Under500* ]17 259,815 221,959 1]7,06 7 Cities -electric All 70 .3,497,299 10,016,076 .34.92 SO,000ormore 6 ]3,3.38,539 53,730,358 24.82 10,000 to 49,999 21 5,867,126 13,596,718 43.15 2,500 to 9,999 20 1,492,763 3,792,636 39.36 1,000to2,499 IO 761,065 1,174,154 64.82 SOD to 999 7 475,509 693,266 68.59 Under 500 6 129,259 127,493 101.38 * This report excludes data from uni ts that have not submitted audited financial statements for the fiscal year ending June 30, 2003. The number of mi ssing units by popul ation group can be found in the nvssing mots column..