Chapter 07: Agency Revenues & Fund Balance Reports

Summarized Revenue Reports

For all budgeted accounts managed, agencies must project revenue that is collected, deposited, distributed, or transferred, regardless of whether the agency spends from the account.

Only projected revenue transactions made by an agency should be reported by that agency. For example, the Department of Revenue reports taxes collected, although it may not spend them. The Office of the State Treasurer (OST) reports interest earnings instead of individual agencies. Revenue projections should be entered on the summarized revenue by account and source report form.

How the Data is Used

The Governor is required to propose a balanced budget. To balance each fund, agency revenue estimates for the ensuing biennium are combined with beginning budgetary fund balances, working capital reserves, current biennium revenue actuals and estimates, and proposed expenditures to calculate each account’s 2027-29 ending fund balance.

What’s on the Summarized Revenue by Account and Source Report

The summarized revenue by account and source report form shows anticipated revenues in budgeted funds for the ensuing biennia. These include all accounts with budget types of A, B, M, and certain type H accounts. See the State Administrative and Accounting Manual (SAAM) Section 75.30.50 for a list of funds and their respective budget types. The report also includes recommendation summary (recsum) text for each entered revenue related decision package (DP).

Include Both Capital and Operating Budgeted Revenues

Revenue estimates related to the capital budget should be included with estimates for the operating budget on the summarized revenue by account and source report form. Although it is typical for a capital project to take several biennia to complete, the revenue estimates should be limited to revenues collected in the 2027-29 biennium.

What Information is Required

Agencies must submit maintenance level (ML) and policy level (PL) revenue estimates for the 2027-29 biennium by fiscal year, account, major source, and source. Revenue estimates should be reported on a GAAP basis.

OFM does not require current biennium or carry-forward level (CFL) estimates for revenue. ML revenue for all funds for the 2027-29 biennium should be entered in one revenue-only ML DP with recsum code 90. Any revenue adjustments related to an individual ML item should be included in the same DP as the expenditures for that item and not included in the ML-90 DP.

Policy Level revenue items must be submitted in a PL DP. Related expenditures, if any, should be included in the same DP. Review if you have new or increased fees.

Explain Assumptions in the DP

In a DP containing revenue, include the following information in the narrative:

Explain key assumptions underlying the estimate of revenue source.
Numerically show how the projected revenue amounts were calculated.
If continued viability of a revenue source is in question, discuss why and expected impacts.

Partially Budgeted Accounts

The agency should only report revenue associated with the budgeted portion of the account. Partially budgeted or mixed funds are generally proprietary funds. In proprietary funds where only administrative costs are budgeted, only enough revenue should be submitted to offset the budgeted expenses. The administering agency must be sure that reported revenue is sufficient to cover the budgeted expenditures for all agencies spending from the account. In budgeted proprietary funds that engage in sales of merchandise, gross profit (sales net of cost of sales) should be submitted in the budget rather than total sales revenue.

Balancing Federal and Private/Local Revenues and Expenditures

Each agency’s federal revenues must equal federal expenditures (both operating and capital).

There are exceptions if any agency receives federal revenue spent by another agency. In this case, federal revenues and expenditures must net to zero at the statewide level. Known exceptions are:

Office of Superintendent of Public Instruction, Fund 113 – Common School Construction Account
Military Department, Fund 05H – Disaster Response Account. Federal revenue will exceed expenditures by the amount of recovery dollars received when disasters are closed out. These dollars become state fund balance, which offsets federal expenditure variance.
Health Care Authority (HCA), Fund 001 – General Fund Federal. After expenditures are settled, match revenue leaving a positive variance to offset negative variance in the Department of Veterans Affairs (DVA). These funds are Medicaid dollars booked at HCA but spent in support of veterans’ homes in Retsil and Orting.
DVA, Fund 001 – General Fund Federal. Negative variance is offset to positive variance in HCA. Funds are Medicaid dollars booked at HCA but spent at the veterans’ facility in Spokane.
Employment Security, Fund 119 – Unemployment Compensation Administration Account. CFL fund balance from previous biennium.
Washington State Department of Transportation (WSDOT)/Bond Retirement and Interest, Fund 389 – Toll Facility Bond Retirement Account. For the federal GARVEE bonds, WSDOT records the revenue to pay the debt service. Bond retirement and interest pays the debt service and records the expenditure.

