Overview
Title V Financial
Management a
A Handbook for Financial Officers
and Program Managers
I ' * „ . ^ -
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Acknowledgm ents
The production of this kiokJet is made possible through grant miiitbei
993379-0!-0 from the Environmental Protection Agency to the Maryland Sea
Grant College. We arc particularly appreciative of support from the Office of Air
Quality Planning and Standards and Region III.
Fund accounts andrfinanmi tonus in Appendix A arc from Gmvnmummi
Accounting, Auditing and Financial Reporting, reprinted with permission of the
Government Finance Officers Association, J80 N. Michigan Avenue, Suite §00,
Chicago, II, 60601.
Special thanks to Mark Kelleii for bis help m producing this report.
For additional copies of this himcibook, contact;
Environmental 'Finance Center
Maryland Sea Grant College
University of Maryland
0112 Skinner Hall
College Park, MP.20742
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Overview of
Title V Financial
Management and Reporting
A Handbook for Financial Officers
and Program Managers
Produced by
Environmental Finance Center
University of Maryland System
Supported by
U.S. Environmental Protection Agency
Maryland Sea Grant College
January 1997
-------
to 19*17 by Maryland Sea Grant Colli pe
Publication Number UM-SG-CEPF-OT-tB
Produced bv the Environmental Finance Center, University of Maryland System m coop-
eration with the Maryland Sea Grant College, University of Maryland, College1 Park,
The Environmental Finance Center (EPC) Network is an association of six wiivcrsttici.
(realed under KPA sponsorship, providing fmrmce training and educational services to
slate and local officials and small businesses, EFC service?: arc designed to demonstrate
ways til lowering (he cans of, and increasing investments in. environmental facilities and
services. Funding for the network came initially through EPA grantK then Iron) othei
MinrceA as well, Mich a% public agencies and private source t. and from fees for training
courses, materials, and conferences.
The participating institutions! are; the University of New Mexico, University of Maryland
System; Maxwell School at Syracuse I'nivetsity; California State Untversiiy ;« Hay ward;
Cleveland State Untversiiy; and Idaho Universities Policy Group al Boise State.
Printed in ti« United States of America on recycled paper,
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Contents
Introduction v
Overview of Title V Program Management Challenge viii
CHAPTER 1
Turn- Keeping and Cost Allocation i
introduction J
Allocating Title V Costs 4
Time Keeping < 7
Lessons Learned by Air Quality Agencies 15
Conclusion . 19
CHAPTER. 2
Accounting Framework lor Title V Programs 21
Types of Funds 23
Government Fund Accounting Reports 29
Accounting for the Title ¥ Program 29
Summary: Pros and Cons of Title V Accounting
Structure Alternatives . 38
C riteria for Evaluating the Need so Modify
an Agency's Title V Accounting Structure 40
CHAPTER 3
Management Reporting and Tracking 43
Introduction 43
Internal Reporting - - 44
External Reporting 49
Conclusion 55
Appendix A 59
Appendix B . >.., . ,...,.....,.,,....,....81
m
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Introduction
Title V of the Clean Air Act Amendments of 1990
(P.L. 103-549) establishes an operating permit pro-
gram for stationary sources of air pollution. Title V
requires that state agencies and local air programs col- [
lect fees from air permit holders to support operation i
of the permit program. Since the passage of the Clean j
Air Art, states have been working diligently to ad- i
dress the many challenges associated with the impie- j
mentation of the Title V program. All states and U. S. j
territories (6) have submitted operating permit pro-
grams io EPA for approval. Most of these programs
have been approved.
Among the myriad challenges confronting slates
in designing and implementing the Title V operating
permit program is the need to address associated fi-
nancial management responsibilities. This document
explores the financial challenges air quality agencies
face when implementing the Title V program. The
goal of the document is to help state. local, and feder-
al air program personnel—especially those with limit-
ed financial management experience—to understand
the fundamentals of financial management and report-
ing. It provides an oveiview of Title V program fi-
nancial management challenges, discusses generally
how states are addressing these challenges, provides
state-specific exampJes of Title V management and re-
porting practices, and discusses pros and cons of vari-
ous approaches to financial management.
Introduction v
-------
This overview report was developed to be an
introductory guide to Key Title V financial manage-
ment responsibilities — but should not be considered
to he formal EPA guidance. The report was devel-
oped through a broadly designed interview-survey
process that explored die state/local application of gen-
eral government accounting, budgeting, and financial
reporting concepts to the Title V program. The prima-
ry target audience for this document includes state and
local air quality agencies that are in the process of de-
veloping or refining the financial management and re-
porting aspect of their Title ¥ programs.
The remainder of this report is presented in five
.sections. The next section provides a brief description
of the Title V management challenges as were identi-
fied through the research phase of the project.
Sections three, four, and five explore the primary fi-
nancial management challenges. The findings of the
study are summarized in the conclusion section of this
report.
How Many Air Programs Are There?
There, are 56 state (including the District of
Columbia and Territories) and 60 local air operating
permit programs in the United Stales. Most states in
the U.S. have a single program account for all air pro-
gram operating procedures, fees, and permits within
their state.
In eleven states there are also local air programs.
Some states allow these local programs to collect and
-------
distribute their own Title V fees. In other states,
however, a state agency collects ail Title V fees and
distributes them to the local programs. In California,
on the other hand, there is no stale program at ail. and
all 34 local permitting authorities submit operating
permit programs directly to the EPA,
There are no multi-state Title V permit programs.
There are. however, some multi-state boards which
discuss certain environmental issues, including air
pollution and Title V permits.
Region States/Territories State Programs Local Programs
Clean Air Act
Operating Permits Programs
Number of
Number of
Number of
IV
V
VI
VII
VIII
IX
X
111
6
4
6
8
6
4
6
7
4
6
4
6
a
6
5
4
6
7
4
0
0
0
10
0
1
2
0
39
8
Total
58
56
60
Introduction m
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Stacks with Local Programs
Number of
Region
State
Local Programs
IV
Alabama
2
IV
Kentucky
1
IV
North Carolina
3
IV
Tennessee
4
VI
New Mexico
1
VII
Nebraska
2
IX
Arizona
3
IX
California
34
IX
Nevada
2
X
Oregon
1
X
Washington
8
Overview of Tille \' Program Management
Challenges
The introduction of the Clean Air Act Tille V Fee
Program presented many challenges to state air quali-
ty agency personnel specifically in the areas of finan-
cial management and reporting. Historically, these
agencies have been involved with the implementation
and management of the Section 105 program, funded
by federal grants. Conversely, Title V does not pro-
vide federal grants to state air quality agencies for
program implementation. Instead, the Title V pro-
gram is designed to be completely self sufficient, rely-
ing on fees received from Title "V permittees to offset
program expenditures. In many eases, the Title V pro-
gram is the first major fee-based program implement-
ed by state air quality agencies.
viii Introduction
-------
Learning to fiscally account for fee-based program
revenues and expenditures is the primary challenge
facing air quality agencies thai have historically dealt
primarily with grant-based programs. Further, these
agencies must now learn to manage fee-based and
grant-based program resources simultaneously. The
Title V program requires stale ait quality agencies to
account for Title V resources in a fashion that segre-
gates them from other air quality programs, requiring
state agencies to review the methods used to account
for program resources.
Based on interviews conducted with state and lo-
cal air program personnel the financial management
and reporting challenges facing Title V program agen-
cies can be broken denvn into three categories:
* Time Keeping and Cost Allocation. As a result ol
Title V, air quality agencies modified procedures for
tracking and distributing labor and non-labor costs
among Title V and non-Title V programs, A key
challenge these agencies face is addressing the
manner in which indirect costs are allocated to
these programs.
* Accounting Fund Structures and Controls. In es-
tablishing the Title V program, air quality agencies
had to select on accounting fund structure for the
Title V program. Different fund structures are rec-
ommended for different types of activity by She
governmental accounting industry. Also, (he fund
structure would need to assure the permit program
is managed as a segregated set of accounts to assure
compliance with the Clean Air Act,
Introduction Ix
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4 Internal ant! Externa! Reporting, Finally. those
agencies implementing the Title V program are de-
veloping internal and external reporting procedures
for their stakeholders. Assessing the success of the
Title V program will rely heavily on the use of
sound reporting practices.
These categories follow the natural sequence of
actual financial management activities. First, the flow
of financial information begins with the initial input
of labor cost information in the time keeping process.
Next, financial information is organized in the budget
and accounting system. Finally, the information is
reported in financial and other reports that are gener-
ated for internal and external reporting.
x Introduction
-------
Chapter 1: Time Keeping
and Cost Allocation
Introduction
Time Keeping
The ability (o accurately track tune spent by em-
ployees is just as important in she government sector
as it is in the private sector. Private sector businesses
need to keep track of whaf their employees are doing
— as well as when they are doing it •— in order to
minimize costs and maximize efficiency. While these
goals are also important for governments, sound time
keeping procedures also allow government accounting
departments and program staff m monitor (he labor
charges from program to program. Government bud-
geting arid accounting is characterized by strict segre-
gation of the numerous programs.
This same argument holds true for the Title V pro-
gram. Funds to be used to pay the engineers, man-
agers, and administrative staff for working on Tide V
casks must come from ihe Title V program. The only
way to ensure the proper segregation of these labor
charges is through the use of an appropriately de-
signed time sheet process, Employees record their
time on a daily basis by using different time codes,
each of which refers to a unique account to which
time is charged. After time sheets are submitted, the
Chapter I: Time Keeping and Cost Allocatitm 1
-------
total labor hours charged to each project can be calcu-
lated, either manually or through a computerized sys-
tem. Mosl importantly, this information can then be
used by accounting staff and managers alike to moni-
tor the status of Title V. Section 105, or any other spe-
cific air quality program.
Cost Allocation
A primary function of any government accounting
system is to record accurately revenues and expendi-
tures as they are realized or incurred. Timely record-
ing or posting of account activity is necessary in order
to ensure up-to-date accuracy of financial reports that
may be scrutinized by a variety of entities. While
timeliness is important when measuring the effective-
ness of an accounting system, it is also necessary to
review the manner in which expenditures are allocated
to various revenue sources. The costs of implementing
a fee-based program such as Title V should be recov-
ered by the revenues realized through the operation of
that same program. In order for this to occur, effective
governmental accounting systems need lo record all
direct and indirect costs associated with program im-
plementation in a manner that allows those costs to be
identified or recognized — as a Title V program ex-
pense, for example. Once the accounting system has
identified the program(s) to which the expense is at-
tributed, the expense can then be allocated., offsetting
the corresponding revenue source(s). Figure 1 graphi-
cally depicts the flow of information associated with
the time keeping and cost allocation process.
2 Chapter 1: Time Keeping and Co&t Allocation
-------
Figure 1: Cost Allocation
and Time Keeping Activity
Employee carries
out Title V
related activity
Agency identifies
method to allocate
shared costs
between Title V and
other cost centers
M'v!"!Cj ncllvilv to.!1;! j
employ v.1 I
¦:'« time j
oil iii'.i - Mit..." i
Periodically (monthly
or quarterly) charges
are distributed based
on cost sharing approach
{% of total hours speni
on Title V}
Manager oversees
Chapter 1; Time Keeping and Cost Allocation 3
-------
Allocating Title V Costs
Numerous costs are associated with Title V pro-
gram implementation, all of which can be allocated in
a variety of ways. Direct labor includes those profes-
sionals who can attribute all or a portion of their work
to the Title V program. Indirect labor includes the ad-
ministrative and managerial personnel who provide
general support for the entire air quality division or
department. Direct (non-labor) costs are those costs
incurred through the direct implementation of the Title
V program. Finally, indirect (non-labor) costs are
those costs incurred by the entire air quality division
or department that will benefit all air programs. Ex-
amples of each of these types of expense are present-
ed below.
Expense C nicy on
lixampJes
Direct labor
> Employees responsible for Title V permitting
• Air quality engineers conducting permittee
inspections
Indirect labor
* Managers of air quality agencies
• Air quality agency administrative
support staff
Direct (non-labor t
• Travel expense to visit Title V permittee
• Telephone charges for Title V program tasks
Indirect (non-labor)
* Office supplies for air quality agency
~ Utilities for air quality agency
4 Chopin !: Time Keeping iiru! Cost Allocution
-------
Din ct Cast Allocution Overview
Allocating the appropriate direct costs to the Title
V program is best accomplished by using time sheets,
either manual or automated, that can interact with the
government accounting system. With such a system in
place, assigning direct costs to various air quality pro-
grams is a straightforward process. Air quality de-
partment employees fill out lime sheets weekly or
bi-weekly to reflect the number of hours spent on var-
ious tasks. By assigning a unique account charge code
to each task, accounting stall are able to track, in de- j
tail, the amount of direct labor charged to each air
quality program. This information allows accounting
departments to reconcile direct labor charges with the !
Title V program budget and also provides Title V pro-
gram managers with information on how labor is be-
ing distributed across various air quality programs
such as Title V. Section 105, and others.
Direct, non-labor charges should be allocated us-
ing the same approach. Air quality employees that
charge direct expenses, such as travel, to air quality
programs can use the same accounting charge code
procedures as for direct labor. |
i
Indirect Cost,\lloi auon Overview
Charging indirect labor and non-labor costs to var- i
ions air quality programs is much more challenging |
than under the direct cost scenario. In order to main- |
tain efficient and accurate accounting practices, air
quality program accountants and managers alike need
Chapter I: Time Keeping ami (osl Allocation 5
-------
to ensure that all indirect costs are recovered, and thai
they are recovered equitably.
The most practical method of allocating indirect
labor costs to Title V and non-Title V programs in-
volves using direct labor charges as an index. Under
this framework, indirect labor charges are allocated to
Title V and non-Title V programs based on the num-
ber of direct labor hours charged to the various air
programs. For example, if Title V direct labor charges
represent sixty percent of the total direct labor charges
within the air quality division, assigning sixty percent
of the indirect labor costs to the Title V program is
justifiable, ft can be assumed that sixty percent of the
secretarial and managerial support time is being spent
on Title V related tasks under this scenario. Percent-
age allocations for indirect labor costs can be adjusted
weekly or monthly, based on the direct labor charges
for that period.
