A year ago, budget discussions at the County Commission got off to a confusing start when the Commission staff raised questions about $4 million in the prior year (FY24) budget that appeared to be unaccounted for. By the next meeting, the staff was able to assure the commissioners that no actual funds were missing, but the accounting still remained unclear even as the Commission approved a budget for 2024-2025 (FY25) without fully resolving the issue.
This week, at the February 6 County Commission meeting, the current commissioners welcomed a FY25 budget revision request presented by David Bound, the county’s recently-hired CFO, that identified $4,033,276 that was unspent and unassigned at the end of the FY24 budget year. This $4 million was a combination of the surplus of operating revenues over expenses for 2023-2024 and the accumulated surpluses from prior years that are routinely rolled forward at the end of each year.
The West Virginia Auditor’s office provides guidance to counties on how to account for surplus funds from year to year, including assigning these amounts to capital reserve funds, a fiscal stabilization (“rainy day”) fund, or a general contingency reserve. The capital reserve funds should have a plan that outlines the use of those funds (for example, building and vehicle purchases or major maintenance projects). County policy, as allowed by the Auditor, currently sets targets for the balances held in the stabilization and contingency accounts — equivalent to 16.7% of the current year budget for the stabilization fund and 10% of the current year budget for the contingency reserve.
According to the Auditor’s guidelines, the unspent amount of the contingency reserve should roll forward into the following year’s budget, but the stabilization fund should be maintained as a separate account, to be “topped up” every year to reflect any year-to-year growth in the operating budget. The County’s budgets for several years prior to FY24 had shown allocations of year-end surpluses to the stabilization fund, but the money had never actually been transferred from the general fund. The “zero balance” in the stabilization fund is what had triggered the alarm in early 2024, even though the $4 million was rolling forward as unassigned funds.
The FY25 budget revision, which was approved by the Commission during the February 6 meeting, allocates all of the unassigned $4,033,276, designating $3,629,948 to the stabilization fund and $403,328 to the contingency reserve. Once the CFO actually transfers the funds according to the approved allocation, the stabilization fund balance will be $4,082,655 and the contingency fund balance will be $4,466,350. The stabilization fund balance would be at 9.1% of the current year budget (the target number is 16.7%) and the contingency reserve would be at 10.4% (the target number is 10%).
By Steve Pearson