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County CFO: maintain reserves, keep budgets structurally balanced
Summary
CFO Kim Engelberg told supervisors that Orange County operates a complex $10.8 billion budget, highlighted payroll and monthly obligations, and described two primary reserves (budget stabilization at two months of general fund operating revenue and a contingency reserve set at 15% of ongoing general purpose revenues).
Kim Engelberg, the countys chief financial officer, told the special workshop the county needs a structurally balanced budget and industry-standard reserve levels to manage volatility in revenue and expenditures.
"The county budget is complicated. It is 10,800,000,000. It involves 22 distinct departments and 196 budgeted funds," Engelberg said, emphasizing that many county revenues are restricted and that only property tax revenues are discretionary. She noted payroll runs roughly "$130,000,000 every two weeks" and outlined two primary reserve accounts: a budget stabilization reserve set at two months of general fund operating revenue and a contingency reserve set at 15% of ongoing general purpose revenues.
Engelberg explained that many grant and state funding streams reimburse the county on a reimbursement basis, which increases the need for adequate cash balances. She said reserves also factor into credit ratings and cited the Government Finance Officers Association (GFOA) guidance used to set reserve targets.
Staff told the board that maintaining reserves provides time and flexibility to respond to unanticipated downturns or emergencies and is not intended to backfill ongoing budget shortfalls.
