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The original item was published from 6/5/2018 2:46:00 PM to 6/14/2018 6:05:00 AM.

News Flash

Town Manager Office

Posted on: June 5, 2018

[ARCHIVED] We received inquiries whether the Town of Clinton has a $1 million surplus.

We received inquiries whether the Town of Clinton has a $1 million surplus:

It is when the final year end reporting of all income and expense are accounted for that will determine if there is a surplus.  If the Town does have more revenue than expenditures at year end, any surplus  will not be available until the following fiscal year - well after a budget is passed.


Due to the uncertainty with the State budget the Town budgeted a lower amount of expected State Revenue than we received.

After the State of Connecticut’s budget was finally passed in October 2017 – more than 4 months after our budgeting started and about 6 months after the Town’s budget was approved - the funding to Clinton was restored.


When the Town closes the fiscal year we net total revenues collected against total expenditures paid. The result of this is either an addition of funds to the Town’s unassigned Fund Balance or not.

GFOA Best Practice:

The Government Finance Officer Association (also known as GFOA) is the principal organization that dictates the Governmental Accounting Standards Board (GASB) standards that all municipalities must follow along with Generally Accepted Accounting Principles (GAAP) and offers a best practice and recommendation that has been developed, tested and constantly reviewed.

The GFOA recommends, at a minimum, that general purpose governments, regardless of size, maintain a reserved budgetary fund balance in their general fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. Therefore the Town should have in the reserve fund upwards of 6 million dollars. The GFOA’s recommendation –reserves of 15 percent or more of operating expenditures be held in the fund. For the Town to have 15% of expenditures in the unassigned fund balance would be approximately $8 million.

Clinton currently has approximately 12% of its operating expenditures or approximately $6.2 million dollars set aside in its unassigned fund balance (reserve fund). The town’s reserve fund balance policy is no less than 10% of the general fund operating budget. It has been increased over the years to improve the financial well-being of our town based on the recommendations of the GFOA, our auditors and the bonding agencies known as Standard and Poor’s, Moody’s and Fitch. These rating agencies in assigning a rating for general obligation bonds assess the following factors: The economy, the debt structure, financial condition, demographic factors, and management practice of the governing body and administration. Standard and Poor’s raised our bond rating in the expectation we keep a 12% fund balance. This high rating keeps our bond rates for borrowing low.

A healthy reserve fund balance, prudent fiscal management of the town’s expenditures and revenue are key to containing costs. There are very limited ways to raise revenue – keeping a healthy reserve is key to deal with unforeseen circumstances, such as an unanticipated major expenditure(s), natural disaster, reduction in state aid and unfunded mandates.


First we do not know the exact revenues and expenditure for year end. We anticipate utilizing the approved FY18 expenditures at this time. Should this be the case on a “budgetary basis” of accounting looking at revenues vs. expenditures (similar to what you do with your own check book) then we could possibly have more revenue than expenditures - the surplus amount is yet to be determined.

Second we do not close our fiscal year until December – 6 months after the new budget is to be in effect, which is when we know what the contribution to the Fund Balance or Reserve truly is.

Third if there is an increase to the unassigned fund balance or reserve, then the Town as a whole can decide how to use them. Decisions to use fund balance are voted on by the Board of Finance and in Town Meeting.

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