Solution
Prince answered on
Jul 13 2024
Solution of Part I & II
Student Name
13th July 2024
Part 1:
1. Types of budgets maintained by Cary:
There are numerous budget funds to account for the expenditures and revenues of local government, which is a comprehensive form of finance. As Rubin (2019) notes, local governments generally use multiple types of budgets to better govern their operations and forward planning.
A. Annual budgets:
General Fund budget - Cary's main operating fund that covers day-to-day governmental operations and services. That may mean delaying actions on critical functions, such as public safety, general administration and parks and recreation. The Transit Special Revenue Fund budget in particular oversees public mass transit operations and secures funding for providing this highly important service. The Emergency Telephone System Special Revenue Fund replaced the 911 state budget, indicating that emergency communicative resources need a specific fund and governance system.
B. b) Multi-year project grants - where large amounts of money get allocated to big projects.
Cary examples long-term capital improvements and infrastructure projects in multi-year project budgets. The Capital Projects Fund, with sub-funds for Parks, Public Works (streets), Fire and General Governmental projects is used to plan and execute the most significant investments that span multiple fiscal years. The Utility Systems Enterprise Fund also engages in multi-year budgeting for water and sewer infrastructure projects. This requires a multi-year perspective for the federal community development initiatives that are managed by the Community Development Block Grant Special Revenue Fund as well. Multi-year budgets such as these, which are consistent with best practices in local government capital budgeting (Marlowe et al., 2009).
C. c) Internal Service Fund Budgets:
Cary employing Internal Service Fund budgets for the Health Insurance Internal Service Fund and Fleet Management Internal Service Fund is an advanced model of managing shared services across departments. It also enables the government organization to have budget that is based on these services so as to be able alocate costs appropriately and optimize service delivery (Kioko et al., 2011).
2. Management Assertions regarding both Budgetary and fiscal compliance:
a) Rating of AAA Bonds:
Management: "Cary Holds All Three AAA Bond Ratings for GO and Revenue Bonds, the Highest Rating Available from Each Agency."
This will demonstrate good fiscal management and maintain compliance with debt covenants. Though the highest bond ratings are within reach by adhering to sound fiscal policies and providing consistent financial performance.
) Compliance with Legal Debt Limit
Management said: "The legal debt margin for Cary is $2.4 billion."
This statement is in compliance with a State of North Carolina statutory limitation on general obligations debt, which cu
ently limits us to issue only up to 8% of the present total assessed value of all taxable property within our county. Making sure to stick within this limit is essential for fiscal and legal reasons (Marlowe, 2015).
c) Cautious Topline Projections
The MD&A states: "Cary was very conservative in their estimation of certain revenues...for the 2023 budget, including ad valorem taxes and other taxes that were under-budgeted by $4.9 million combined."
This comment builds on the
oken-window model of conservative budgeting, a major support for fiscal stability and mandates to balance budgets (Hendrick 2011).
3. Budgetary and fiscal compliance indicators:
Budget-to-actual reports help provide valuable information regarding how well or not a local government is actually managing its fiscal resources in compliance with the budget. As noted by Justice et al. Although this seems like repeating things I have already said before, these same changes are necessary to determine economic sustainability and where actions on the profitability may need be needed (2020)
a) General Fund Positive Variance in Revenue:
The General Fund indicates the actual revenues were $225,390,830 compared to budgeted of $219,785,587 or a favorable variance of only $5.6 million. This represents a significant overperformance, suggesting very strong fiscal health and potentially conservative revenue projections. As indicated by Hendrick (2011), revenue variance results from the comparison of actual (with budget) revenues and positive variances occu
ing regularly can provide insight as to a government's ability to abso
economic ebs and tides, while maintaining services.
This means the local government either has more money to spend on services or save for a rainy day. The money would give Cary additional financial flexibility to handle unexpected events or invest in community priorities. But consistent large variances may also signal a requirement of more precise forecasting techniques.
) General Fund Expenditure positive variance:
Budget The final budget was $243,978,290 with actual expenditures of $233,913 910-budget variance Actual better-$10M This is a good news because it means we are at least cost effectively controlling and managing our budget. Rivenbark and Roenigk (2011, p. 3) point out that although consistent...