Similarly, private/local revenues must equal private/local expenditures (both operating and capital). There are exceptions if an agency receives private/local revenue that is spent by another agency. In this case, private/local revenue and expenditures must net to zero at the statewide level. Known exceptions are:

DSHS, Fund 001 – General Fund Private/Local. After expenditures are settled, match revenue.

ABS will produce a warning if federal or private/local revenues and expenditures are not in balance on the pre-release edit report.

Use ABS for Preparing the Report

Agencies must use ABS to prepare the summarized revenue report. ABS will generate the report based on the revenue entered in the DPs. Contact the OFM Help desk (HereToHelp@ofm.wa.gov) at 360-407-9100 if you have questions or need access to the system.

Use Prescribed Revenue and Source Codes

Use the correct two-digit major source code and two-digit source code to identify each type of revenue. Refer to the list of official revenue source codes in SAAM for the appropriate Revenue Source Codes and titles.

Provide Updated Revenue Estimates to OFM in the Fall if Forecasts Change

OFM uses the Economic and Revenue Forecast Council’s September and November forecasts for accounts that they, and participating agencies, forecast. Agencies must inform their OFM budget advisor of material adjustments to the submitted revenue estimates. Agencies should update current biennium revenue allotments regularly to provide an accurate picture of resources in dedicated accounts.

Fund Summary and Fund Balancing

Reserve Fund Balance for Compensation and Other Changes

Agencies should ensure their budget submittals will reserve enough fund balance to cover potential salary, health insurance, pension, and central service agency charge adjustments by OFM and the Legislature. As a guide, look at the amounts funded for these changes in previously enacted budgets.

Fund Administrators Must Coordinate with Other Agencies on Projected 2027-29 Ending Fund Balance

Administering agencies for accounts need to coordinate with agencies using the account to ensure the combined budget proposals do not put the account into a projected negative fund balance at the end of the 2027–29 biennium. The OFM Fund Reference Manual lists the administering agency for each account if you have questions.

Beginning Budget Fund Balances

OFM will send agencies the beginning budget fund balances that will be used for the budget. These are divided into two groups: Governmental Funds and Proprietary Funds.

Governmental funds. Each biennium, the Governor must propose a balanced budget for every account. Beginning fund balances for the current biennium are based on the Annual Comprehensive Financial Report (ACFR). These balances represent the beginning “budgetary” or “spendable” fund balances. This will likely not be the same as the accounting/book/cash fund balance in the Agency Financial Reporting System (AFRS) or the ‘cash’ or ‘book’ balances in OST’s Treasury Management System (TM$). OFM will notify agencies in the spring of the adjusted beginning balances that it plans to use based on the General Ledger (G/L) codes listed below.

In the case of governmental funds, all revenue (32xx), all expenditure (65xx) codes and the following fund balance G/L codes are included in the beginning fund balance (Note: An x indicates all G/L codes in that series):

9230 Restricted for Higher Education
9231 Restricted for Permanent Funds – Realized Investment Losses
9232 Restricted for Education
9234 Restricted for Transportation
9235 Restricted for Bond Covenants
9238 Restricted for Other Purposes
9240 Restricted for Human Services
9242 Restricted for Wildlife and Natural Resources
9244 Restricted for Local Grants and Loans
9246 Restricted for School Construction
9248 Restricted for State Facilities
9250 Restricted for Budget Stabilization
9252 Restricted for Debt Service
9255 Restricted for Cash and Investments with Escrow Agents and Trustees
9260 Restricted for Pollution Remediation Liabilities
9270 Restricted for Unspent Bond Proceeds
9271 Restricted for Operations and Maintenance Reserve
9272 Restricted for Repair and Replacement Reserve
9273 Restricted for Revenue Stabilization
9274 Restricted for Unspent GARVEE Bond Proceeds
9283 Restricted for Third Tier Debt Service
9284 Restricted for Fourth Tier Debt Service
9285 Restricted for GARVEE Bond Debt Service
9310 Committed for Higher Education
9311 Committed for Education
9320 Committed for Transportation
9321 Committed for Other Purposes
9323 Committed for Human Services
9324 Committed for Wildlife and Natural Resources
9325 Committed for Local Grants and Loans
9330 Committed for State Facilities
9340 Committed for Debt Service
9372 Assigned for Other Purposes
9390 Unassigned
9723 Capital Asset Policy Changes