Allocating indirect non-labor costs among Title V
and non-Title V is more complicated. As indirect costs
are to be shared among a variety of programs, they
should be allocated in a manner where the program
receiving the greatest benefit from the source of the
cost is responsible for the majority of the cost recov-
ery, Unfortunately, this presents a tedious and compli-
cated task for accounting staff. Instead, common
practice usually involves the same process as de-
scribed for indirect labor; as the indirect non-labor
costs are allocated based on the percentage direct
labor charged to each program. However, some state
programs use their own discretion for allocating these
6 Chapter1; Time Keeping and Cost Allocation
-------
costs, often treating indirect non-labor costs as general
overhead and charging to each air quality program
equally. Stale-specific approaches to this type of cost
allocation are described in the next section.
State Title V Programs
Accounting personnel from state ah quality divi-
sions across the country were contacted in order to
determine the common practices regarding cost allo-
cation for Title V and non-Title V programs. The ma-
jority of the state air quality agencies interviewed rely
on the methods described and recommended in the
previous section oi' this document when tracking time,
and allocating and recording costs.
The table on page S contains a sample of the suites
contacted and describes their approach to cost allocation.
Time Keeping
Of the state air quality divisions contacted, all but
one require the completion of weekly time sheets to
provide accounting and program staff with a detailed
account of where time is spent during the week. To
complete the time-sheet employees must provide the
number of (direct labor) hours worked daily on each
particular task, each of which identified by its own
unique account/charge code. The level of detail in the
account/charge code system varies from state to state,
but at the very minimum, the Title V program is rep-
resented by its own unique identifier. The majority of
the time sheet systems in the state air quality agencies
Chapter 1: Time Keeping and Cost Allocation 7
-------
Trru- V Cosi Allocation ami Time Keeping Procedures
.Stale Cost Allocation Time Keeping
Maryland Non-Iaboi costs arc allocated
to each program (Title V, new-
Title V, 105) based oil direct
labor charges to each pro-
gram. Maryland's sophisticat-
ed MIS (Management
Information Systems') allo-
cates these costs based largely
on the Program Cost Accounts
iPCAs'j employees use to
charge their time.
Time sheets are used to allocate la-
bor to appropriate account. Title V
will also use the PCA system,which
drives a number of other llscaj re-
ports as well bs. indirect charges.
Time sheet and financial reporting
systems- arc very closely integrated.
Mississippi Non-labor costs are allocated
to each program (Title V, non-
Title V, J 05) based on direct
labor charges to each pro-
gram.
Pre-printed time sheets arc uied and
interface with MIS by account code.
Employees are prevented from
charging non-air-relaied accotmis.
Title V is only one account code —
more detail i& desired by depart-
ment Summary reports distributed
w program managers monthly.
North Non-labor costs are allocated
Carolina to each program (Title V. non-
Title V, 1051 based on direct
labor charges to each pre-
grant
Time sheet system will interface
with new accounting software Time
tracking began in 1994 and divides
staff time into a number of cate-
gories, including Title V. Activity
codes are used to identify' specific
tasks charged to under the Title V
category.
Oregon Non-labor costs, are allocated
to each program (Title V. non-
Title Y, 105) based on direct
labor charges to each pro-
gram.
The sophisticated on-line accounting
system interface? with the employee
time sheet system, using very de-
tailed task codes to refteci employee
charges to Title V.
PcNtisxlvania
Non-laboi costs are allocated
based on program staffers'
recommendations as to the
relative percentages that
should be charged to Title V
& non-Title V. PA is working
on a more exact allocation
svstem.
Time sheets art filled in manually,
hut contain codes correspond tag to
low-level tasks for the Title V pro-
gram, Information is entered into
MIS and reports arc, generated show-
ing expended funds per employee,
per task, etc
8 Chapter J: Hum Keeping and 17m Allocation
-------
are computerized and interface with the other manage-
ment information system! s) (MIS) in place in the
state. This relationship among computer .systems al-
lows timeshcei information, for example the total
number of hours charged to Title V for the week, to
be immediately reflected in the Title V budget system.
Figure 2 shows an example of a completed time
sheet. Id this example, the actual codes and sub-codes
used to segregate tasks correctly are shown in the first
two columns under the "Project" heading. This partic-
ular employee has divided his or her time among six
unique tasks, necessitating six unique account codes,
The first three activities are "NSR" ("New Source
Review") subtasks. The last three project functions
listed are OPP (Operating Permit Program) activities.
The second column lists the operating permit program
activity (section code). Based on this information, ac-
counting and program personnel can review the time
sheet and know exactly how much time was spent on
each task and to what accounts that time should be
charged, all without any guesswork. Figure 2 includes
the actual pages from the same air quality agency that
list and define the appropriate account sub-codes for
the slate air activities including the Title V Operating
Permit Program.
Labor Cos is: I tire'.:!
Direct labor, those hours dedicated to a specific
task, are accounted for usiny the time sheet system
described above. Employees simply enter the number
of hours worked and the account code (or sub-code if
Chapter I: Time Keeping and Cost Allocation 'J
-------
POS # 1008 DEPARTMENT OF ENVIRONMENTAL QUALITY - TIME REPORT - REPORT ENDING 04/15/96
s
I
I
&
¦3
I"
1
3
1
S*.
o
LAST. First NAME t Print)
n-tr,rn? i o\>, inc,statement aftufs
T'K>N1 V NW-S'XEm ?-MFUM ¥$S
{certify to ih>* xLtirment rep«ya»nte \hc hmn worked
by mt Ajjch work dw ?nH wesk «f sfitt pay ftnri
and the paj ?n which f am enfitlfd for ibK pay frrimi
employef signature.
CTRTFFTEH BY _
PROJECT
1
2
3
4
5
6
7
8
9
10
11
12
13 U 15
FUNC.
SECT.
(1
16
17
18
19
20
21 '
22
23
24
25
26
27
28 29. 30
31
TOTAL
N i-
014
2,00
4,00
8.00
6.00
1.00
21.00
NSR
024
3.00
1.00
1.00
8.00
3 00
16.00
NSR
034
1,00
5.00
5.00
2.00
4.00
17,00
OPP
MS
5.00
4,00
;
2.00
7.00
18,00
OPP
PAR
3.00
4.00
1.00
I
j
8,00
OPP
EIF
1.00
7.00
i
,
8.00
I
0.00
•
0.00
;
0.00
I ! :
0.I
V.T.T.
! i
¦¦ ::'.:
S.L.T.
I '.'.J '¦
0.00
M.I.L.
I " i"*1
0. '
A.C.T
|—4—
0.00
] TOTAL HOURS
5.00
8.00
8.00
8.00
8.0
! o.oo
1 0.00
8.00
8.00
8.00
8.00
8.00
15&1® 8.00
0.00
88,00
COMP. EARNED
0.00
-------
applicable.) After the time sheets are submitted and
approved, the actual hours are charged to appropriate
Title V or non Title V program.
Figure 2 also shows total direct labor charges for
an air quality agency employee. The "Total Hours"
line displays the total hours charged for the day and
period (two weeks in this case), while the far right
column "Total" shows the number of hours spent on
each particular task.
Air Quality Division
Time Sheet Budget & Acnvrrv Cooes
June 21,1994
Operating Permit Program
Function Code OPP
Section Code
(Activity) Explanation
INS Facility Inspections and Report
Writing/Staff Review
PAR Operating Permit Application Review
GIF Emissions Inventory/fee Assessment
R£G Regulation and SIP Development for
Stationary Sources
AMM Ambient Monitoring — See March 24,
1994 budget Chargeable Work
Activities for list of activities.
VIS Visibility Monitoring
CEM CEMs Certification and Audits
SKT Stack Tests Witness and Review
Chapter I: Time Keeping and Cost Aitocalhn
-------
CPL Review of Facility Compliance
Reports
SBA Small Business Technical Assistance
Program
EPA EPA Reporting
ML Filing
AQB Air Quality Advisory Board
BPT Budget Preparation and Track]rig
CM] Complaint Investigation (Stationary
Source)
) ENF Enforcement prior to Filing In Court
; ADM General Administrative Duties,
j (Reserved for Administrator
| Secretaries, Program Manager)
New Source Review (NSR) Function Code NSR
Section Code (Project/Activity)
Assigned
I Application # A Unique Application number is
1 assigned for each application corre-
i spending to company name and date
| of application
| ADM General Administrative Duties
i (Reserved for Program Mgr. and
Administrator)
12 Chapter I: Time Kt eping and Cost Allocaium
-------
Non Fee Program (EPA 105 Grant and State Genera!
Fund)
Function Code
(Budget) 105
Section Code (Activity) and Explanation
A MM
ASB
CM I
REG
BPT
ENF
ADM
RAD
RSI
Ambient Monitoring (Sec March 24,
J 994 Budget Chargeable Work
Activities for full list of activities)
Asbestos and Indoor Air
Complaint Investigation (Not related
to stationary sources,)
Regulation and SIP Development (Not
related to stationary sources).
Budget Preparation and Tracking
Enforcement Activities-including ail
enforcement actions for asbestos and
work after filing in court for stationary
sources.
General Administrative Duties
(Reserved for Administrator,
Secretaries, and Program Manager)
Radiological Activities
Railroad Safety Initiative
Labor Costs: Indirect
For most of the air quality agencies interviewed,
the process of allocating indirect labor cost is based
on the direct labor tracking system described above.
Labor costs for air quality division managers and
Chapter I: Time Keeping and Coat Allocation 13
-------
administrative support stall" that are not directly attrib-
utable to a program activity code art- allocated based
on the percentage of total labor charged to each of the
air programs, e.g.. Title V, Section 105, etc. Using
the employee time sheet system, the total number of
direct labor hours charged to each air quality program
is calculated along with the percentage that program
represents of total direct labor charges. These percent-
ages are then multiplied by the total number of indi-
rect labor hours charged for the same period, resulting
in the proper allocation to be charged to each air qual-
ity program. Most air quality agencies interviewed
rely on their MIS to perform these calculations, while
others make the calculations manually.
\!on-labor Costs
Direct non-labor costs are allocated and recorded
differently from state to state. Some agency staff that
were interviewed rely on the time sheet system to
track these costs, usually for travel expenditures that
are to be charged to a particular program, e.g., a Title
V permittee inspection. Other agencies use an inde-
pendent expense authorization system to approve, pay,
allocate, and record direct costs. Regardless of the
subtle procedural differences, all agency staff inter-
viewed use an account/charge code to ensure that the
direct (non-labor) costs are charged to the appropriate
air quality program, a code that usually differs from
that used to allocate and record labor charges within
the lime sheet system, Additionally, all those inter-
viewed relied on their agency's MIS at some level to
charge direct costs to the various air program budgets.
J 4 Chapter I: Tutit Keeping and Costi Allocation
-------
As expected, allocating and recordino indirect
non-labor costs to the various air quality programs
presents it greater challenge to the state agencies con-
tacted. As described previously, indirect non-labor
costs would besi be allocated among various air pro-
grams by assessing the amount of benefit or usage
each program realizes as a result of incurring the indi-
rect cost. Again, measuring the relative contribution of
each indirect expenditure to each air program could
present a unacceptable administrative burden as at-
tempts are made to calculate, for example, the amount
of air conditioning costs to be charged to the Title V
program. Instead, the majority of the state air quality
agencies interviewed relied on the direct labor per-
centage calculation described above in order to allo-
cate their indirect non-labor costs. The remaining
states grouped these indirect noil-labor costs into an
overhead-like category, distributing the costs equally
among all of the air quality programs, Again, all state
agencies contacted rely on their MIS at some level to
allocate, record, and post these costs to the proper air
program budgets.
Lessons Learned by Air Quality Agencies
Although the Title V program is relatively new
and state and local agencies are just now beginning to
implement the accounting procedures necessary to
manage the program, a few lessons* have been learned
that can provide insight for local air quality agencies
as they develop their own programs.
Chapter 1: Time Keeping and Cost Allocation JS
-------
; A {location Methods
I
| Generally speaking, the methods used by various
j air quality ageucies to allocate costs among Title V
; and non-Title V programs have been in use for many
i yean,. The use of time sheets and the practice of in-
j dexing indirect labor and indirect non-labor costs to
i direct labor hours has a long history in both public
| and private sectors. However, most of the agencies
! contacted expressed the desire for a more exact or de-
= tailed approach to indirect cost allocation. While these
' agencies. for the most part, were unable to offer any
: suggestions toward efficient improvements, a few of
: the agencies were in the process of refining their MIS
to allow for greater control over indirect cost alloca-
I tion. using indices in place of or in addition 10 direct
i labor hours.
Some air quality agencies also raised concerns
over direct non-labor cost allocation practices. While
mosl charges are easily categorized and recorded as
Title V, Section 105, etc., some direct charges, espe-
1 cially those shared among programs, are more diffi-
i cull lo allocate. For example, an air quality engineer
I incurs travel expenses for a trip to visit a Title V per-
| mi tree. However, on the same trip, that engineer also
1 performs a site visit under the Section 105 program.
1 To which program should the engineer charge the (di-
| reel) travel costs? Indirect costs would be allocated
[ based on direct labor hours, but travel expenses are
| direct costs and must be charged directly to a specific
j program. In some states, the answer lies in the engi-
I neer's own judgement regarding the extent to which
16 Chapter I: Time Keeping and Cost Allocation
-------
the trip was primarily to conduct one activity or an-
other. Most states have informal policies or practices
in place that result in equal sharing of costs between
air program budget centers such as the Title V pro-
gram and the Section 105 grant program. Regardless
of the process that stales have devised, it is important
to point out that these procedures should be formally
documented and communicated to EPA Regional Air
contacts. Documentation of the piactices will help to
minimize any misunderstandings regarding cost shar-
ing approaches.
