Kittitas County Fund Balance Policy_2025

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2 4 Policy When the ARG and the UBT are shown to be at the following levels by applying the procedures described in this policy, corrective actions shall be considered to preserve the financial health and resilience of county operations. (Green) Strong Financial Health: (ARB) 6+ Months of Unrestricted General Fund Balance and/or (UBT) <0% Surplus Trend: Indicates strong financial flexibility. Persistent surpluses may allow allocation of excess funds to non-recurring expenses (e.g., capital projects, one-time initiatives). Departments and Offices should analyze multi-year revenue and expense trends and assess the long-term impact of ongoing commitments (e.g., new full- time equivalents). Strategic planning is encouraged; no immediate corrective action is required. (Yellow) Moderate Financial Concern: (ARB) 3–6 Months of Unrestricted General Fund Balance and/or (UBT) 0%-5% Moderate Balance Consumption: Requires heightened spending restraint. Structural deficits forecasted for future years necessitate proactive measures. Possible corrective actions include: • Implementing vacancy freezes • Freeze cost-of-living adjustments for non-bargained employees. • Adopt net-zero budgeting practices. • Eliminate interfund subsidies. • Departments and Offices must monitor spending and align with budget priorities to prevent further reserve depletion. (Red) Critical Financial Stress: (ARB) Less Than 3 Months of Unrestricted General Fund Balance and/or (UBT) >5% Significant Balance Consumption: Below minimum reserve threshold, requiring immediate action. Immediate corrective actions may include: • Implement all Yellow Tier actions. • Reduce staff (e.g., layoffs or hiring freezes). • Reduce service levels. • Asset divestitures or other cost-saving measures. 5 Procedures The Auditor’s Office is responsible for: • Monitoring and reporting Unrestricted General Fund balances and trends to the BOCC, Departments, and Offices to ensure adequate reserves and financial flexibility. • Calculating and restricting the DGFR, representing 3 months of Unrestricted General Fund Balance, during the annual budget adoption process using prior year audited financial statements, and ARB/UBT methodology. • Reassessing and revising the DGFR in Q3 of the subsequent year, if necessary. • Implementing BOCC appropriation actions per the Auditor’s statutory role as Chief Financial Officer. The DGFR should be restricted within the General Fund and accessible only by BOCC resolution for critical functions during severe financial stress.