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Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2007 Financial Analysis of the Government's Funds As noted earlier, the County uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds Unreserved fund balance may serve as a useful measure of the County's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the County's governmental funds reported combined ending fund balances of $222.9 million, a decrease of $43.8 million in comparison with the prior year. • The fund balance of the County's General Fund increased by $5.0 million. Key factors in this growth are as follows: (1) an increase of tax revenues of $7.7 million resulting from increased property values and increased franchise taxes, and (2) an increase in interest income of $1.7 million resulting from higher interest rates. • In the Impact Fees Fund there was a $12.3 million decrease. The slowdown in construction activity is reflected by a decrease in special assessments revenue of $17.6 million, or 72%. The transportation expenditures increased by $12.5 million, or 131%. Culture/recreation reported $1.4 million in expenditures in 2007 for contributions toward three community projects: the joint -use library with the local community college, soccer fields lighting in the central part of the county, and lighting improvements at a multi-purpose park. • The Land Acquisition Fund decreased by $25.4 million in fund balance, largely the result of $31.1 million in land purchase expenditures. • The Optional Sales Tax Fund decreased by $12.9 million, with $39.5 million of expenditures in capital projects including $14.1 million for the administrative complex, $4.1 million for the emergency operations center and $14.8 million for the jail expansion project. • Of the $222.9 million combined ending fund balances, $199.9 million, or 90%, is classified as unreserved, undesignated fund balance. The remainder of fund balance is reserved to indicate that it is not available for new spending. The largest reserved amount is in the Optional Sales Tax Fund, which is reserved for capital projects in the amount of $16.0 million and also for a $0.74 million loan to another fund. Other reservations include the Secondary Roads Construction Fund's two reservations of $0.67 million for capital projects and $0.71 million for advances to other funds; the two debt service funds listed on pages 108-109; and one construction reserve fund listed on page 109. The General Fund is the chief operating fund of the County. At the end of the current fiscal year, unreserved, undesignated fund balance of the general fund was $50.3 million. As a measure of the general fund's liquidity, it may be useful to compare unreserved fund balance to total expenditures. Unreserved, undesignated fund balance represents 56 percent of total general fund expenditures. The impact fees fund had a $73.1 million unreserved, undesignated fund balance, and the total impact fee expenditures were 32 percent of the ending fund balance indicating future road construction. 9