Year End Transfers of funds are something we do each
February to address some budgeted transfers and manage cash in such a way as to
bank for the future. The majority of
these transfers are done to add cash or redeem cash through the Revolving
Capital Fund. The Revolving Capital Fund is a fund that is used to balance cash
flow needs from one year to the next or beyond.
The fund contains categories to segregate funds that are earmarked. As example there a Police line item, a Public
Works line item, and others to define what funds are who’s so budgeting for
future expenditures can be managed.
When doing the budget, we anticipate some revenues will come
out of this fund and others will be placed in this fund. Funds that were budgeted for capital
expenditures in a budget cycle that are unspent get allocated to the
appropriate department at year end. This
avoids the last minute expenditures to use these funds before a new budget
cycle begins. The goal is to have
expenditures planned and budgeted for. Without
this approach unspent funds would otherwise become general fund reserves with
no earmark or designation.
We also budget funds to transfer to the Revolving Capital
Fund. With Public Works we budget for
both current capital expenditures but also $50,000 to be placed in the
Revolving Capital Fund. The purpose of
these funds is to bank money to be used for large upcoming expenditures. A plow/dump truck carries a price tag of
$250,000 to $300,000. Having cash to
purchase one of these makes more sense than going into debt to acquire the
piece of equipment.
Another scheduled transfer is with the sewer fund. We have two funds that are used for the sewer
enterprise. One fund deals with
operations and another deals with long range capital expenditures. Each year capital expenditures are budgeted
in operations but we also budget for a transfer to the Sewer Capital Project
Fund. This fund provides for expenses
such as major upgrades to the sewer system.
A transfer of $68,242 was made to this fund.
In summary this year we placed funds into the Revolving
Capital for road improvements from assessment revenues in the amount of
$208,833.85. Moving funds from the
General Fund to Revolving Capital Fund for various earmarks was
$75,207.16. Taking funds from the
Revolving Capital Fund to balance expenditure made in the General fund amounted
to $72,296.32.
With a change in budgeting for 2018 a number of these
transfers will not occur as accomplished in the past. Many of the revenues and expenditures have
been budgeted in the Revolving Capital Fund.
Some transfers will still need to be made but hopefully the year end
process will be simplified with the new approach.
