(A) Legislative findings. The County Council, as the governing body of York County, South Carolina, has made the following legislative findings incident to the adoption of this section:
(1) The County Council recognizes the importance of sound financial management in the development of financial policies for the county's general fund, including the adoption of balanced budgets and the establishment of a formal fund balance policy for the county's general fund.
(2) Credit agencies carefully monitor levels of unreserved fund balance in a governmental subdivision's general fund in order to evaluate the political subdivision's continued credit worthiness.
(3) The Government Finance Officers Association has recommended that a government, including political subdivisions of the state, establish a formal policy on the level of unreserved fund balances in its general fund.
(4) The County Council finds that a fund balance policy should be established by Council in order to ensure the long-term fiscal stability of the county; provide uninterrupted county services in the event of unanticipated expenditures and/or revenue shortfalls; provide guidelines for budgeting decisions; maintain and upgrade current investment grade bond ratings; avoid interest expenses related to issuance of tax anticipation notes in order to better address operating budget and capital needs; and provide for the orderly, sound and responsible administration of county fiscal matters.
(B) Scope and application of policy. Upon its adoption, this policy will apply to the county’s general fund.
(C) Definitions. The following words, terms and phrases shall have the following meanings as used in this policy unless the context clearly indicates or requires a different meaning.
FUND BALANCE. The difference between assets and liabilities. FUND BALANCE is accumulated when revenues exceed expenditures, and decreased when revenues are less than expenditures.
UNRESERVED/UNDESIGNATED/UNASSIGNED FUND BALANCE. The portion of fund balance that is available for appropriation and is not designated or reserved for a specific purpose.
(D) Minimum balance of unreserved, unassigned funds in county general fund established.
(1) Although there is no precise formula for determining an appropriate unreserved, unassigned fund balance in the county general fund, the following matters shall be considered in determining an appropriate unreserved, unassigned fund balance in the county general fund:
(a) The timing of revenue collections;
(b) The local, state and national economic environment; and
(c) The volatility and relative stability of major revenue sources.
(2) It shall be the policy of the county to maintain a minimum of 25% of annual budgeted expenditures as the projected year-ending unreserved, unassigned fund balance in the county general fund.
(3) While the Government Finance Officers Association recommends, at a minimum, that general-purpose governments, regardless of size, maintain unreserved fund balances in their general funds of no less than 5% to 15% of regular general fund operating revenues, or of no less than one to two months of regular general fund operating expenditures, the minimum targeted amount of annual unreserved, unassigned fund balance for the county is established at 25% of regular general fund operating expenses, based on the significant percentage of annual expenditures that are attributable to salaries and benefits and the future capital needs of the county.
(4) The county’s comprehensive annual financial report shall show reserves and designations subject to the requirements of generally accepted accounting principles.
(5) The undesignated/unassigned fund balance shall be considered when developing the annual county budget, and shall be monitored and evaluated during each fiscal year to ensure year-end results will meet the targeted unreserved, unassigned fund balance reserve in the county general fund.
(6) In the event the projected unreserved/unassigned fund balance is greater than 25% of annual expenditures, the excess may be appropriated and used for:
(a) One-time expenditures that do not increase recurring operating costs; or
(b) Capital equipment/facilities.
(7) If during a review of actual operating revenues and expenditures the ending unreserved/unassigned general fund balance is projected to fall below the 25% minimum targeted amount at fiscal year end, the county finance director/treasurer will report those findings to the county manager, who shall present a plan for expenditure reductions to the County Council. Appropriations from the minimum unreserved fund balance shall require the approval of the County Council, which shall establish a plan to rebuild the unreserved fund balance to the minimum targeted amount established by this policy contemporaneously with the approval of such appropriation.
(Ord. 2410, passed 7-19-10)