.. \ccowuiChargc C odv\
Many air quality agencies expressed difficulty in
implementing the time sheet system with respect to
account/charge codes. Interviews with agency ac-
counting personnel indicated that some time sheet sys-
tems contain too man}1- codes, sub-codes, sub-sub-
codes. etc. for charging tasks under Title V. or non-
Title V programs. In these cases, air quality program
personnel are sometimes inconsistent with respect to
charging time to identical tasks. This problem is ag-
gravated by the fact that few accounting staff persons
are required to understand the subtle differences be-
tween these often technical tasks and are unable to
correct the MIS-coding singlehandedly,
Conversely, about the same number of agencies
claim the account/charge codes are not detailed
enough, with a few air quality agencies using only
one account/charge code for all Title-V'-related tasks.
This weakness leaves air program managers without
Chapter 1; Time Keeping and Cos! Allocation 17
-------
I adequate information concerning the specific tasks
I with which their employees are involved,
! Several agencies indicated that they have, already
j modified their activity code lists to facilitate use and
achieve more accurate recording of time and expense
charges, ft should be expected thai, agencies wilt con-
tinue to modify their activity codes as they gain more
experience with the Title V program and identify
ways of improving the process,
i MJS/Timc Sheet System
...
i Many of the individuals interviewed in air quality
| agencies are currently working to enhance their man-
! agement information systems (MIS) and to expand the
I role of MIS in air quality program management,
i While alt of those interviewed employ MIS to some
! degree, most are moving towards significant system
, enhancements that will present budget comparison re-
; ports, labor distribution reports, and other financial
; comparisons in real time, taking into account ihe most
j up-to-date data in the system. For all of the state air
quality agencies, these enhancements include sophisti-
cated interfaces between the .MIS accounting/finance
i modules and the agency's time sheet system, allowing
; up-to-date information on labor cost allocation among
\ Title V and other air quality programs.
Report R econciliationlRcvie. w
J
! Finally, most of the air quality agencies expressed
I the need for a more thorough review process with
IS Chapter 1: Time Keeping and Cost Allocation
-------
respect to the time sheet system and cost allocation
procedures. Specifically, air quality agency accounting
personnel believe periodic interaction is required be-
tween accounting staff and air program staff" to ensure |
that direct and indirect labor and non-labor charges j
are being allocated and recorded correctly. Because
most accounting personnel are not familiar with the
technical nuances among programs and tasks, the rc- j
view of time and com allocation procedures should in- I
elude air program managers io ensure thai those |
allocations closely mirror actual program aciivities, i
!¦
Conclusion
All of the state air quality agencies referenced in !
this section have been quite successful in implement- j
ing procedures to monitor time and track indirect and
direct costs associated with administering the Title V
program in concen with other non-Title V programs.
Most agencies are relying on methods of cost alloca-
tion that have been in use for many years and yield
j
acceptable results, while other states are working to
improve the procedures further. The fiscal manage-
ment of the Title V program will continue to be re- j
fined by state air quality agencies as program ami j
accounting staff continue to share knowledge and j
expanding management information systems take on
greater roles.
Chapter 1; Time Seeping and Cost Allocation 19
-------
Chapter 2: Accounting
Frameworks for Title V
Programs
Government accounting and financial reporting
practices differ considerably from those found in the
private, commercial sector. Generally accepted ac-
counting principles (GAAP) for government provide
strict guidelines concerning the methods used to man-
age the resources provided by taxpayers. While
GAAP standards for business enterprises are designed
to provide information needed by investors and credi-
tors. GAAP standards for government are intended to
ensure legal compliance as well as security for public
resources. In most cases, GAAP standards are aceom- 1
panieel by state accounting rules that must also be fol- [
lowed, resulting in a multi-layered oversight of the I
government accounting process. |
One of the primary differences between govern-
ment accounting and the private sector is the GAAP-
recommended use of fund accounting. According to
the Governmental Accounting Standards Board
(GASP), a fund is defined as:
A fiscal and accounting entity with a a•elf-balanc-
ing set of accounts recording cash anil of fur
financial resources, together will oil related lia-
bilities and residual equities or balances, and
changes therein, which arc segregated for the pur-
pose of carrying on specific activities or attaining |
certain objectives in accordance with special '
Chapter 2: Accounting Fmmewarks for Title V I'roprumn 21
-------
regulations, restrictions, or limitations. (Source;
GASB Codification of Governmental Accounting
and Financial Reporting Standards. Section 1300)
Simply stated, fund accounting is the practice of
separating the record keeping activity of any number
of individual funds. A fund can be viewed as a fiscal
entity with segregated accounting records used to im-
plement a specific program or activity, A federal
grant, for example, might be accounted for in a sepa-
rate fund. Most state and local governments have re-
lied on fund-based accounting systems for many years
in order to administer and manage a variety of differ-
ent programs.
Understanding fund accounting is very important
to the management of Title V permit programs at the
state and local program level. The assignment of a
specific fund type 10 the Title V program by a state/lo-
cal program establishes the expected level of segrega-
tion from other state funds; the degree to which the
fund is meant to be a self-supporting, business-type
enterprise; and the types of reports that will be avail-
able for internal and external reporting.
This section is designed to familiarize state and lo-
cal program managers with fund accounting as it re-
lates to the operation of Title V programs. It provides
an explanation of fund types that are available for use
by states, describes the accounting approach that
states and local programs are now using, and presents
criteria for evaluating the need to modify a state's ac-
counting structure.
22 Chapter 2; Aremtnting Frum? works fnr Title V Pmgramx
-------
Types of Funds
Jn general, governments can choose from generic
types of funds to manage pi og rams. Tlie.se fund types
are generally divided into foui categories: Govern-
ment Funds, Proprietary Funds, Fiduciary Funds and
Account Groups. Each type of" fund has its own char-
acteristics and is used for different government activi-
ties and programs.
Figure 3 provides a graphical summary of the or-
ganization of government funds.
6'Ovvrmm-nt Funds
The largest fund category, governmenl funds
are used to account for all general government op-
erations, such as fire and police protection, public
works, parks, and recreation. There are five iund
types within this category:
1. The General Fund i^ the chief operating
fund of a stale or local government and is
used to account for all program resources
that arc not accounted for in other funds.
The government uses only one general
fund, containing the majority of its finan-
cial transactions.
2. Special Revenue Funds are used to
account for finances thai are legally restric-
ted or earmarked for specific purposes,
such as the state implementation of an
Chapter 2; Accounting Frameworks jar Titk V Programs
-------
environmental mandate. For example, a
federal grant most likely would reside in a
fund of this type,
GASB states that special revenue fund
types may be used;
to account for the proceeds of specific rev-
enue sources that are legally restricted to
expenditure for specific purposes. (Source:
GASB Codification of Governmental .4c-
countmt» and Financial Reporting Stan-
dards, Section 1300.104)
It should be noted that the definition of a special
revenue fund is permissive, not prescriptive, A
special revenue fund nuty be used under govern-
ment program circumstances described above,
but it is not a requirement. Many governments
do not use speci.il revenue funds, choosing in-
stead to report (restricted) activities in their gen-
eral fund. However, the benefits of special
revenue fund accounting over that of the general
fund will be examined later in this document.
3. Capital Projects Funds account for finances
used for major capital development, Govern-
ments usually prefer to account for these re-
sources in funds separate from other
operations,
4. Debt Service Funds are used to account for
the repayment of government long-term
debt, such as major bond issuances,
24 Chapri-r 21 ccou/Uing Frameworks for Title V Program:;
-------
Figure 3:
Fund Organization Chart
SEate
i. Governmental i
Fund Types
Genera!
Fund
2. Special
Revenue
' 3. Capita!
Projects
4. Debt
Service
: 5.Special jji
^ Assessment i
II. Proprietary i
Fund Types
i
1.
Enterprise
2. Internal
Service
III. Fiduciary
Fund Types
1. Trust and
Agency Funds
Agency
Pension
Trust
: Expendable
Trust
^ Nonexpend-
; able Trust
Chapter 2: Accounting Frameworks for Title V Programs 25
-------
5. Special Assessments Funds account for the
funding obtained through special assess-
ments for public improvements. For exam-
ple, after levying a special assessment tax
for a new sidewalk, the funds are account-
ed for lie re.
Proprietary Funds
In general, proprietary funds are used to ac-
count for those government activities and pro-
grams thai are similar to the private commercial
sector, such as a transportation system or water
system that receives direct payment for services.
1. E/iterprise Funds are used to account for
activities that are operated much like pri-
vate sector business enterprises. Govern-
ments need to charge users for a variety of
public services to recover all or a portion
of the costs associated with a particular
program or activity. Public utilities are a
popular example of an entity fiscally man-
aged within this type of fund.
According to GASB, this type of fund may
be used:
to account for operations (a) that are fi-
nanced and operated in a manner similar
to private business enterprises — where
the intent of the governing body is that the
costs (expenses, including depreciation) of
26 Chapter 2: Accounting Frameworks for Ttitv I' Programs
-------
providing goods or ser\>ices m the general
public on a continuing basis he financed
or recovered primarily through user
charges; or (b) where the governing body
has decided that periodic determination or
revenues earned, expenses incurred, and/or
net income is appropriate for capital main-
tenance, public policy:, numagement con-
trol, accountability, or other purposes,
(Source: GASB Codification of
Governmental Accounting and Financial
Reporting Standards, Section 13(H).104)
The benefits of using enterprise funds
to account for the Title V program will be
presented in the next section,
2. Internal Service Funds account for opera-
tions similar to those found in an enterprise
fund, but for entities that provide goods
and services to other government depart-
ments. Government printing and data pro-
cessing are examples of activities
accounted for in these funds.
Fiduciary Funds
Fiduciary funds are used to account for assets
held by the, government as a third-party trustee or
agent. Examples of the funds accounted for in-
clude government pension plans and willed assets.
Chapter 2; Accounting Frameworks for Title V Programs 27
-------
I. Trust and Agency Funds
• Agency Funds are used to account for
non-government assets or assets be-
longing to another government, such as
a county that collects taxes on a coun-
ty-wide basis,
• Pension Trust Funds account for gov-
ernment pension plans
• Expendable Trust Funds account for
government assets that have been pro-
vided to that government via a trust or
other agreement. Under expendable
trusts, interest and principal may be ex-
pended based on the provisions of the
agreement. Assets left to the govern-
ment are often placed in this type of
fund,
The use of expendable trust funds to account
for Title V program resources will be present-
ed in the next section,
• Nonexpendable Trust Funds are similai
to expendable trusts, except that only
interest earnings may be expended,
leaving the original principal intact.
JiV Chapter 2: Acrnuitllng Framcworls for Title I' Programs
-------
< loveniment lumf Accounting Reports
All of the government funds described abo\e are
designed to ensure effective accounting for public
monies. In order to test this objective, governments
rely on financial reports. Stakeholders, which include
tax payers, government accounting departments and
program personnel to name a few. have a vested inter-
est in the statun of fund resources. The creation ol peri-
odic financial reports such as balance sheets, revenue/
expenditure statements, budget vs. actual compar-
isons, etc. pro\ide important information. More spe-
cifically. these reports can be used to verify that
specific programs, such its Title V, are being imple-
mented efficiently and in accordance with government
accounting standards.
As described in the following section, the reports
that can be generated and subsequently used to account
for the resources of a government program vary slight-
ly based on the specific government fund type used.
Aceotmfmy for the Title V Program !
State and local air quality agencies are concerned
with how Title V resources are managed. First ol all.
agency managers need to know that the program is
being managed in such a way that user fees are cover-
ing program costs. They also need to know that Title
V staff time and expenses are being covered using
Title V resources and. conversely, that non-Title V
program expenses are not being recovered through the
Title V program. Not only is this information valuable
Chupivr 2: Accounting Frameworks for Title V Programs 29
-------
to the air quality agencies administering the Title V
program, but also to a number of other stakeholders,
including the Title V permittees, state and local gov-
ernment officials, USEPA, and flic general public,
each of which has an interest in the efficient and ef-
fective operation of the Title V program.
As long as the particular government fund com-
plies with GAAP and state or local requirements,
there are no restrictions as to which accounting fund
encompasses the Title V program, However, while
there are numerous fund types in governmental ac-
counting, only a few can be considered viable for
Title V accounting based on the GASB definition of
the fund types. In the governmental fund type catego-
ry, possible candidates include the general fund and a
special revenue fund, though it is likely that general
fund accounting for a Title V permit program would
be considered inappropriate because of the lack of
earmarked fund segregation (see below). Capital
Title V Program Accounting;
Appropriate Government Fund Types
fund Category
fiinti Type
Governmental Funds
• General Fund
« Special Revenue Fund
• Enterprise Fund
• Expendable Trust
Proprietary Funds
Fiduciary Funds
30 Chapter 2: Acauiniiny; frameworks for Tith¦ V Programs
-------
projects; debt serviea mid!special fassessment, tlMci s
serve puippscs-xiiisiinilar to'those oft the Titib ¥ pro-
grant,JflitheqTfropne,titrj«; iCutdi cat agon1, fiUu \Vc©«{ ait
infemil serriu'eTimcill Inliitr fund cateuwy. »i
start -miahr.'adopt.an ,«\\peuKfeh 1c intstr bincti rha! could
accciintSbr ibfc.Ti!ldv (iiTigriari Jhitnimatey fiiiiriK,
pension;]0.181 f WMk -.aid iiurkecpumdttble trust. ftuids
woufil'iiot'tibmsecl.'.'V sjimnrsn; 'tidhe fund ivpre j -
He irvncconnf'fcij* itie n?tio V pjnemm is shown* M'-va.' ,
General Fnt>ci
The general fund 'is comprised (if a largiemimftw ;
of accounts assoc iated - with the general .sejwwi^ ;r.t-
quiredby aiw state, or municipality. This fluid iiudinfe.
accoiuitsd#f ©lice, and fire protection, parks, jfiilWic
areas. anrf.:.a«y>,ot.tei-government program 01 acrivitA> ;
that is nor accounted for elsewhere in die acc.fninris;g-
system. If the Title V program were to be fiscally
managed from the general fund, ii would be ideniifetf
as an independent account, separate from other gemo:- ,
al fund accounts. All revenue and expenditure aetiivk-y
such as permit fees (receipts) and the costs of open-it- j'
ing the program (staff salaries, for example) would1 ;i
flow in and out of the Title V account within the •*{£•$>-
eral fund. Funds would not flow 10 or from the ITSfe j
account to or from ianv other general fiiod.aecQMBi;
- - 1!
without some soil' of. legislative approval,.
