When an unexpended balance is funded from the Capital Fund Balance and the Ordinance is canceled, to which fund must the balance be returned?

When an unexpended balance is funded from the Capital Fund Balance and the Ordinance is canceled, to which fund must the balance be returned?

• A. Current Fund
• B. General Fund
• C. Capital Fund Balance
• D. Deferred Charges to Future Taxation - Unfunded

Answer: (C)

When funds are used for capital projects, they belong to the Capital Fund and its balances. If an ordinance that authorized that funding is canceled and there is an unexpended balance, the money should be returned to the same source it came from so that capital resources remain available for future capital needs. Returning it to the Capital Fund Balance preserves the separation between operating funds and capital resources, and keeps the money within the capital budgeting framework. Transferring it to the Current Fund or General Fund would mix capital resources with operating funds, which isn’t appropriate, and Deferred Charges to Future Taxation - Unfunded is used for different financing arrangements. So the unexpended balance goes back to the Capital Fund Balance.

When funds are used for capital projects, they belong to the Capital Fund and its balances. If an ordinance that authorized that funding is canceled and there is an unexpended balance, the money should be returned to the same source it came from so that capital resources remain available for future capital needs. Returning it to the Capital Fund Balance preserves the separation between operating funds and capital resources, and keeps the money within the capital budgeting framework. Transferring it to the Current Fund or General Fund would mix capital resources with operating funds, which isn’t appropriate, and Deferred Charges to Future Taxation - Unfunded is used for different financing arrangements. So the unexpended balance goes back to the Capital Fund Balance.