Special Revenue Fund

A special revenue fund is an account laid out by a government to collect money that must be utilized for a specific project. Special revenue funds give an extra level of accountability and transparency to taxpayers that their tax dollars will go toward an expected purpose.

Breaking Down Special Revenue Fund

In the periodic budget process that each district goes through, there are dealings and fights over money — where does it come from, who gets it, and the amount they get. There are four essential pails of budget money to be allocated: general fund, capital fund, "blustery day" fund and special revenue funds. The general fund pays for regular and continuous town expenses; the capital fund is reserved for large projects, and the blustery day fund is the emergency account for startling expenditures. A special revenue fund is laid out to finance and operate dedicated more limited size projects. Parks, libraries, sea shores and town squares may be in every way financed by special revenue funds. These projects will have their own set of books for recording cash inflows and outpourings.

The Government Accounting Standards Board (GASB) issued Statement No. 54 of every 2011, to explain the definition of special revenue funds, as there was some vagueness before. From the Statement: "Special revenue funds are utilized to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for determined purposes other than debt service or capital projects."

Illustration of a Special Revenue Fund

A city could lay out a special revenue fund to pay expenses associated with stormwater management. The money in this fund must be utilized for stormwater management costs, for example, street clearing, drain and trench cleaning, system maintenance, and a public awareness campaign. The city would be required to publicly report on where it collected the special revenue fund money from and how it spent the special revenue fund's budget.