Fairfax County, Virginia Fairfax County, Virginia LINES OF BUSINESS - - PowerPoint PPT Presentation

LINES OF BUSINESS

March 2016

Fairfax County, Virginia

County Lines of Business (LOBs) Presentation to the Board of Supervisors

RESERVES

LINES OF BUSINESS

July 2016

Fairfax County, Virginia

County Lines of Business (LOBs) Presentation to the Board of Supervisors

www.fairfaxcounty.gov/budget/2016‐lines‐of‐business.htm

EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

• Importance of Reserves
• Major County Reserves
• Managed Reserve
• Revenue Stabilization Reserve
• Economic Opportunity Reserve
• Funding Policy
• Funding Progress
• Benchmarking

Agenda

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EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

• Reserves are an essential part of strong financial management for municipal

governments

• The size of reserves and controls over them are dependent on many factors

including:

• Volatility and diversity of the revenue base
• Flexibility and willingness to reduce expenditures or increase revenues
• External risks that may threaten the financial stability of a region
• Reserves are a significant factor in evaluating a jurisdiction’s credit worthiness by

the rating agencies

• The County’s AAA bond rating is critical for debt service affordability and access to funds in

support of capital projects

• Since 1978, the AAA has saved the County $772.42 million

Importance of Reserves

3 “The outlook has been revised to stable. The Aaa rating reflects the county’s adequate financial position supported by recently strengthened comprehensive fiscal policies, large and diverse tax base with socioeconomic indices that are well above average, and reasonable debt burden with manageable future borrowing plans.” – Moody’s Investor Services

EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

• Provides for temporary financing of critical unforeseen expenditures of a catastrophic

nature

• Target balance increased from 2% to 4% of General Fund disbursements as part of

the FY 2016 Adopted Budget Plan

Managed Reserve

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EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

• Permits orderly adjustment to revenue reduction during significant and rapid

deterioration of the local economy

• Conditions for withdrawal:
• Projected revenues must reflect a decrease greater than 1.5% from the current year

estimate

• Must be used in combination with spending cuts
• Withdrawals must not exceed one half of fund balance
• Withdrawals must be replenished
• Target balance increased from 3% to 5% of General Fund disbursements as part of

the FY 2016 Adopted Budget Plan

• Used for the first and only time in FY 2009
• Withdrawal of $18.7 million as part of the total plan to address a $64.7 million shortfall at

the FY 2009 Third Quarter Review

Revenue Stabilization Reserve

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EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

• Intended to stimulate economic growth
• Provides for strategic investment opportunities that are identified by the Board of

Supervisors

• Established as part of the FY 2016 Adopted Budget Plan with a target balance equal

to 1% of General Fund disbursements

• Funding for this reserve will occur after the Managed Reserve and the Revenue

Stabilization reserve are fully funded at their new levels

Economic Opportunity Reserve

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EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

• Options to fund increased reserve target levels include:
• One-time revenues (insurance reimbursements, significant refund revenue based on state

audit, etc.)

• 40% of year-end balances not required for critical purposes
• Savings from bond refundings and other one-time savings
• Consolidation of existing balances
• Budgeted funds for reserves when available

Funding Policy

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EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

4% 5% 6% 7% 8% 9% 10% 11% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Reserves Target

Funding Progress1

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1 Projected reserve level in FY 2017 is shown as included in the FY 2016 Carryover Review.

EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

Jurisdiction Fund Balance Policy Available General Fund Balance Mecklenburg County, NC1 8% 43.0% Chesterfield County, VA 8% 38.6% Henrico County, VA 15% 31.2% Loudoun County, VA 10% 22.8% Baltimore County, MD 10% 22.0% Prince George’s County, MD 5% 19.2% Arlington County, VA 5% 17.7% Prince William County, VA 8.5% 17.4% Montgomery County, MD1 10% 16.0% Fairfax County, VA2 10% 13.4%

Benchmarking

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1 Fund balance policy for Mecklenburg County, NC, requires that total fund balance be maintained at 28% of actual revenue, and that unassigned fund balance be maintained at 8% of actual revenue. Fund balance policy for Montgomery

County, MD, applies to unrestricted fund balance. Fund balance policies for all other jurisdictions listed apply to the unassigned fund balance or to a named reserve such as a revenue stabilization reserve or contingency reserve.

2 Available Balance for Fairfax County includes General Fund Available Balance and Non‐General Fund balances that have been identified as being available for General Fund use in the FY 2015 CAFR. Available Balance for all other jurisdictions

is based on total General Fund balance, excluding nonspendable balances, as published in most recent available CAFR documents.

EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

8.7% 16.0% 17.4% 17.7% 19.2% 22.0% 22.8% 31.2% 38.6% 43.0% 4.7% 0. 0.0% 0% 5. 5.0% 0% 10 10.0% .0% 15 15.0% .0% 20 20.0% .0% 25 25.0% .0% 30 30.0% .0% 35 35.0% .0% 40 40.0% .0% 45 45.0% .0% 50 50.0% .0% Fairfax Montgomery County, MD Prince William County, VA Arlington County, VA Prince George’s County, MD Baltimore County, MD Loudoun County, VA Henrico County, VA Chesterfield County, VA Mecklenburg County, NC

Gener General Fund Fund Bala Balance as as a Pe Perc rcent of

• f Re

Reve venues

% Gener General Fund Fund Ba Balance lance % Availab ailable Reserves Reserves 13.4%

FY15 FY15 Pee Peer Gr Group Medi Median an = 20.6 20.6%

Benchmarking

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EMPLOYEE COMPENSATION

County of Fairfax, VA – Lines of Business Presentation

Discussion

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