While, il wrmld be oons'idfened.acceptable. itntfer •
GASB to use tha-gtaieral fund toaceoum fot: dti? Tiide- |
V progmm.-it'is* clearly-iroi the best'ahoictf1.. First of [
al], Title V pmgmnprepotf jug! i» »iot as detailed1 Svfeefi \
itfmr 'Title ¥Pmgrmm<\:ilJ
-------
i using the general fund. Under this scenario, i itie V is
: merely one of a large number of accounts, and while
! general in format ion on the program's fiscal activity is
, available through the general fund financial reports.
[ the information is not as robust as it would be under
J
: another government accounting fund type.
| More importantly, most government general funds
! do not restrict the movement of resources among the
J many general fund account groups and accounts,
: Further, it is a common government accounting prac-
' tice to reallocate program resources among general
! fund accounts. Title V resources must be accounted
for separately, without interaction between any other
accounts, This requirement makes the general fund an
| unattractive option tor Title V accounting.
i Of the state air quality agencies interviewed, none
i uses !he government's general fund to account for the
| Title V program, based on the limitations described
; above. Appendix A contains illustrative general fund
| statements that show the types of reports included as
part of the general fund process,
l The types of general fund reports provided as part
! of a comprehensive annual financial report include the
following:
j The statement of revenues, expenditures, and
changes in fund balance. This statement reports
] the financial performance of the entity over the
| annual reporting period. It. is meant to cormnuru-
' cate the sources, uses, and balances of current
32 Chtiptt'f 2: AiXDUitiitig Pratntwarks for Title V Programs
-------
financial resources used to run general govern-
ment operations.
The balance sheet. This report is best viewed J
as u snapshot in time of the entity's financial posi- |
tion. It presents the balance between governmental j
assets and liabilities and fund equity.
Standard accounting formats include presentation
of combining statements that group all sub-funds into
a summitry report as well as separate statements on j
component units. |
Because Title V is a new program specific lllustra- j
tions of financial statements are not yet available. In j
order to illustrate the way the statements will be pre- j
sen ted, illustrative general fund financial statements j
have been included as an appendix to this report.
Special Revenue I unci
The decision to select one particular fund type
over the others has been primarily credited to historic
precedent. Grant-funded programs and activities, such
as the Section 105 program, have been accounted for j
hv state and local governments through special rev-
enue funds as common practice lor many years. While
the Title V program does not involve {fie management
of federal grants, many air quality agencies have
viewed Title V as a "sister program" of sorts to the |
Section 105 program. Subsequently. Title V resources j
have been managed through the same government ac- j
counting fund type — the special revenue fund — as
Chapter 2: Accounting- Frameworks for Title V Programs 33
-------
the Section 105 program. In nearly all state and local
air programs contacted, the Title V program is man-
aged within a special revenue fund.
Special revenue funds are the backbone of govern-
ment accounting structures, as most governments op-
erate numerous special revenue funds to implement a
variety of programs and activities. As stated previous-
ly, special revenue funds account for financial re-
sources, often in the form of federal grants, that are in
some way restricted or ear-marked for a specific gov-
ernment purpose. The permit fees Chat flow into the
state Title V programs are restricted just as a federal
grant would be. even though these funds originate
from private sector permittees and not the federal gov-
ernment. Because Title V revenues may not he used
for any purpose other than the implementation and
management of the Title V program, a special revenue
fund is an appropriate accounting entity. All revenues
and expenditures flowing in and out of the Title V
special revenue account are used solely for that pro-
gram and may not be co-mingled with any other spe-
cial revenue fund without state legislative approval.
Governments may also account for Title V re-
sources using a Title V account within an existing spe-
cial revenue fund. Under the scenario described
above, the Title V program is accounted for through
the management of its own special revenue fund.
Conversely, governments may account for Title V
simply as an account within a special revenue fund
possessing similar restrictions, such as a Clean Air
special revenue fund that accounts for resources for
,?>/ Clioixcr 2; .-1 ccounting Frameworks for Title V Program.*
-------
Title V it nil non-Title V programs. In this situation, j
Title V (account) resources are restricted for use only
within Title V programs and may not he transferred
outside of the fund without state legislative approval.
This structure is often used for agencies in which the
Title V program is not large enough to justify segrega-
tion into a separate fund.
Wilh only one exception, all state air quality agen- j
cich interviewed use the special revenue fund to ac-
count for the Title V program. Most of the agencies
account for Title V by utilizing a separate special rev-
enue fund (Title V only,), while the remaining use a
separate Title V account within an existing j
gram) special revenue fund. Appendix A presents illus-
trations of special revenue fund reports, Because they
are part of the general fund, they are presented both as
a component of the combining statements for the gen- !
eral fund and as individual special revenue funds.
hntvrpriKc / utnl
Enterprise funds are used to account for govern-
mental programs and activities that are similar in
nature to private sector commercial transactions. Ser-
vices that require a cash outlay from the purchaser, as
opposed to those services provided via tax revenues,
are generally accounted for within enterprise funds.
Good examples of these business-like services are
public transportation systems and public utilities.
Although Title V programs could fall into this catego-
ry, no states are currently using an enterprise fund
structure for Title V programs. Pending changes by
Chapter 2; Acvmmting Frame works for Title \r Programs 35
-------
the accounting regulators may, however, change this
in the near future.
The Government Accounting Standards Board
(GASB) is in the process of modifying the require-
ments for the use of enterprise funds. Due out in raid-
J 997, the new requirements will encourage a broader
use of enterprise fluids for self-supporting activities. If
the new requirements are passed by GASB, it is possi-
ble that Title ¥ programs would need to be classified as
enterprise funds by states to be in full compliance with
GAAP. GASB language as now drafted is as follows;
Bitswe,ss~r\pe activities should be reported as pro-
prietary (enterprise) funds. To provide more con-
sistency among governments, the circumstances
under which enterprise accounting may or should
be used are revised as follows;
Any activity thai charges a fee to users for its
services may be reported using enterprise fund
accounting and financial reporting. An activity is
required to be reported using enterprise fund
accounting and reporting if anv one of these
criteria is met:
a. The activity issues debt that is secured
solely by a pledge of the net revenue from
fees and charges of the activity,
h 0f. i()cai Iaws. ()r re(,}(tari0ns require
that the activity recover the costs of pro-
viding services, including capital usv
charges or debt service, with fees and
charges.
36 Chapter 2; Accounting Frameworks for Title V Programs
-------
c. The pricing policies oft In: activity establish
fees and charges designed to recover the
costs of providing services, including capi-
tal use charges or debt service. (Source:
Preliminary Views of the Governmental Ac-
counting Standards Board on Major Issues
Related to Governmental Financial Report-
ing Model; Core Financial Statements.
June, /995)
Bccau.se Title V permittees pay fees directly to the
Title V program's administering air quality agency, as
opposed to paying for the government program via in-
come taxes or other sources, the program acts much
like a commercial enterprise. Thus, an enterprise fund
may ultimately be the structure used lor Title V fee
programs.
Enterprise' fund accounting includes the use of
financial reports that are not found under other gov-
ernment fund accounting scenarios, providing infor-
mation to stakeholders from a more business-like
perspective. Specifically, enterprise fund accounting
features "Statement of Cash Flows" reports dial would
he useful in showing the movement of resources in
and out of the Title V program. Accounting statements
provided as part of an enterprise fund are included as
part of Appendix A,
Chapter 2; Accounting Frameworks for Title V Prngmms 37
-------
Expendable Trust
Expendable trusts are. employed by governments
to account for resources provided to the government
under a trust agreement for implementation of a spe-
cific objective, These resources are often in the form
of gifts or donations to the government, but have also
historically taken the form, of federal grants. As op-
posed to a non-expendable trust, both principal and
interest of expendable trust resources can be expended
in accordance with the trust agreement.
Title V resources can be accounted for under an
expendable trust structure. While the Title V program
does not provide any gifts or direct grants to be en-
trusted to the state governments, the program does re-
sult in revenue generation through permittee fees.
These fees become the resources of the trust and can
be expended only to implement the Title V program.
One of the state air quality agencies interviewed
uses an expendable trust to account for the Title V
program.
Summary: Pros and Cons of Title V Accounting
Struct ore Alternatives
While the four government fund options discussed
may be used for the Title V program, some are clearly
better than others. The table below summarizes the
strengths and weaknesses of each option for use in the
Title V program.
.i.S' Chapter 2; 4rrounUng Yramrvarhs for Tulr \' Pragrums'
-------
Usage by
fides
Fund T) pa
Strengths
\S c,ikm'SM\s
Ki-portJ
Int'.t vimved
General
Easily imple-
Funds can he
Statement of
None
Fund
mented; alt
moved from
revenues, ex-
states have
one account to
penditures
general funds
another with
and change*.
in place.
ease — a vio-
in fund bal-
lation of Title
V guidelines.
ance; balance
sheetf; budget
vs. actual
Special
Funds are seg-
Creates: anoth-
Statement ot
All states hut
Kcv.iuk
regated Gen-
er reporting
revenues, ex-
one (')6 of 17
Fund
erally itcjuircs
entity; many
penditures,
legislative or
states have
and changes
gubernatorial
numerous spe-
in fund bal-
approval to
cial revenue
ance; balance
move lo bc-
funds. Does
sheets; budge!
iwecn funds.
not report on
cash flow.v
vs. actual.
Enterprise
Behaves
Generally not
Statement of
None
Fiinit
much like a
used for small
revenues-, ex-
commercial
programs such
penditures,
business
as Title V.
and changes
enterprise.
in fund bal-
Emphasis is
ance; balance
balancing
sheets; budget
resources with
vs. actual;
expenses.
statement of
Higher im-
cash flows.
plied level of
segregation.
Allows cash
flow reporting.
r.xpcndahle
Funds arc
Not originally
Statement of
Otic agency
Trust
segregated
intended for
revenues, ex-
0 of 17)
Fund
for specific
fee-based pro-
penditures.
purpose. Pro-
grams, histori-
and changes
vides same
cally used for
in fund bal-
reports as en-
federal grants.
ance; balance
terprise fund
sheets; budget
accounting.
vs. actual;
statement of
cash flows.
Chapter 2: Accounting Frameworks for Tale. V Programs 39
-------
Criteria for Evaluating the Need to Modify an
Agency's Title V Accounting Structure
As most state and local air programs are just be-
ginning to work with accounting procedures for the
Title V program, few have had the opportunity to as-
sess whether or not the selected accounting structure
(fund type) is acceptable in terms of meeting the re-
quirements of the program itself and providing ac-
counting staff and Title V program managers with
information needed to accurately monitor costs.
In order to assess the adequacy of the Title V ac-
counting program, air programs should ask the fol-
lowing questions:
• Does the current accounting structure ensure that
Title V resources are being managed and report-
ed on independently of all other non-Title V pro-
grams?
• Do accounting managers within the state or local
agency foresee any possibility that Title V funds
could be transferred to another account for unau-
thorized use? If so, which fund structure within
the agency provides the highest level of protec-
tion from transfers?
• Does the current accounting structure allow for
the creation of reports that are meaningful to air
quality agency managers and other stakeholders
such as permittees and US EPA?
Chapter 2:, ii'cour.d)iz Framrworks for Title 5' Pnniramf
-------
• Ik the current accounting structure flexible
enough to allow changes in reporting procedures
— for example, to correct any inadequacies?
The answers to these questions may indicate that a
change in accounting structures is necessary in order
to manage the Title V program more effectively,
Chapter 2: Accounting Frameworks for Title V Programs 41
-------
Chapter 3: Management
Reporting and Tracking
Introduction
Managerial reporting is one of the most important
activities in both the private and public sectors. The
presentation of current, accurate information to the j
stakeholders of a private business or government
program can literally make the difference between
bankruptcy for the private business or program in-
effectiveness for a government agency,
Many academics and business leaders alike agree !
that information is the most important resource in any
entity, private or public. For example, a manufactur-
ing business needs information on how costs are alio- !
cated among different products, just as Title V
program managers are interested in identifying how
program personnel spend their time among Title V
and non-Tide V programs. These examples reflect the
need for 'internal" reporting — providing information
to those within the organization.
Similarly, information is required by those outside
the organization that have an interest in the success of
the program. A bank is not going to loan a business
millions of dollars without first taking a look at the fi-
nancial position of the operation. Similarly, stakehold-
ers in the Title V program including permittees, the
state legislature, and the federal government need
Chapter 3: Management Reporting and Tracking 43
-------
to know that financial resources are being used as
intended by the U.S. Congress in the Clean Air Act.
These two examples show the necessity of "external"7
reporting — providing information to stakeholders
outside of the organization.
This section represents the third of the three steps
in the natural sequence of financial management and
reporting activities. Internal and external reporting
logically follows the activities that occur in the first
two steps. To recap, the first step involves gathering
the accounting information via tools such as time
sheets and recording the direct and indirect labor and
non-labor costs as they are incurred. The second step
emails introducing the cost information to the particu-
lar government fund put in place to manage the Title
¥ program. Once the information has been gathered
and posted to the fund, it is time to put that informa-
tion to work in the form of financial reports for inter-
nal and external usage.
Step 1: Gather time keeping/cost allocation
information
Step 2: Post information to Title ¥
accounting fund
Step 3: Develop internal and external
financial report;;
internal Reporting
Internal reporting procedures allow important pro-
gram and accounting information concerning the Title
J-4 Chattier 3:
Management Reporting and Tracking
-------
V program to be disseminated throughout the air pro-
gram. This sharing of information accomplishes sev-
eral important objectives, including; (!) it allows
program and accounting personnel to understand the
status ot the Title V program in a timely manner, and
(2! it helps identify those areas of the Title V program
in need of modification or improvement. This second
point is significant as the Title V program is quite new
and its constant improvement will require the sharing
of information throughout the administering agency.