Proprietary funds. In the case of proprietary funds, the calculation for the beginning budgetary fund balance includes only short-term assets less short-term liabilities. Long-term assets and long-term liabilities are excluded because they do not represent resources or obligations that must be paid within the year. The following short-term asset and liability G/L codes are included in calculating the beginning budgetary fund balance for proprietary funds:

1110 Cash in Bank
1120 Undeposited Local Cash
1205 Temporary/Pooled Cash Investments
13XX Receivables and Allowances – Short-term
1415 Donated Inventories
1420 Merchandise Inventories
1430 Work-in-Process Inventories
43XX Treasury Cash
5111 Accounts Payable
5112 Interest Payable
5113 Claims and Judgments Payable
5115 Contracts Payable
5116 Retained Percentages Payable
5117 Construction Contracts Payable
5119 Employee Insurance Benefits Payable
5122 Matured Interest Payable
5123 Investment Trades Pending Payable
5124 Accrued Salaries and Fringe Benefits Payable
5126 Accrued Prizes Payable
5130 Due to Fiscal Agents
514X Other Liabilities
515X Intergovernmental and Intragovernmental Payables
5171 Current Installment Purchase and Contracts Payable
5174 Current Right-to-Use Lease Liability
5175 Current Subscription IT Liability
518X Other Liabilities
5190 Unearned Revenues
5191 Deposits Payable
5193 Liability for Unclaimed Property Refunds
5194 Liability for Cancelled Warrants/Checks
5195 Deferred Expenditure Recoveries
5198 Loans Payable
5199 Other Liabilities
71XX Treasury Cash In-Process

Revenue Transfer Reconciliation Statement

Generally, operating revenue transfers balance at the agency level. A transfer reconciliation statement must be submitted as part of the revenue justification material when both sides of a transfer are not shown on the summarized revenue report (e.g., transfers between budgeted and non-budgeted funds). This statement assists the OFM advisor in understanding the purpose and mechanism for the complete transfer.

Here is a sample format for the transfer reconciliation statement:

SOURCE 06XX — TRANSFERS IN:

Fiscal Year Amount To account Purpose

SOURCE 06XX — TRANSFERS OUT:

Fiscal Year Amount From account Purpose

Working Capital Reserve

The administering agency of an account must be the agency to submit a working capital reserve form (B9-1). This form lists the recommended ending fund balance for those accounts.

Agencies use ABS to prepare this report. ABS includes the appropriate worksheet and prints the report.

What to Consider When Estimating a Reasonable Working Capital Reserve

The agency should enter the working capital reserve that, based on historical data and using its best judgement, should remain in the account at the end of each biennium to cover fluctuations in cash flow. For most funds, a reasonable amount would cover cash expenditures for two months.

The recommended balance should be entered for each account needing a working capital reserve. There is no need to indicate a revenue source code.

The recommended ending balance should include a cash reserve sufficient to ensure the account does not end the biennium with a negative cash balance. Administering agencies could recommend a higher ending balance because of volatile revenues, unique cash-flow cycles, or to offset an operating deficit in the ensuing biennium.

Administering agencies should ensure sufficient balance to cover compensation, central service agency charge increases, and other cost adjustments typically made after agency budget requests have been submitted.

Since only administering agencies may enter a recommended reserve, they should contact any other agencies operating in the account to determine the impact of those operations before recommending an ending balance.

Reminders When Preparing Revenue Submittals

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