Dunn County starts process to limit unassigned fund balance
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By LeAnn R. Ralph
MENOMONIE — In years past, the Dunn County Board — with no real policy on how to spend the money — has used unassigned general fund balance to fill budget deficits.
The Dunn County Board approved the first reading of an ordinance at the July 26 meeting to limit the amount of money in the unassigned general fund balance to no less than 35 percent and no greater than 50 percent of the general fund operating expenditures.
The ordinance will be a tool to help the Dunn County Board make decisions about how to spend unassigned general fund balance, said Kristin Korpela, county manager.
The Governmental Accounting Standards Board (GASB) recommends keeping between 25 and 33 percent of the general fund operating expenditures as unassigned fund balance.
Money that is left over from the budget year is transferred into the unassigned general fund.
Every year, the audit report lists the amount of unassigned general fund balance, which can be considered as the county’s savings account or as the county’s operating reserves, Korpela said, adding that she prefers to think of the money as operating reserves.
At the end of 2021, the unassigned general fund balance had a ratio of 60 percent of the tax levy, she said.
The tax levy for 2021 was $23 million, so the unassigned general fund balance was at 60 percent of the general fund expenditures, or about double the GASB recommendations, Korpela said.
As of December 31, 2021, the unassigned general fund balance was $13.9 million, representing an increase of $4 million over 2020.
GASB recommendations of 25 percent to 33 percent of the general fund expenditures for 2021 would be $5.75 million to $7.6 million in the unassigned general fund balance.
Keeping 35 percent to 50 percent in the unassigned fund balance, on a tax levy of $23 million, as the proposed ordinance state. would mean keeping between $8.1 million and $11.5 million in the unassigned general fund balance .
35 to 50 percent
The proposed ordinance would maintain at least 35 percent of the general fund expenditures in the unassigned fund balance and no more than 50 percent, Korpela said at the July 26 meeting.
According to the proposed ordinance, if the unassigned general fund balance falls below 35 percent of the general fund expenditures, the county board must find a way to bring the unassigned general fund balance back up to 35 percent of the general fund expenditures.
If the amount in the unassigned fund balance goes over 50 percent, the ordinance would allow the Dunn County Board to use the additional money for several expenditures, such as a transfer to a capital improvement fund to pay for the cost of capital equipment or capital improvements; transfer to the debt service fund for prepayment of callable bonds or notes; or to use as a beginning cash balance in support of the annual budget to pay the costs of one-time expenditures, Korpela explained.
The amount currently in the general fund is $2.5 million over the maximum of 50 percent that the proposed ordinance would establish, she said.
ARPA money
Tim Lienau, county board supervisor from Menomonie, asked if the additional money was because of American Rescue Plan Act (ARPA) funds or because of fiscal responsibility.
Interest is at an unprecedented high, and Dunn County investments are earning 5 percent, while sales tax revenue to Dunn County has increased, mostly because of Internet sales, Korpela said.
A number of years ago, before companies that generate online sales were required to collect sales tax for the states in which the sales occurred, Wisconsin residents were asked, using an “honor system,” to report the amount of sales tax they owed from online sales and then add that amount to the income taxes they owed.
ARPA funds and other COVID money meant that a certain amount of the tax levy collected did not have to be used on the budget, Korpela said, noting that the additional funds in the unassigned general fund balance were due to both ARPA money and fiscal responsibility.
Contingency
Donald Kuether, county board supervisor from Menomonie, asked about the difference between a contingency fund and the unassigned general fund balance.
A contingency fund is actually a line item in the budget, and Dunn County usually sets aside $125,000 per year for contingency, Korpela said.
The contingency fund contains money that can be used for emergences or unanticipated needs that could not be budgeted for, she said.
Audit reports
According to the audit report, Dunn County’s unassigned fund balance was $10.9 million for the year ending December 31, 2020, or 49.9 percent of the general fund expenditures, compared to the $13.9 million in unassigned general fund balance in 2021.
As of December 31, 2019, Dunn County’s unassigned general fund had a balance of $8.33 million, which was somewhat higher than the unassigned fund balance of $8.31 million in 2018.
In 2017, the unassigned fund balance was $9.077 million.
In 2016 and in 2015, the unassigned fund balance was $14.7 million, or 77.6 percent of the general fund expenditures.
In 2014, the unassigned fund balance was $14.5 million, or 73.1 percent of general fund expenditures.
In 2013, the unassigned fund balance was $12.5 million, or 61 percent of general fund expenditures.
The Dunn County board is expected to consider the proposed ordinance for a second reading at the September board meeting.