The I 'inancial Reporting System
As described above, financial reporting represents
the third of three main steps to the financial manage-
ment and reporting process. Subsequently, the activity
that occurs in this final step is a function of what hap-
pens in the first two, Most financial reporting systems
are set up to provide a siandaid set of budget and fi-
nancial statement reports for internal users, based on
the type of governmental accounting fund in use. For
example, if the Title V program is accounted lor as a
special revenue fund, the standard reports accessible
via the accounting system include balance sheets,
statements of revenues, expenditures and changes
in fund balance, and budget versus actual reports.
The reports, usually generated monthly, are based on
(1 (the information provided through recordation of
permit fee receipts, time sheet and cost allocation
practices and (2) the type of government fund in use
for Title V accounting, Because of governmental ac-
counting standards, all air programs have the ability to
create these reports through their accounting systems,
showing Title V-specifie information. Some have the
Chapter 3; Mantigrmeiir Report in? ami Tracking 45
-------
[ ability to access the information on line. Appendix A
shows examples of the types of standard reports thai
can are generated through the government financial
reporting system,
Specialized Financial Reporting
The reports described in the previous section are
very important to the air program staff, providing in-
formation concerning Title V fund account balances
and actual expenditures and revenues to date. Inter-
views conducted with air program staff revealed,
however, that reports customized to fit various indi-
vidual needs of the users beyond those offered by a
traditional reporting system can also be extremely
useful. For some agencies, these specialized reports
include:
• Summaries of Title V obligations and
encumbrances
• List of permittees and fee revenues generated
• Account balances by object code
Specialized reports such as these are extremely use-
ful to air program managers as they implement a new
program such as Title V for two main reasons. First, the
nature of a fee-based program involves constant moni-
toring of the balance of revenues and expenditures, ne-
cessitating up-to-date information on permit fee
revenues and labor cost allocation, for example. In or-
der to recognize whether or not the permit fees are ade-
quately offsetting program expenditures, a specialized
level of reporting is needed. Second, specialized reports
46 Chapter J." Management Reporting and Tracking
-------
can be used to monitor internal performance character- (
isties of the Title V program itself. The amount of di-
rect labor spent per Title V permittee, for example, may
be useful information to Title V managers as would a
summary of Tide V indirect cost allocation.
While most of (he agencies interviewed desire
the ability to generate custom reports, few are able to
accomplish this objective with their current manage-
ment information systems (MIS). For many states, j
geneiating customized reports entails bubmitting a for- j
mal request to the accounting or MIS department thai
describes the financial information requested. De-
livery of the report can take up to two weeks in some
cases, often resulting in information that is too dated
to be of much use. A few states, however, have so-
phisticated MIS in place that allow a large variety of
specialized financial reports to be generated on-Jine.
in real time. In these cases, the financial reports re- j
fled the most up-to-date information possible. [
The slate of Wyoming provides a good example of
the usefulness of customized financial reports. Three
diHerein financial reports are generated by Wyoming's
MIS. Each of the reports displays accounting infor-
mation not contained in the standard special revenue
fund reports described in the previous section,
Wyoming's system provides another filter to the data,
subsequently giving Title V program managers de-
tailed information on the status of their fee-based pro-
gram. The first page of the system includes a
Summary of Obligations representing the costs with
the amount expended or encumbered, and the remain-
Chuplvr 3; Management Kiportuif; ami Tracking 47
-------
ing balance. The last line of (lie first page shows the
Title ¥ fees that are available to cover these costs.
This information is crucial to managers of a fee-based
program, as it provides cash flow information. The
last two financial reports present detailed information
on Title V permit program expenditures, again, infor-
mation thai is more detailed and more useful than the
standard special revenue fund reports.
Summary: Inte rnal Reporting
In order to effectively manage resources. Title V
agencies need access to different types of internal re-
ports: those general purpose statements that are avail-
able through the government fund accounting system,
and specialized financial reports that can be created
by Title V managers to provide detailed information
lacking in the general purpose reports. Generating
customized financial reports is best accomplished
through the use of a sophisticated MIS that can pro-
vide the detailed information on-line,
Interviews of air program personnel yielded the
following general information regarding internal re-
porting:
• Most Title V programs are incorporated into
state environmental department-wide general
purpose financial statements (balance sheets,
statements of revenues and expenditures, etc.) on
a regular basis, via their government fund ac-
counting systems. Financial reports specific to
the Title V fund can be requested by state or lo-
cal permit program managers.
48 Chapter 3; Management Reporting and Tracking
-------
• Most Title V agencies expressed the need for
more specialized internal financial reports.
• A few agencies have the ability to generate de-
tailed, specialized financial reports by using .so-
phisticated MIS; the remaining must submit
formal requests for such customized reports and
sometimes must wait weeks to receive them.
As air programs begin to identify areas for im-
proving their implementation of the Title V program,
the v ariety and detail of internal reports will most
likely increase,
KxUtikiI Reporting
External reporting is the practice of providing in-
formation lo entities outside of a business or agency.
For various reasons, stakeholders like to be kepi in-
formed as to the financial status of a public or private
entity. For the Title V program, stakeholders that may
wish to review the administering agency's financial
reports include Title V permittees, state legislatures,
or USKPA.
Title V Kxwrual licpurtin^ Status
In general, external reporting procedures lor the
Title V program have yet lo be developed lor a couple
of reasons. First, as the Title V program is relative!)
new, states have been concentrating on designing and
implementing the program itsell. In order for external
reporting to be meaningful, Title V program adminis-
trators first need to get the program established and
Chupitr 3: Altmagemaii Reporting and Trucking 41
-------
develop measurement criteria that stakeholders will
find useful. Secondly, Title V stakeholders have yet to
place external reporting demands on the air programs.
Stakeholders. Title V permittees in particular, appreci-
ate the fact that the program is still under develop-
ment and agency personnel are concentrating on
implementation for the time being,
(Unrmmcutal Reporting Procedures
Any description of external reporting responsibili-
ties for government agencies would be incomplete
without mentioning the CAFR. The Comprehensive
Annual Financial Report (CAFR) is a detailed report
that encompasses the fiscal activity of every fund and
account group used by the government. The National
Council on Governmental Accounting (MCGA) re-
quires completion of a CAFR each year to provide very
detailed accounting information, to a wide audience. In
addition to the information concerning government ac-
counting activity for the year, the CAFR also presents
other general and statistical information. A key charac-
teristic of the CAFR is that it presents audited financial
statements for the state or local government.
Through the structure of government fund
accounting and management information systems, ac-
counting information on the Tiiie V program is pro-
vided to tipper levels of the governmental entity.
This information is then summarized and becomes
part of the CAFR. In most cases, the Title V-specific
information is not readily identifiable in this report,
even though many Title V programs are accounted for
St) Chapter 3: Management Reporting mid Tracking
-------
in their own special revenue funds. While the CAFR
presents information on all special revenue funds,
most Title V programs are far too small in comparison
to other funds to be listed separately. Subsequently,
the Title V accounting information is buried within
another special revenue fund summary.
External Oversight ComimiUt s
As mentioned above, typical external reporting
techniques have yet to materialize for the Title V pro-
gram. However, many agencies have formed external
(third-party) oversight committees lo help monitor the
fee-based Title V program from a multiple-stakehold-
er perspective. These committees will most likely be
the impetus to the development of external reporting
procedures. A number of the agency personnel inter-
viewed have set up these committees, which are com-
posed of Title V permittees, state legislators, and other
regulatory representatives. The mission of the over-
sight committees is lo help the Title V administering
agency develop a program that addresses the needs of
all stakeholders, one of those needs being the access
to information.
To restate, stakeholders have'yet to put pressure
on Title V agencies for external reporting. As the Title
V program takes shape, stakeholders will become
more, interested in receiving up to dale program infor-
mation such as:
* Current fee levels
• Costs associated with program implementation
Chapter J; Management Reporting and Tracking SJ
-------
• Expenditure and revenue reconciliation
- Various performance indicators
Simply staled, the stakeholders, especially those
that have mobilized into forming oversight commit-
tees, will want to know where their fees are going anu
how efficiently they are being used to administer the
fee-based Title ¥ program.
External Reporting: Measuring Performance
A challenge thai will face Title V agencies as they
develop external reporting procedures is identifying
and measuring program performance criteria. Once
Title V programs ate implemented and underway, it is
safe to assume stakeholders will soon be demanding
financial and performance-based reports. Title V
stakeholders may desire performance-based reports
that answer questions such as:
* How many labor hours does it take to implement
the Title V program foe each permittee?
* How many days does it take to review a Titie V
permit?
* Are Title V-related labor and other costs decreas-
ing or increasing over time compared to work-
load?
The air programs must take great caie when devel-
oping their external reporting program, as the applica-
bility of cost and performance data may vary widely
across the Title V program. For example, a report
showing the relationship between the total number of
52 Chapter J: Management Reporting and Tracking
-------
permittees and tlie annual cost of Tifle V program irn- I
piemen tation may provide misleading information as j
the required amount of labor hours (cost) may vary
among Title V permittees. !
For the most pan, the benefits of performance I
tracking outweigh the potential pitfalls described I
above. States should work hard to develop external re- j
porting processes that provide meaningful measures of
performance, while still meeting the needs of Title V
stakeholders. j
t
External Reporting: Sew York as Examph
The State of New York's Department of Environ- J
mental Conservation develops an annual report for the j
New York State Operating Permit Program (Title V), j
Selected portions are included in Appendix B. The |
New York report is a useful example of external re-
porting in practice. Presented each year to the New
York State Legislature, the Governor and the Office
of the State Comptroller (stakeholders), the report I
summarizes the Title V program's activity and in-
cludes both fiscal and performance-based criteria,
such as the estimated versus actual costs of program j
implementation, the average number of permits issued j
annually, as well as future fiscal year projections.
Summary: External Reporting
i
Most agencies are in the process of implementing
and refining their Title V programs and have not yet
addressed external reporting. How ev er, based on the
Chapter 3: Management Reporting mid Tracking 53
-------
interviews conducted, the- following similarities have-
been identified:
« Stakeholders such as permittees and regulatory
agencies have not. yet demanded external report-
ing from the Title V agencies as the program
continues to he implemented.
8 Governmental fund accounting systems support
externa] reporting to be used for the
Comprehensive Annual Financial Report
iCAFR). However, due to the relatively small
size of the Title- V program, it is rarely identified
in the CA.FR.
* Some agencies have organized oversight com-
mittees to provide feedback to Title V-adminis-
tering agencies. These committees will be the
driving force in the creation of external reports
for stakeholders in those states.
• Agencies will need to begin to develop external
reporting to respond to requests from stakehold-
ers.
$•/ Chapter J; Management Reporting and Tracking
-------
CONCLTSION
The Clean Air Act Title V Operating Permit Program
presents new requirements for state and local air quality
agencies. Most of these requirements are a challenge to
agencies that have historically managed grant-based pro
grams such as Seetion J 05, Fee-bused programs need
special considerations in terms of time keeping, eoxi al-
location. accounting fund type selection, and report ing,
This study found thai .state and local air programs
are making great snides in addressing the many finan-
cial management challenges associated with the Title V
program. However, because the program is beginning
the implementation phase, it is likely that state ami lo-
cal program,s will need to adjust the financial manage-
ment of the program as they gain more experience.
Conditions in the three primar) financial manage-
ment activities identified in the study are as follows:
I. Time Keeping and Cost Allocation
• Air quality agencies must refine procedures
for tracking labor and non-labor costs among
Title V and non-Title V programs. Of those
interviewed, all but one agency utilize time
sheets to record labor costs incurred for Title
V and non-Title V programs, Some of (he.se
systems are very sophisticated and interact
with the management information system
(MIS) to generate detailed reports.
Conclusion J5
-------
* These agencies must also address the manner
in which indirect costs are allocated to these
programs. All individuals interviewed have
procedures in place to record and allocate in-
direct labor and non-labor costs to appropri-
ate Title V and non-Title V program
accounts. State and local programs would
benefit from documenting these procedures if
they have not done so.
Accounting Fund Structures and Controls
•Air quality agencies must review their ac-
counting structures and assess whether the
current procedures are adequate for managing
the resources of a fee-based program or if
new accounting methods are required for pro-
gram efficiency and/or compliance with Title
V requirements,
• All agencies interviewed are currently em-
ploying acceptable methods of accounting for
Title V resources independently of non-Title
¥ programs. All but one of the agencies in-
terviewed rely on special revenue accounts
for Title V program management, while the
remaining agency accounts for Title V via an
expendable trust fund. Agencies should be
aware that government accounting regulators
may impose a fund definition that would ne-
cessitate a change in the Title V fund struc-
ture — changing Tide V to an enterprise
fund, Such a change will result in financial
-------
reports for Title V that more closely reflect
the fact thai the Title V program is user fee
supported.
3. Internal and External Reporting
• Agencies are challenged with identifying the
financial data they require in internal program
reports to manage the program. While the
budget process will provide regular reporting
on encumbrances against account codes, other
detailed information will be available through
the accounting system to evaluate costs and
revenues on a regular basis.
• Many state and local programs have yet to be-
come adept at manipulating the accounting
system to provide management information.
However, where programs are further along in
implementation, it seems that internal track-
ing information is more readily available.
• External reporting is an area that, to a great
extent, has not developed at the state and local
level. As the programs move from the start-up
period to the operation period, interests in pro-
viding external information will increase.
While there are difficulties in overly simplistic
performance measures that do not consider the
normal variability of individual activities, the
development of useful summary performance
information is a worthwhile endeavor that
Title V programs should undertake.
Conclusion 57
-------
I
L
Appendix A
Hxccrptcd from Governmental Accounting, Auditing and Financial j
Reporting (Government Finance Officers Association),
Appendix A 59
-------
General Fund
The general fund is used to account for resources, traditionally
associated with government, which are not required legally or by
sound financial management to be accounted for in another fund.
