Council may have to forgo fund raids

Copyright © 2008
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — It could be awhile before the Undesignated Unreserved Fund has anything but a zero balance, according to Navajo Nation Controller Mark Grant.

The Navajo Nation Council approved taking $2.3 million from the Minimum Fund Balance in early September to fund design and engineering services for the Office of Youth Development in Fort Defiance.

The Nation is required by law to have 10 percent of the prior year’s budget amount in the Minimum Fund Balance just in case of a government emergency. After the Sept. 2-5 Council budget session, the Minimum Fund Balance stood at $8.1 million.

“The effect of dipping into the Minimum Fund Balance is the fact that it is now below the legally required amount,” Grant said Wednesday. With the new fiscal year, which began Oct. 1, the amount required is $14.9 million because the Nation’s budget increased.

In fiscal year 2007 the General Fund budget was $127 million, so the fiscal year 2008 Minimum Fund Balance requirement was $12.7 million, Grant said. In fiscal year 2008, the budget was $149 million, so the Minimum Fund Balance requirement for fiscal year 2009 is $14.9 million, because the fund balance is based on the prior year’s budget.

“The fact that we were already short in the Minimum Fund Balance means that any new money that we get is going to go into that Minimum Fund Balance to satisfy year that requirement first, before it becomes available for appropriation. So we’re about $7 million short,” he said.
Normally, any reversions at the end of the fiscal year would go into the Undesignated Reserve for appropriation, but that, too, is going to be impacted by the amount of carryovers, he said.

“I don’t know what that number is yet, but it means that not as much will be going into reversions, and any reversions will go into the Minimum Fund Balance first.”
Once the Minimum Fund Balance is satisfied, then everything after that will become available for appropriation. “Since we won’t meet the revenue projection until next year — probably in June or July — there’s the potential that the UUFB will not be available for appropriation until next year, June or July,” he said.

“Also, if oil prices stay low like they are right now, then there’s a possibility we won’t meet our revenue projection until later in the year, say August or September. It will take longer to meet our revenue projection, which means then, that there will be less going into UUFB.”