by Lynn Meredith
Elburn—The village of Elburn is switching its accounting system for this year’s budget to fund accounting.
Essentially, fund accounting means that municipalities bring in revenue and expend money on a fund-by-fund basis. Money that is collected as part of the water and sewer billing processes, for example, can only be used to maintain water and sewer operations, administration and other operating costs. That money cannot be used to pay police salaries or purchase squad cars.
“Funds can be thought of as a way of categorizing the source of revenue and expenditures relating to certain business functions of the village,” Village Administrator Erin Willrett wrote in an overview of fund accounting to the village trustees. “One advantage to fund accounting is that one can easily get an overall view of each fund’s net income, cash flow and financial standing to evaluate the need to enhance revenues or control spending.”
Funds may be restricted or unrestricted, and one project may be funded by several sources of revenue if appropriate. The only unrestricted funds are those in the General Operating and General Capital funds.
The General Operating fund receives its revenue from property tax collections, its share of retail taxes, along with fees for liquor licenses, court fines, building permit fees and others. The taxes on residents’ phone, gas and electric also go into this fund. The monies collected go to costs of administration, police and streets departments, as well as salaries for elected officials.
The General Capital fund receives its revenue from Road and Bridge property taxes assessed by Elburn’s two townships. The village gets 50 percent of the taxes collected from properties inside Elburn, and that money is returned to the village in this fund. The monies go to any capital expenses in the administration, Police and Streets departments.
Other funds included Water and Sewer Operating, and Capital funds (two separate funds), Park Dedication, Recreation, Transportation, Metra Parking, Escrow and others.