Namk of Government
General Fund
Comparative Statements of Revenues, Expenditures
and Changes in Fund Balances
For the fiscal years ended December 31,19X4 and 19X3
(amounts expressed in thousands)
T9X4 19X3
Revenues:
Taxes:
Property $14,133 $13,886
Sales 6,642 5,253
Franchise 4,293 4,126
Licenses arid permits 2,041 1,820
Intergovernmental 5,770 4,469
Charges for sen/ices 2,300 2,335
Fines 808 521
Interest 623 476
Contributions 145 —
Payments in lieu of taxes 365 314
Drug forfeitures 75 -
Total revenues 37,195 33,200
Expenditures:
Current:
General government 4,232 3,844
Public safety 13,438 13,150
Highways and streets 3,735 3,389
Sanitation 3,726 3,404
Culture and recreation 5,899 6,167
Debt sen/ice:
Principal 15 -
Bond issuance costs 150 —
Total expenditures 31,195 29,954
Excess of revenues over expenditures: 6,000 3,248
(id Appendix A
-------
19X4 11X3
Other financing sources (uses):
Operating transfer in-electric fund 1,576 —
Operating transfers out
Debt service fund (3,32?) (3,331)
Pipeline construction fund (1,210) —
Component unit (25) —
CDBG revitalization project fund (63) —
Capita! leases 140 —
Sales of general fixed assets 5 —
Total other financing sources (uses) (2,094) (3,S31)
Excess (deficiency) of revenues and other financing
sources over (under) expenditures
and other financing uses 3,096 (85)
Fund balances, January 1 1,807 1,892
Residual equity transfers out-fleet
management fund (45) —
Fund balances, December 31 $4,858 S 1,807
The notes to the financial statements are an integral part of this statement.
Appendix A 61
-------
Namk ok Government
Gf.nkral Funu
Comparative Statements of Revenues, Expenditures and
Changes in Fund Balances - Budget and Actual
For the fiscal years ended December 31, 19X4 and 19X3
(amounts expressed In thousands)
19X4 — -—19X3-
Variance Van i nee
FifortMi Fsvwibte
Budget Actual (unfavorable) Budget Actus! (Unfavorable)
Revenues
Taxes:
Property
114,007
$14,133
S 128
313,844.
$13,886
$42
Sales
5,900
6,642
742
5, OS
5253
55
Franchise
4,312
4,293
(13)
4,124
4,126
2
Licenses end parrwis ..,
1,02?
2,041
214
1,503
1,620
317
Intergovernmental
5,661
5,770
109
5,395
4,469
(926}
Charges for services
2,1 S3
2,300
142
2,085
2,335
240
Floes
810
808
(2)
487
521
34
Interest
555
S3
60
529
476
(44)
Contribullona ,.
_
14S
145
—
_
_
Paymants In lieu of taxes .,
345
365
20
314
314
0
Drug torfsitures
_
75
75
_
_
_
Total revenues
35,575
37,195
«,620
33,450
33,200
(280)
Expwtfilurta:
Current:
Genera! Government
Council
110
92
16
94
113
119)
Commissions
88
84
22
71
63
8
Manager
4S0
505
(151
426
414
12
Attorney
360
387
(7)
218
206
to
Clerk
275
250
25
247
237
10
Personnel
356
304
52
274
249
25
Finance and admin
904
86B
36
648
830
16
Other-unclassified
2,256
1,762
494
1,884
1,732
152
Total general gov'i
4,86?
4,232
626
4,058
3,844
£14
Public safety:
Police
6,513
6,354
159
6,026
8,801
(775)
Fire
6,040
6,031
9
5,521
5,415
106
Inspection
1,092
1,053
3S
970
334
36
Total public safety ,,
13,645
13,438
207
12,517
53,150
(633)
Highways and Streets:
Enoineering
014
796
18
777
762
IS
Maintenance
3.052
2,939
113
2,681
2,627
64
Tola! highways & SB,,..
3,866
3,735
131
3,458
3,389
69
Sanitation
3,848
3,726
122
3,428
3,404
22
Culture & recreation
5,950
5,899
51
5,477
5,167
(690)
f>2 Appendix /t
-------
——-19X4 — —19X3 —
Variance Variance
Favorable Fawrabte
: ¦ ¦ ¦ ¦ ¦¦¦ . Budge! Actual |Unf ¦
Depl se^ite:
Principal
-
.;-5i
—
—
Bond issuance costs
150
Wj
0
—
Tolal deb! service
150
•Br
05)
—
—
Total expenditures
32,316
51 'PS
1.1 ei
2£ 936
£9 95^
11,013}
Excess of revenues
over expenditures .,,
SJ59
s.csri
£,?ji
4 5.14
8.24C'
itmi
Other financing sources (uses);
Ooerat ia transfers (n
1,576
1,576
r»
--
—
Operating iiansletr out:
Debt service (una
(3.400.
7, 1,2101
%
—
Comportfcr' unii
-
i25)
(25»
—
CDBG re'/italizatiori proj, ,
—
,F,S:
i6?i
—
Capita; leases
-
i
-------
Na.vih of Government
Gknkrai. Fund
Comparative Balance Sheets
December 31» 19x4 and 19x3
(amounts expressed in thousands)
19X4 19X3
Assets $3,097 $ 557
Cash and cash equivalents 2,091 1,226
Investments
Receivables (net of allowances for uncollectible®):
(merest 92 48
Taxes:
Property 88 74
Property—interest and penalties 11 4
Liens 25 19
Sates 330 800
Accounts 72 59
Intergovernmental:
Federal — 150
County 215 127
Due from other funds:
Transportation fund ,. — 38
Water and Sewer fund 65 193
Fleet management fund 8 —
Due from componenl unit 12 —
Iriterfund receivables:
Fleet management fund 8 —
Management information systems fund 24 —
Inventories 39 37
Advances to other funds:
Fleet management (unci 32 -
Management information systems fund 46 50
Tolal assets 6,753 3,382
64 Appendix A
-------
19X4 19X3
Liabilities and fund balances
Liabilities:
Accounts Payable 88?
Compensated absences 225
Contracts payable 67
Due to other funds:
Pipeline construction fund 335
Water and sewer fond 37
Fleet management fund 47
Management information systems tad 57
Deferred revenue:
inleresl — 48
Property taxes — 24 75
Interest and penalties-property taxes 10 8
Tax liens 25 19
Federal government 181 85
Tots! liabilities 1,895 1,575
Fund balances:
Reserved for encumbrances 320 211
Reserved for senior recreation program 145 —
Reserved for drug enforcement 75 —
Reserved for advances 78 50
Unreserved, undesignated ........ 4,240 1,546
Total fund balances 4,858 1,807
Total liabilities and fund balances 6,753 3,382
The notes to the financial statements are an integral part of this statement.
Appendix A 65
-------
Name of Government
Special Revenue Funds
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
For the fiscal year ended December 31,19x4
(With comparative totals for the fiscal year ended December 19x3)
{amounts expressed in thousands)
—Totals—
15x4 19x3
Parks CDBS
Trans- Main- Revitali-
portation tenance zatiori
Revenues:
Motor fuel tax; 729 — —
Alcoholic beverage tax 798 — 739
Intergovernmental — 100 — 338
Interest 77 39 —
Donations ..... — 148 —
Total revenue 906 987 338
Expendiiures:
Current
Highways and streets 742 — —
Economic and physical
Development - — 401
Culture and Recreation — 1,001 —
Total expenditures 742 1,001 401
Excess (deficiency) of revenues
over (under) expenditures 184 (14) (63)
Other financing source:
Operating transfer:
General fund — — 63
Excess (deficiency) of revenues and other financing sources
over (under) expenditures and
other financing uses 164 (14) —
Fund balances, January 1 744 480 5
Fund balances, December 31 ..... 900 466 5
The notes to the financial statements are an integral part of this statement.
729
651
438
116
149
2,231
742
401
1,001
2,144
87
83
150
1,229
1,379
355
28
70
239
1,343
28
805
633
710
71
514
1,229
6 ft Appendix A
-------
Special Revenue Funds
Special revenue fund,1, are used to account for specific revenues
that are legally restricted 10 expenditures for particular purposes,
Transportation Fun J — This fund is used to account for the
government's share of motor fuel tax revenues and special state
prants that are legally restricted to the maintenance of state high-
ways within the government's boundaries.
Parts Maintenance Fund •— This fund is used to account for
private donations and alcoholic beverage tax revenues (.approved
by voters ir, J9X3) that are specifically restricted to the mainte-
nance of the government's parks.
CDBG Revitalizaiion Project Fund — This fund is used to ac-
count for the community development block grant that is funding
the revitalization project for substandard housing in the govern-
ment's jurisdiction
Appendix .4 ft?
-------
Name of Government
Special Revenue Funds
Combining Balance Sheet
December 31, 19x4
(with comparative totals for December 31,19x3)
(amounts expressed in thousands)
Parte
CDBG
Trans-
Main-
Revttalt-
—Totals
portation
tenance
Mttlon
11*4
19x3
Assets
Cash and cash equivalents
65
146
211
188
Investments
. 1,174
403
_
1,577
1,144
Interest receivable
1
1
—
2
12
Cash-restricted
_
4
4
Intergovernmental raceivatte
restricted
—
19
19
5
Total assets
1,240
550
23
1,613
1.349
Liabilities and fund balances
Liabilities:
Accounts payable —
332
84
—
416
82
Due to other funds-general fund ,
—
_
_
_
38
liabilities payable from
restricted assets
_
_
18
18
—
Total liabilities
. 332
84
16
434
120
Fund balances:
Reserved for encumbrances
. 353
8
5
366
159
Unreserved, undesignated......
555
458
—
1,013
1.070
Total fund balances
908
466
5
1,379
1,229
Total liabilities and
fund balances
1,240
550
23
1,813
1,349
The notes to the financial statements are an integral pari of this statement.
68 Appendix .4
-------
Enterprise Funds
Enterprise Funds arc used to account for operations that are fi-
ll an mi and operated in a manner similar to private business enter-
prises — where the intent of the government's council is that the
costs of providing £oods or services to the general public on a con-
tinuing basis be financed or recovered primarily through user
charges; or where the government's council has decided that peri-
odic determination of net income is appropriate for accountability
purposes.
Water and Sewer Authority Fund — This fund is used to ac-
count for the activities of the Water and Sewer Authority (a blended
component unit of the mamk of government).
Electric Fund — This fund is used to account for the activities
of the government's electric distribution operations
Appendix A 6<>
-------
Name of Government
Emfrpiusi: Fi;.\n>
Combining Balance Sheet
December 31, 19X4
(With comparative totals for December 31, 19X3)
(amounts expressed in thousands)
Water
and Sewer — Totals —
Authority Electric 19X4 19X3
Assets
Current Assets:
Cash and cash equivalents $ 1,388 $4,253 S 5,619 $ 4,121
Cash with fiscal agenl 123 — 123 —
Investments 14,610 1,735 18,405 8,879
Interest receivable 408 51 ^80 435
Accounls receivable (net of
allowance for uncoltecti'bles) 2,621 1,378 3,999 3,551
Due from other funds;
General fund 37 - 37 39
Reel management fund 2 — 2 —
Inventories 308 637 §45 930
Total current assets 19,476 8,114 27,590 17,955
Restricted assets:
Customer deposits 1.543 188 1.731 1,375
Revenue bond operations
and maintenance account 1,294 — 1,294 1,023
Revenue bond construction account 18,542 — 18,452 —
Revenue bond current debt service account 3,706 — 3,706 1,380
Revenue bond future debt service account 737 — 737 523
Revenue bond renewal and replacement account ... 1,832 — 1,632 1,165
Total restricted assets 27,454 188 27,642 5,466
Defe'red charges 568 — 580 489
Fixed assets:
Land.... 604 451 1,055 1,055
Buildings ana'system 20,928 7,043 27,97! 19,817
Accumulated depreciation-buildings and system ., (2,476) (3,013) (5,489) (4,769)
Improvements other than buildings 1,250 — 1,250 1,250
Accumulated depreciation-
improvements other than buildings (342) — (342) (188)
Machinery and equipment 104,283 1,034 105,377 104,761
70 Appendix A
-------
Water
snd Se*,er
—Totals'—
Authority
Electric
18X4
19X3
Accumulated depreciation-
machinery and equipment
, - (t-,723)
(5585
115.281]
113,429)
Construction in progress
. . 7,11b
—
7,118
~
Fixed assets (net ofaecynUateo depreciation) ,,
.. 116,642
5,017
-21,659
108,407
Total assets
8*64,140
S13,319
177 ,"59
132,337
Liabilities and earn
Current liabilities:
Accounts payable
.. $:,?37
£1,130
$ 2,367
$ 2 261
Compensated absence? psvabte
37*
16
390
378
Relainaae payable
536
_
£36
—
Due to otner funds:
General fund
—
65
193
Fieei management fund
at "*
_
17
—
Management info. sys. (unci
_
5
14
Interoovenmentai payable
-
—
11
Matured boners payable
68
-
68
_
Matured interest payable
55
_
55
--
Accrued interest payable
. 1,045
_
1,045
1,100
General obligation bonds
oavabie-current
1 iftri
_
1,480
1,360
Capital teases payable-current
23
_
23
—
Total current liabilities ,. -
, 4,905
1,146
6,051
5,337
Current liabilities payable from restricted assets:
Customer deposits payable . ...
.
168
1.731
1,375
Revenue bonds payable
- 1,484
1,484
530
Accrued interest payable
, 1,331
-
1.331
448
Total current liabilities payable
from restricted assets
4,356
*86
4,546
2,353
Normurrents liabilities:
General obligation bonds payable
(net of unamortized discounts)
, 30,815
_
30,81 e
25,798
Revenue bonds payable fuel ot
unamortized discounts!
