Government Financing Outside of the Current Period: An Examination of Deferred Outflows

Service provision often requires financing that does not coincide with the normal transaction activity of the current fiscal year. The deferred outflow is a method that allows for both policy implementation and funding transparency. No previous research exists concerning the practice of deferred outflow utilization and the impact of these resources on future funding activities. This study examines the levels of deferred outflows among county governments in North Carolina. Preliminary findings indicate a very high level of outflows dedicated to pension-related programs for employees who provide services in traditional government activities. A logistic regression analysis suggests the total number of employees, an overall increase in net position from the previous year, and the presence of more personnel who perform accounts payable activities were all significantly related to elevated levels of deferred outflows. Findings also suggest that smaller governments were more likely to increase deferred outflow resources at a higher rate on an annual basis. Implications of the study include the importance of proper budgeting and fund accounting for employee post-service and the need for experienced finance personnel staff that can adequately implement transactions and compile comprehensive audits.