Committee reviews revised fund-balance policy, discusses non‑lapsing accounts and proprietary funds

Marathon County’s Human Resources, Finance and Property Committee reviewed a draft fund-balance policy that embeds the county’s working-capital designation and aligns fund classifications with GASB 54.

The policy as presented addresses only governmental funds, defines nonspendable/restricted/committed/assigned/unassigned classifications, establishes an order of fund-balance spending, and proposes minimum working-capital targets aligned with prior guidance. It also includes optional non‑lapsing contingent accounts and equipment‑replacement/capital‑repair funds that would require committee and full‑board approval to expend.

Committee Chair Gibbs said the goal was clearer, plain‑language explanations so board members and the public understand the math and the purpose behind classifications. Sam (finance staff) said the draft mirrors GASB 54 language, clarifies that the policy covers governmental (not proprietary) funds, and records the working‑capital designation as unassigned fund balance for funds that receive a tax levy. The presentation noted proprietary funds — such as highway, solid waste and internal service insurance funds — are separate and not part of this governmental‑funds policy.

Members questioned how proprietary funds should be treated in policy language. Supervisor Gibbs and others asked for the county to either enumerate proprietary funds in the policy or explicitly reference the financial statements, where governmental and proprietary funds are listed. Sam said staff can add an explicit list or a cross‑reference to the financial statements.

A major point of debate was the proposed non‑lapsing contingent accounts, designed to accumulate unspent departmental funds from years with excess revenue over expenditures. Staff described examples where such accounts might be used — jury sequestration costs for the clerk of courts or district attorney, jail equipment repairs, and periodic large purchases such as orthoimagery for Conservation, Planning & Zoning — and said departments would not have unilateral spending access; the committee and full board would have to approve expenditures. Some supervisors expressed concern that many targeted non‑lapsing accounts can appear as “stashing” money and prefer relying on a general contingency fund for unforeseen needs.

Committee members asked how the policy would affect capital improvement plan (CIP) rollover. Staff said implementation timing is a choice: adoption now could take effect with 2025 financials and affect the 2027 CIP rollover, or a phased approach could apply parts in 2026 and 2027. Sam said the county’s prior practice puts working‑capital targets in the 25–30% range and the revised language keeps the county in that ballpark.

On the highway fund, members noted the fund is proprietary and healthy, and asked whether some balance could move to capital projects. Staff recommended a separate working‑capital policy specific to the highway fund because some highway monies are restricted for highway capital needs and cannot be freely transferred to the general CIP fund.

Several supervisors asked for additional materials before any adoption: (1) a flowchart or visual that shows fund types and what is included under each, (2) a list of which proprietary funds exist today, (3) historical contingency and fund‑balance drawdowns going back several years (pre‑pandemic where useful), and (4) examples of past projects funded from contingency or reserves. Staff agreed to return with those clarifications and historical data.

The committee did not vote to adopt the policy at this meeting and instructed staff to revise the draft and return with the requested information for consideration early in the budget process.