. 31.975
—
31,975
8,580
Capita' teases payable
78
—
76
_
Total noncurrent liabilities
. 62,871
—
62,871
32.378
Total liabiM'Es
72154
1.334
73,^68
40,068
Appendix 4 71
-------
Water
and Sewer -— Totals—-
Authority Electric 19X4 19X3
Equity:
Contributed capital:
Government 4,033 — 4,033
Customers 14,062 — 14,062
Developers,..., ....... 35,241 3,138 38,379
Intergovernmental 5,588 — 5,588
Total contributed capital 58,924 3,138 62,062
803
13,854
34,293
5,588
54.533
- 1,294 1,023
Retained earnings:
Reserved for revenue bond
operations and maintenance ,, ,, 1.294
Reserved for revenue bone!
current debt service 891 — 891 402
Reserved renewal and replacement 1,632 — 1,632 1,165
Unreserved 2335 8,84? 38,112 35,191
Total retained earnings 33,082 8,84? 41,929 37,781
Total equity 92,006 11,985 103,991 92,319
Total liabilities and equity -,,$164,140 $13,319 $177,459 $132,387
The notes to the financial statements are an integral part of this statement
72 Appendix A
-------
Namk or Gfn krnmkm
Em HRPiasi- Fumis
Combining Statement of Revenues, Expenses and Changes in Retained Earnings
for she fiscal year ended December 31, 19X4
(With comparative totals for the fiscal year ended December 31, 19X3}
(amounts expressed in thousands)
Water
and Sewer
Touts —
Authority
Electric
19X4
18X3
Operating revenues:
Charges for sale? and services:
..... 10,22?
Watcsstes
—
S 6,227
$7,588
Sewer charges
—
5,671
4,344
Tap fees
1,52!
—
1,521
1,155
Electric sales
..... —
15,250
15,250
15,110
Total operatic fvewes —
15,250
31,669
28,197
Operating expenses;
Costs 0? sales anci services
6,997
10,772
17,769
16,879
Administration
3,137
1,46?
<3.620
4.342
Deorecialion
2,436
318
2,754
2,597
Total operstina expenses
12,670
12,573
£5,143
23,818
Operating income
. . , 3,W9
2,677
6.526
4,379
Nonopereting revenues {expenses):
IntsraovetnmenJai
.. ... 350
4G
396
172
Interest revenue
1,753
523
2,278
2,357
Interest expense
, ,. {3.4391
—
(3,439)
(2,765)
Boicf issuance costs
(35J
_
.(25)
(10)
Loss on ssles of fixed assets
(10)
—
110}
_
Tota; nonoperating teveiues
(expenses)
.... (1.371}
569
(802)
(246)
Income before operating transfers
. . 2,478
3,246
5.724
4,133
Transfer (to) other funds:
General fund
<1.576)
(1.576)
—
Net income
-... 2,476
1,670
4,140
4.133
Retained eaminos, January 1
,, ., 30,604
7,177
37,781
33,648
Reisined earnings December 31
$33,082 S 8,847 $41,929 S37.781
The notes tc the financial statement? aw an integral pan of this statement
Appendix ,4 73
-------
\.*MF Of GOVI-RNMEN I
Fxn.Rpiri.sr Finds
Combining Statement of Cash Flows
For fiscal year ended December 31, 19X4
(With comparative totals for fiscal year ended December 31, 19X3)
(amounts expressed iri thousands)
Water
and Sewer —Totals ——
Authority Electric 19X4 19X3
Cash flows from operating activities:
Cash received from customers 816,151
Cash paid to suppliers (5,813!
Cash paid lor quasi-extemai transnctions
Cash paid to employees
Net cash provided by operating activities
Cash flows from noncapital financing activities:
Transfer to general fund
Subsidy from federal grant
Net cash provided (used) by
noncapital financing activities
11,202)
(3,117!
S.019
350
350
Cash flows from capital and related financing activities:
Proceeds from general obligation bonds 8,423
Proceeds from revenue bonds 34,150
(11
170)
02)
(2,310)
Principal payments-bonds
Principal payments-capital leases
Interest paid
Proceeds from sales of feed asssis
Purchase of fixed assets —
Capital tease obligation clown payments (6)
Construction (including capitalized
interest costs) ('1,396)
Contributed capital 4,294
Net casts provided (used) by capital and
related financing activities 21,978
Cash flows from investing activities:
Interest received
Net cash provided (used) by
investing activities
St 5,097 $31,248 $27,364
(10,558) (18,371) (18,064)
- (1,202)
(1,903s (5,020) (4.338)
2,636 8,655 6,962
- (1,576) (1,576)
46
396
(1,530) (1,180)
9,423
34,150
(11,1701
(121
(2,310)
S
(494)
(6)
(494)
- (11,396)
- 4.294
(494) 21,484
172
172
(1,885)
(2,887)
(1,637)
6.744
335
, 1,568
2,038
3,606
2,987
. (23,860)
(2,276)
(26,136)
(9.898)
1,347
593
1,940
2,316
. (20.945)
855
(20,590)
(4,593)
74 Appendix /I
-------
Water
and Sewer -— Totals —
Aultiofity Electric 19X4 19X3
Nel increase (decrease) h cash
anil cas>- equivalents — 7,402 907 6,365 2,676
Cash and cash equivalents, January 1
(including $8,611 in restricted accounts) 2.696 3.474 6,17c 3.296
Cash and cash equivalents,
December 31 (including $168
ri restricted accounts) $10,100 S 4,<41 $14.541 3 6,172
Rf'TOM iuation OF Ori:r(,vriNi; Jncomil 10 Nn
Cash Pkovidkd r\ Opkk-viin"*. Aciivmd-n
Water
end Sewer
Totals—
Authority
Electric
18X4
19X3
Ooerating income
$ 3,849
$ 2,677
$6,526
5 4,379
Adjustments to reconcile operating Income
to net cash provided by operating activities;
Depreciation expense
. 2,456
318
2,754
2,507
(Increase^ in accounts receivable
(506)
(153)
(681)
(40)
increase in due 'rom other funds
_
—
—
(11)
(Increase) in allowance for
uncoBecNb.% accounts
213
_
213
110
(Increase) decrease in inventories
i£3
(168)
(15)
(100)
increase in customer Deposits
233
12
245
84
increase (oecreasei in accounts payable
133
(47!
m
(34)
(increase) in awunls payable
related to equipment purchase .
(374)
_
(374)
-
Increase (decrease) in
compensated absences payable
15
(3)
12
(2)
Increase (decrease) in inter-governments-
payables
(11)
—
(11)
4
increase (decrease) in due to other funds ........
(120)
—
(120)
5
Total adjustments ......
2,170
1411
2,129
2,583
Net cash provided by operating activities
$6,019
$ £,636
$ 8,655
$ 6,962
Noncash Investing, Capital and financing Activities
Borrowing under capital lease
101
_
Contributions of feed assets 'rom government
3,230
-
Purchase of equipment on account
374
—
The notes to the financial statements are an integral pari of this statement.
Appendix A 75
-------
Trust and Agency Funds
Trust funds are used to account for assets held by the govern-
ment in a trustee capacity. Agency funds are used to account for
assets held by the government as an agent for individuals, private
organizations, other governments and/or other funds.
Senior Citizens' Transportation Fund — This fund is used to
account for donations that are received pursuant to a trust agree-
ment that restricts the use of those donations to providing subsidies
for senior citizens' transportation to special government sponsored
events,
Perpetual Care Fund — This fund is used to account for princi-
pal trust amounts received and related interest income. The interest
portion of the trust can be used to maintain the community cemetery.
Public Safety Employees Retirements System Fund — This
fund is used to account for the accumulation of resources for pen-
sion benefit payments to qualified public safety employees.
Deferred Compensation Fund — This fund is used to account
for assets held for employees in accordance with the provisions
of Internal Revenue Code Section 457.
76 Appendix A
-------
Name of Government
Trust and Agency Funds
Combining Balance Sheet
December 31, 19X4
(With comparative totals for December 31, 19X3)
(amounts expressed in thousands)
ixpfisJftlt
Ttwt
Senior
CfcMtt'
TrsftsjsMtelioB
Nifl-
EXptndaMt
Twii
Ptrpttoil
Car*
Ptrjion
fruit
Public
Safety
Employ«s
Agency
DrfdfT»8
Conipen-
ittton
18X4
Tolife ——
19X3
Assefi
Cash end casi equivalent ,.
$11
$231
$33
$18
$293
$87
Investments
41
1,752
14,335
1,188
17,327
15,394
Interest receivable
6
82
348
—
434
163
Total assels
$58
$ 2,068
S 14,714
§ 1.216
$ 16,05*
S 15,644
Lis Dili ties and fund balances
Liabilities:
Accounts payable
$ (
11?
$18
—
$30
$36
Deferred compensation
benefits payable
—
—
—
1,216
1,216
900
Total liabilities
1
13
16
1,216
1,254
936
Fund balances:
Reserved for
perpetual care
1,102
—.
—
1,102
1,102
Reserved for employees
retirement system
—
—
IS,802
,—
16,802
14,248
Unreserved,
undesignated
51
9S1
|2,108)
—.
(1,104)
(642)
Total fund balances
51
2,053
14,636
—
16,800
14,708
Total liabilities and
fund balances
8 58
S 2,065
$14,714
$1,216
118,054
S 15,644
The notes to the financial statements are an integral part of Us statement.
Appendix A 77
-------
Name of Government
Senior CrnzKNS' Transportation
Expendable Trust Fund
Comparative Balance sheets
December 31, 19X4 and 19X3
(amounts expressed in thousands)
19X4 19X3
Assets
Cash and cash equivalents $11 $18
Investments 41 33
Interest receivable 8 ?
Total assets $58 $51
Liabilities and fund balances
Liabilities;
Accounts payable $ 7 $ 2
Fund balances:
Unreserved, undesignated — 51 49
Total liabilities and fund balances $ 58 $ 51
The notes to the financial statements m an integral part of this statement.
7H Appi'ndix ,-l
-------
Name of Government
Senior Citizens" Transportation
Expandable Tkijst Fund
Comparative Statements of Revenues, Expenditures
and Changes in Fund Balances for fiscal years ended
December 31, 19X4 and 19X3
(amounts expressed in thousands)
19X4
19X3
Revenues:
Interest
$ 6
$ 2
Donations
82
52
Total revenues
88
54
Expenditures:
Current;
General government
B6
25
Excess of revenues over expenditures —
2
25
Fund balances, January 1
49
24
Fund balances, December 31
$ 51
$49
The notes to the financial statements are an integral part of this statement.
Appendix .4 79
-------
Appendix B
Excerpted from New York State
Operating Permit Program, Annual Report 1996 (pp. 6-13).
Appendix B 81
-------
Nmv York State Operating Permit Program
1995 Annual Report
Contents Page
Introduction ]
Preface I
Background 2
New York State's Operating Permit Program Status 3
New York State's Operating Permit Program Implementation 4
Fiscal Report 6
Operating Permit Program Fee 6
Clean Air Compliance Act Reporting Requirements 7
Recommended Fee Adjustment S
Program Report.............. 12
Slate Fiscal Year 94/95 Details and Projections 12
Other Involved Agencies ...13
Appendices
Appendix A; NYS Department of Economic Department-Clean
Air Act SmallBusiness Ombudsman, Annual Report to the NYS
DEC-Augu&t 1995
Appendix B: NYS Department of Health-Clean Air Compliance
Activities-November 1995
Appendix C; NYS Environmental Facilities Corporation-Small Business
Assistance Program Annual Report to DEC-August 1995
Figures
Figure 1: 1994/95 Operating Permit actual Costs 9
Figure 2; 1995/96 Operating Permit Estimated Costs 10
Figure 3: 1996/97 Operating Permit Estimated Costs 11
Figure 4: Projected Number of Permits Subject to Review
for Title V OPP Implementation 12
Appi ndtx B
-------
Fiscal Report
Optra tint IVnnit Program I-it
Beginning in J 994. Title V facilities were required jo pin tfie tonnage based
OPP fee, pursuant to section 72-0303 oj the ECL, OPP lees collected arc de-
posited in I he OPP Account of the Clean Aw Fond established by Slate Finance
Law, Non-Title V .sources? continue to pay Air Qualm Control Program fees tftat
are deposited to the Environmental Regulatory Account established in 1%'?.
Both lite ledera) Act and the NYSC'ACA requiic fee revenues sufficient to
covet all reasonable direct and indirect costs required to develop, administer and
enforce the Stated Tjtle V peuiw piogram. Once EPA approver the, .State's plan
for delegation ol the Title V program to the State, Title V/OPP fees ciin only be
used1 fo fund Title V permit program activities. Prk« to approval. Title A" activities
can be funded from any souices available to the State Fur fjseal years 1994/95
and 1995/%. the DEC's Title V workload has been funded from lie General Fund,
the Utility Regulatory Account. Federal Funds and the OPP Aecount.
In !994/u5. Title V activities constituted ?5'« of the DEC's air program ef-
fort. however the OPP Account only paid foi 2h'7i of DEC V air program costs. It
is anticipated that as newly authorized positions funded from the OPP Account
ure filled during 1995/96. the amount expended from the OPP Account will ap-
proach lOU'v of tile Title V program cost. Many of the employees who will be
recruited to the new OPP jobs will be transferring from existing positions cm-
renth funded In the Section 105 li-dend grant. Section 105 funds may noi he
used for Title V costs once federal appro\al of the OPP is obtained. Those gran!
funds are expected to be reduced accordingly by the federal government.
The Style legislation sequires that commencing January 1, ] 094 and annual-
ly thereafter, the Department u-\- a formula to calculate the fee per ton of emis-
sions that subject sources arc required to pay and that the calculation and fee he
established a* a rule through publication jn the Environmental Notice Bulletin.
The fee is calculated by dividing the current Stale fiscal year appropriation for
the OPP by the total tons of emissions of regulated air contaminants from
sources subject to the OPP during the prior calendar year, with consideration
given to any .surplus or deficit in the OPP Account of the Clean Ail Fund, any
loan repayment from the Mobile Source Account of the Clean Air Fund and ttje
tatc of collection of bills issued for the fee. The fee is limited to a maximum lee
of $25 per ion, increased by the percentage, if any. by which the Consumer Price
Index iCPl) exceeds' the CP! for the prior year. Based upon this ceiling, the J044
ice was $25.fi9 and the J9C»5 fee was $26,44,
Appendix B S3
-------
( loan Air Compliance Act Repot tiny Requirements
The NYSCACA specific* the fiscal information that this report must con-
tain. These are an follows: the actual direct and indirect costs and revenues re-
ceived in State fiscal year iSPY) 1994/95; SFY 1W5/96 estimates for direct and
indirect costs, revenues and the year end balance of the Clean Air Fluid's OPP
Account; SFY 1996/9? projections for direct and indirect costs and tonnage of
pollutants that will be subject to OPP fees; and finally, a recommendation on an
adjustment to the fees to assure, adequate funding during future fiscal years.
