COLUMBIA, Mo 2/20/14 (Editorial) -- Our story YOUR MONEY, NOT AT WORK: Boone County ‚Äúslush Fund‚ÄĚ hits $47 million "contains several errors and mischaracterizations," Boone County Auditor June Pitchford explained in a six-page response that lays out her perspective on an important government accounting goal:¬† financial stewardship.¬†
Across all funds in Columbia's three largest agencies -- the city, Boone County, and Columbia Public Schools -- over $262 million sits in so-called "undesignated, unrestricted" fund balances, labeled "slush funds" because the idle money far exceeds normal reserve requirements.¬†¬†
Pitchford's response about the County's portion -- sent in PDF format -- is too long to reprint here, but can be read in its entirety on our Scribd page.¬†
Briefly, the Auditor worries our use of "slush fund" implies corruption; and that the story mis-characterizes "fund balance"; overstates a County policy mandating a 17% cash reserve in its General Fund, one of several different accounts that contain large "unrestricted, undesignated" fund balances; and fails to properly account for recent proceeds from the new children's services and 911 tax measures.¬†
But as is often the case with budgets and financial reports, much of the dispute is a difference of opinion.¬†
In 2011, Boone County's General Fund reserve was 38%; in 2012, 44%; in 2013, estimates are running as high as 50% and in 2014, the budget plans for 37%.
In fact, every year since 1997 (page 90 of the budget) the General Fund's reserve has exceeded the 17% requirement, in many years by more than double. ¬†¬† In dollars, the reserve has grown from $5 million to $10 million in that time.¬†¬† County government has to keep taking more money from We the People to keep the reserve so high.¬†
Auditor Pitchford considers it "good stewardship," even with a 17-year history showing the money just sits and grows.¬† "17% is a minimum fund balance," she explains.¬† "There is no violation of County policy if the fund balances exceeds the minimum and to make such a statement is false and misleading."¬†
I would agree if the reserve was exceeded by 5%, or even 10%.¬†¬† Even 25%.¬† But I consider it poor financial stewardship to exceed the requirement by more than 100% -- by more than double.¬†¬† It's money not used for roads or children's mental health services;¬† not used for County employee raises; not used to offset higher taxes and fees.¬†
And it's certainly NEVER refunded to the taxpaying public, which struggles every year under a larger tax, rate, and fee burden while a chosen few special interests -- e.g. big developers -- clean up. ¬† ¬†
I'm far from the only journalist to worry about giant reserve funds -- and to use the term "slush fund" to describe them.
"First, an overly large reserve fund without rules on how it can be used can easily become a slush fund, providing quick and easy money for whatever projects pop up on the fly," explains an editorial about reserve fund policy in Beaufort County, South Carolina.¬†
"Residents should not have to pay more in taxes or see services cut so the county can boast of a large savings pot."¬†
Click for AUDITOR JUNE PITCHFORD RESPONSE