Double-check for Dormant Funds

The accounting firm of C.L. Coonrod & Company has agreed to provide financial guidance & solutions to us related to shortfalls and temporary cash-flow issues on a weekly basis for the next several weeks. Here is the latest installment.

Double-check for Dormant Funds – A Source of “Found” Money

We are often surprised at the number of dormant funds we find on township ledgers.

A dormant fund is a fund that has a balance that is not being used. On the annual report, such a fund will have a beginning and ending balance, but no transactions, or very few.

Examples we have found recently are:

  • Levy excess funds.
  • Bond funds for paid-off bonds.
  • Loan funds for paid-off loans.
  • Fire territory funds for fire territories that have been dissolved.
  • Park or cemetery funds for townships that no longer have parks or cemeteries.
  • Pension funds for townships that once had local pensions that have been replaced by the state-administered INPERS plans.

If your township has any dormant funds, consider transferring the unused balances to your rainy day fund.  A board resolution is required, and you should confirm through your township attorney that there are no outstanding claims against these funds.

Annual rainy day fund transfers are limited to 10% of the township budget, but that is usually not a problem.

Balances in the rainy day fund can be appropriated for any lawful purpose.  Consult your township attorney as to what purposes are lawful.  Generally, they include any purposes for which the township general fund can be used.

Also, we sometimes see cumulative fire building and equipment funds (cumulative fire funds) that are not being used.  These funds are sometimes overlooked in the annual budget.  During the year, there may be confusion as to how to access them.  It is simple. By resolution, the township board can appropriate these cumulative fund balances for fire and EMS buildings and equipment, including loan and lease payments.    A public hearing with proper notice is required.

C.L. Coonrod & Company
3850 Priority Way South Dr, Indianapolis, IN 46240
(317) 844-4450
coonrod@coonrodcpa.com