Each of these requirements is addressed under subheadings below
Cost iigures provided in tilth report are actual or projected expenditures be-
tween April 1 and March 51 for a giver) State fiscal year. Expenditure figures
rather than appropriations are used in this report since expenditmes provide
more, accurate reflection of actual program costs. Appropriations only reflect the
level of spending the Legislature has authorized in a particular year, and autho-
rized funds may not be disbursed in that year. A legislative appropriation is usu-
ally based on anticipated revenues. If actual revenues generated by the OPP fees
are less than the appropriation, the full appropriation cannot be spent.
Expenditures may he made against a prior year's appropriations, current year ap-
propriations or a ^appropriation depending on when the liability was incurred.
State Fiscal V.-ar 1994/V5
The actual direct and indirect costs of the OPP in SFY 1W4/95 were
S10,687.7W. This amount includes expenditures by the Departments of Environ-
mental Conservation, Health. Emnomie Development, and the Environmental
Facilities Corporation. A detailed summary is included in Figure i. The sources
of funds for the program were OPP Account $7,413,029 with the balance com-
ing from die General Fund, Federal Funds, and the Utility Regulatory Account,
Total revenues received by the OPP account during SFY 1994-95 were
$11,084,735. Revenues included fees, interest and penalties.
Slate Fiscal Year 1995,%
The estimated direct and indirect costs of the OPP in SFY i '¦¥>5/96 are
$13,653,881. This amount reflects expenditures by the Departments of Environ-
mental Conservation, Health. Economic Development, and the Environmental
Facilities Corporation. A detailed summary is included in Figure 2.
Revenues anticipated lo be received in SFY 19^5-96 total S 10,427,629. This
amount is based on emission tonnage hilling of 453,32(1 tons times a per ton fee
of $26.44 minus a I3'ii uncollectible figure. This revenue estimate does not irt-
84 Appendix ft
-------
dude any additional funds that may he collected from prior year tees, penalties
•and interest.
DEC estimates that the balance in the OPP Account at the end of SF-Y
19Q5/95 will be $4,564,49S. This estimate is based on.
Stale Fiscal Year 19%/()7
'1 he estimated direct and indirect costs ol the OPP in SPY l')9W% are
3>14^!l)(i.658. Th^ amount reflects pi ejected e\|>cnditoies by the Departments of
Environiijcntnl Conservation. Health, Economic Development anil the Environ-
mental Pftciliiies Corporation, A detailed siimman is included in Fienre 3,
Under current legislation, revenues estimated to lie received it) SFY 1 9Wi/y7
total $10,522,530. This amount is based on an emission tonnage billing of
430,000 tons times a pet ion 1ee ol $27.19 minus a 10Ci, uncollectible figure. Tlx
lee uf $2"?.19 it: the maximum allowed by the ceiling current!) prescribed in the
NYSCACA,
Ucconmu mled ) * t Adjustment
The 19%,"J7 appropriations requested he DOC for the OPP represent no fur-
ther enhancement. Rather, the icquest is merely lor the hill annual value of the
program levels authorized on a part-yeai basis in the 1U93M4 and 1444/95 bud-
gets, DfiC is makhip no recommendation lot an adjustment at this time.
Beginning balance
Anticipated revenues...
Projected expenditures
finding balance
.. $7,711,MS
$10,427,624
$13,653,881
. $4.4 85,366
Appendix II R5
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Figure 1;
1994-J 995 Oper viw; Pkrmjt Arn ai. Costs,
Category
Personal Fringe Nonpersonal
Servlct Benefits Service Capital
Tetssf
Direct Program Costs
Environmental Conservation
.. 4,234.341
1,253,520
385,050
343,708
Health
«B,886
137,838
116,543
0
Economic Development
222, 649
88,398
441,718
0
Environmental facilities Cora
0
0
556,853
0
8,816,619
703,085
732,763
658,853
Tola! Direct Costs
4,908,676 1,453,754 2,100.162 343JOB 8,809,300
Indirect Program Costs
Environmental Conservation 1,716,141
Health 150.736
Economic Development , 111,622
Environmental Facilities Corp 0
Total indirect costs ..... 1,878,499
Total Operating Permit Program Costs 10,687,799
ASSUMPTIONS:
DEPARTMENT OF ENVIRONMENTAL CONSERVATION:
Direct costs were based on Trine and Activity records including adjustments made by supervisor)' staff. It was
determined that 35% of Air stiff time was devoted to Operating Perm,: Program activities in SFY1994-05. This
percentage was applied to the total Air expenditure in SFY 1394—95. Indirect costs were calculated at 31.6% of
persons! service and fringe benefit costs and reflect costs associated with agency operations, auxiliary support
staff and other stale overhead responsibilities
Departments of Health and Economic Development: Reports containing expenditure information were provided
to DEC by these agendas.
H6 Appendix H
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FlGi.'Ki 2:
1995-96 Opi;k u !\c Permit Ksiimaj i n Costs
Personal
Fringe
Nonpersonsi
Category Service
Benefits
Subtotal
Service
Capital
Tote!
Direct Program Costs
Environmental
Conservator 4,476,601
1. £96,835
5,878.434
1,879,786
1,503,000
9,256,222
Health 249,579
78 043
3£7,62£
15,312
0
2*13,334
Economic
Deve'opment ,, . , 403,345
126,126
529,471
613,731
0
1,M3,20£
Environmental
Facilities Corp 0
0
C
1 040,61*1
0
1,040,614
Total Direct Costs 5,125,525
1.604,002
6,753,527
3,549,445
1,500,020
11,782,97!
Indirect Program Costs
Environmental Conservation
, 1,754,116
0
1,754,11)
Health
&7,79£
0
97,79!
Economic Development
18,998
0
18,99!
Environmental Facilities Corp ,. .....
0
0
C
Tot® Inoirect Costs
1,870,909
0
1 ,B70,90S
Total Operating Costs ,, 5,125,525
1,60*5,00;
6732,527
£.420,3=4
l.EQO,OK
13,6S3,»
ASSUMPTIONS:
Environmental Conservation:
Persons! Service expenditures reflect acuta' carry-in from 1994-95 oLs 12 month projected expenditures for 65
pos'Sions carried over from ! 894-95 and 3 trartfh projected expenditures tot 42 direr,t cosiiions tc be filled our-
irtg the current fiscal yeai.
Funding for 11 positions from SFY 1954-95 anfl B positions from SFY 1995-96 that are ass'gneoto (he Divi&on
of Regulatory Services and other support offices is shown unaer the Indirect Program costs heading.
Nonpersuns* service expencfstires reflect acta1 carry-in from 1994—SS projected 12 month disbursements
against 1995—€ appropriations (88% of planned in 12 mwrh sjeraxsj.
Cap'tai expenditures assume 100% of planner! amount.
Environmental Faclliltes Corporation
Nenpefsonal servic? expenditures reflect actual carry-in from 189*1-55 plus projected *2 month tiisoursercents
aga'nst 1995-98 appropriations, i'88% of planned in 12 month period).
Fringe Benefits/Indirect:
Fringe benefits for all agencies art calculates at S1 27% of personal service
Indirect costs for Environments, Conservation ant! Health are calculated t>i 29.65'."!. of personal
service and fringe benefits.
Indirect costs for Economic devetownent Ere 4.71% of personal service.
Appendix B 87
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Figure 3:
1996-97 Opkratjnc Permit Estimated Costs
Personal
Fringe
Monpersonai
Category
Service
Benefits
Subtotal
Service
Capital
Total
Direct Program Costs
Environmental
Conservation
5,210,708
1,629,388
6,840,096
1,829,032
1,000,000
0,809,128
Health
248,579
78,043
327,822
75,312
0
402,934
Economic
O«v8topm«nt
399,366
124,882
524,248
558,298
0
1,082,544
Environmental
Facilities Corp
0
0
0
1,000,000
0
1,000,000
Total Direct Costs .. .
5,859,663
1,832,318
7,691,966
3,602,640
1,000,000
12,294,808
Indirect Program Costs
Environmental Conservation
. 2,041,789
0
2,041,769
Health
57,795
0
97,769
Economic Development ,..
, 156,468
0
156,466
Environmental Facilities Corp
0
0
0
Total Indirect Costs
2,298,052
0
2,296,052
Tola! Opirating Costs .., 5,859,653 1,632,313 7,691,966 S,896,682 1,000,000 14,690,658
ASSUMPTIONS'
Planned expenditures for all agencies mllecs projected carry-in amounts against 1995-98 appropriations p!us
99% of requested personal service and 88% of non-personal service appropriations,
Capiial expenditures are estimatad af 1,000,000,
FRINGE BENEFITSMDIRECT.
Fringe benefits for all agsneies are calculated at 31.27% of personal service.
Indirect costs for all agencies are calculated at 29.85% of personal service and fringe benefits.
88 Appendix if
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State Fiscal Year 1994/95
Details and Projections
The NYSCACA requites DEC to report the number of Operating Permit ap-
plications on which filial action was talvc.n iti the previous fisenl year with details
on nveiage review time per permit, number of person houi> .spent per permit unci
the number of complete permit applications fried. Since the State did not have a
federally approved OPP in effect in SFY l5, no Title V permits were re-
viewed or issued and actual data on average review time per permit is not avail-
able. However, the Department has projected, to the extent possible, the
minimum number of permit reviews that will be necessary to implement the pro-
gram over the ties! five years. These are reflected in Figure 4.
FiGL'ilL 4:
1'RO.jt:c J F.D \TMBF.R <>]' PERMITS
sntji rr to ur.vni\ okolr to mi'LMii'Xr tjti.i: V
Permits to be reviewed
Average Review
Permit Type
over the next 5 years
Time* (days/permit)
Existing major facilities
876
40
Nox and VOC Reasonable Achievable Technologies'
Cent. (RACT) permit moditoitons
200
15
We V General Permits
150
10
New source review (Tite lj IncludesPSO reviews,
netting/lradinq permit modilifationE
100
60
Known MACT (Section 1121 sources
150"
30
Capping guI of Title V and RACT
9650""
"
* This time represents estimated technics! review time oy Division of Air staff oily. Specific permit appli-
cations coufd take considerably mwe o' less tine depending on the size end complexity of the facility.
Also (tie review lime does not include that required by Division of Regulatory Affairs to process and issue
permiti,
*" The numbers in trie table are estimates. o( the effort required id review permits for si* categories o'
sources tor which MACT standards have been adopted by EPA, Tfie'e are 174 categories for which
MACT standards are utilmately requ'red to be developed, As new MACT standards are promulgated there
wii: be a sipnifitam Increase in bain the number of facilities that requre permits and the effort neeesary to
review those permits
Tnis includes the approximately 8000 New VorN Piy sources ihsi will nuEd tnoitticatons to their permits
in order to cap out of Title V
Appendix B $9
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Other involved agencies
The NYSCACA does not specifically require that the activities of other in-
volved agencies be reported. However, the Department of Health, Department of
Economic Development and the Environmental Facilities Corporation were
asked to report so that the direct costs of the fiscal portion of this report could be
determined, Expenditures reported by those agencies have been included in this
report. Their submissions to DEC are included as appendices to this report.
'-(/ Appendix /•'
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The Environmental Finance Center is part of the Coastal and Environmental
Policy Program (CEPP) and is hosted by the Maryland Sea Grant College.
About CEPP
The Coastal and Environmental Policy Program is a non-degree granting pro-
gram composed of the University of Maryland Sea Grant Program, the School
of Public Affairs, the College of Agriculture, the School of Law, and the
Center For Environmental and Estuarine Studies. CEPP provides informa-
tional, educational and research policy analysis and technical problem-solving
assistance.
A bout Sea Grant
-The National Sea Grant Program encourages wise stewardship of our marine
resources through research, education, outreach and technology transfer,
Mary land Sea Grain is one of twenty-nine Sea Grant programs across the
country — part of a national partnership supported jointly by state and federal
funds, from the National Oceanic and Atmospheric Administration,
About the HFC
.With support from the U.S. Environmental Protection Agency (EPA) and the
Maryland Sea Grant College Program, the Environmental Finance Center
(EFC) was created to train, provide assistance and act in an advisory capacity
to state- and local governments on issues related to environmental finance.
The Center promotes a comprehensive and integrative look at environmental
finance from a strategic management perspective that suggests that sound
environmental practices encompass a broad spectrum of activities. Activities
such as needs assessments, issue prioritization, identification of relevant envi-
ronmental regulations and compliance issues, development of capital facilities
plans, identification of revenue sources, and community participation are pre-
cursors to securing funding that form part of the EFC's holistic approach.
To find out more about the Environmental Finance Center visit our web
- page: http;//www.mdsg,nmd.edu/MDSG/EFC/index,htjnl
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Title V of i iik Clean Air An
One of the most important benefits of the new Title V operating permits program of the Clean Air Act is
that the program itself will ensure that adequate resources arc available for its administration. By col-
lecting tees from stationary air pollution sources in exchange for permit* which regulate levels of emis-
sion';. states and localities can achieve a number of desired goals;
« Use revenues generated by those regulated to monitor, enforce, and report on stationary
air emissions
• Create incentives for those sources to reduce emissions by forcing permit holders to internalize
the costs of emitting air pollutants
• Begin to track air pollution control requirements and performance so it becomes easier to man-
age programs across .media, such as air, water, and land
If revenues generated from u program go to support other State efforts, then not only will the program
suffer from lack of resources, but those paying the permit fees will not receive the level of service that
they are payi tig for.
This handbook identifies ways a. state or local air program agency can collect, secrecate, and account for
Tills V fees so that they are not commingled with other efforts.
HEPA
stalinl
Issues in Environmental Finance
Knvironmentttl Finance Center ¦ University of Maryland System
http://www.mdtg.umd. edu^MDSG/KFC/indrx.htm!
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