Enterprise and Special Revenue Funds

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Back in 2011, the accounting method for the Lake Worth golf course changed.  The golf course was reorganized and is no longer an Enterprise Fund.  Prior to 2011, the golf course paid for itself as far as operational expenses but the huge administrative fees, debt and capital improvements always showed it operating in the red. There were always those supporting growth of any kind who would say, "See, it can't make any money; we should sell off 9 holes for development." Those people exist today. The Golf Course fund is now and has been since 2011, a Special Revenue Fund and it will be treated like other parks within our city, giving it a chance to survive. It is now profitable.

On Tuesday night, our Vice Mayor, Scott Maxwell said, "So, each one of these funds--the Electric Utility, the Golf Course, the Beach Fund, the General Fund--all of our funds have to be balanced.  To the extent of how much we're losing up there (the beach park), is unknown."  Maxwell is right to a certain degree but not entirely. Maxwell gave information that was somewhat misleading relative to our golf course and our beach when he grouped them in with other funds and when he said those funds had to balance. 

Our Golf Course is no longer an Enterprise Fund. If an activity's principal revenue source meets any one of the following criteria, it is required to be reported as an enterprise fund: (1) an activity financed with debt that is secured solely by pledge of the net revenues from fees and charges for the activity; (2) laws or regulations which require that the activity's costs of providing services, including capital costs, be recovered with fees and charges, rather than with taxes or similar revenues; or (3) pricing policies which establish fees and charges designed to recover the activity's costs, including capital costs. In an enterprise fund, all costs of operating the enterprise must be identified. This includes direct costs, indirect costs, employee benefits, legal and borrowing cost, and capital expenditures. These costs may also include an appropriation for emergency reserve and a budget surplus.

An account established by a government to collect money that must be used for a specific project is a Special Revenue Fund. These funds  provide an extra level of accountability and transparency to taxpayers that their tax dollars will go toward an intended purpose. Special Revenue Funds account for the proceeds of specific revenue sources (other than trusts for individuals, private organizations, or other governments, or for major capital projects) that are legally restricted to expenditures for specific purposes. Governments must rely on operating and capital budgets to pay for any shortfalls that revenues do not provide.

Our casino beach fund is not, according to the city, an enterprise fund.  Therefore, the city must rely on funds from our operating budget to pay those expenses when there is a shortfall of revenue to cover the total costs.

So, when Scott said these funds all have to be balanced, he is right to a certain extent because all monies go into our operating fund that must be balanced by law. He was wrong if he was implying that special revenue funds representing certain enterprises must pay for themselves. As an add, many expenses at our beach park were/are (the audit is delayed) thrown into the Olympic Pool that make it impossible to show a profit there, i.e., total toilet paper cost and total water costs, etc. were expensed to the pool at one time.

When asked for an explanation on the two distinct funds, the new Finance Director, Nerahoo Hemraj, referred me to GFOA GAAFR Blue Book; GASB 34 Model version.

According to the city--

Special Revenue Funds
102		Improvement Fund
103		Building Permit Fund
140		Beach Fund
150		Parking Improvement Fund
160		Code Remediation Fund
170		Road Improvement Fund
180		Grant Fund
181		Beach Redevelopment
190		Beautification Fund
195		Utility Conservation Fund
404		Golf Course
605		Simpkin Trust
606		Library Endowment Fund
607		Library Trust Fund
608		Incentive Fund
635		Escheat Fund
640		Criminal Justice
643		Building Education Fund
647		State Forfeiture Fund
Enterprise Funds
401		Electric Fund
402		Water Fund
403		Local Sewer Fund
405		Regional Sewer
406		Regional Sewer R & R
408		Stormwater Utility Fund
410		Refuse, Collection & Disp
480		Storm Water Utility Fund

Sources: Office of Financial Management;  Municipal Accounts.