Board Policy - Section Number: 03.05.10.00

Purpose

The purpose of this policy is to establish guidelines that allow the County to maintain adequate levels of fund balance in the general funds to mitigate current and future risks such as revenue shortfalls, unanticipated expenditures, natural disasters, other unforeseen circumstances, and to ensure stable tax rates for the taxpayer. An additional purpose is to establish certain sound financial management practices that in combination with the fund balance guidelines will allow the County to maintain the highest possible credit ratings.

Policy

Fund Balance/Reserves

It is the policy of the BOCC that combined fund balance in the countywide and unincorporated area general funds will be budgeted at a level necessary to maintain general fund budgeted reserves between a minimum of 20% and a maximum of 25% of general fund expenditure appropriations, or as otherwise required by applicable law. The Government Finance Officers Association (GFOA) recommends, at a minimum, that general-purpose governments, regardless of size, maintain unrestricted budgetary fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. However, the GFOA also provides that the adequacy of unrestricted fund balance general funds should take into account each government’s own unique circumstances. The unrestricted fund balance and reserve levels established by this policy exceed the minimum level recommended by the GFOA based on the following factors:

• Maintaining a AAA general credit rating from all three rating agencies
• Susceptibility to natural disasters (hurricanes and flooding)
• Risks of unanticipated changes in general fund budgets associated with Constitutional Officer annual budget requests, one-time needs, and new State and Federal mandates
• Maintaining stable and/or decreasing tax rates
• Commitment to sound financial management practices

Under certain circumstances, there may be a temporary need to use fund balances to meet a need(s) that require a fund balance draw down resulting in noncompliance with minimum funding levels identified in this policy. Examples of these circumstances may include, but are not limited to the following:

• Unanticipated revenue shortfalls due to unforeseen circumstances including a significant and prolonged downward trend in an economic cycle
• A natural disaster of significance
• New federal and state mandates/legislation
• Immediate capital needs

If such a need is addressed as part of the County’s annual budget process, the County’s Budget Officer will communicate the need to the Board at a Budget Workshop or Public Hearing and will present a plan and timeline to replenish fund balance to levels consistent with this policy. The plan may include one-time or recurring expenditure reductions, budget surpluses, transfers from other funding sources, etc. The plan of replenishment should not extend beyond a three year planning horizon as recommended by the GFOA.

Usage of fund balance/reserves during a fiscal year are governed by Board Policy 03.02.05.00 – Reserve for Contingency.

Sound Financial Management Practices

It is the policy of the BOCC to employ sound financial management practices resulting in the highest possible general credit rating and stable finances allowing for consistent, efficient, and value driven delivery of service to County residents. The financial practices shown below shall be employed by County Administration in management of the County’s budget and finances:

• External Financial advisory services will be contracted when appropriate to engage expert specialized services.
• Decisions made in the County’s annual budget process will be service driven and based on existing Community Standards and performance metrics.
• County reserve levels will be set according to this Board policy
• The County will maintain debt service coverage at levels necessary to maintain the highest possible credit rating.
• The County will annually strive to achieve a structurally balanced budget consistent with guidance provided by the GFOA.
• Bond issues will be continually monitored to identify and act on any refunding opportunities.
• The annual Operating and Capital budget documents will be prepared consistent with GFOA guidelines and state law.
• The County will employ sound long-term financial planning strategies and will annually prepare a five-year pro forma analysis.
• The County will follow its other adopted financial policies not specifically identified in this policy. Those policies are also designed to operate using sound financial management practices.

Any deviation or amendment to this policy shall require a supermajority vote of the BOCC.