Shelby County's Fund Balance Is at 15 Percent. Its Own Policy Says 20 to 30.

The county closed fiscal year 2026 by moving $7,185,588.36 to cover funds that ended the year short. A commissioner asked what that leaves in reserve. The answer was about $80 million, flat to last year.

MEMPHIS, August 19, 2026 - Shelby County's estimated total fund balance heading into fiscal year 2027 is about $80 million, which the county's finance office told commissioners is 15 percent, against a county policy that recommends 20 to 30 percent.

The figure came out during Committee 1, Budget and Finance, on a routine year-end cleanup resolution that commissioners are asked to pass every year. The resolution amends the fiscal year 2026 operating budget to transfer general fund money into three funds that ended the year in a negative cash position, and to commit general fund balance against tort liability.

What the resolution moves

As filed in the agenda packet, the resolution transfers $4,423,908.63 to the Correction Center Enterprise Fund, $549,810.69 to the Group Health Insurance Fund and $100,000.00 to the On-The-Job Injury Fund, and commits $2,111,869.04 of general fund balance for tort liability. The total is $7,185,588.36.

The deputy director of administration and finance told the committee that accounting rules bar the county from carrying negative cash in certain funds, including enterprise funds and some internal service funds, and that the assessment cannot be done until the year is complete. He said the tort portion is being committed rather than transferred this year because tort cases usually take an extended period and the cash does not normally go out during the year.

The number behind the number

Commissioner Britney Thornton asked what the resolution does to the fund balance. Finance told her just over five million dollars will be transferred out of fund balance directly, and the roughly two million dollars committed for tort will not be transferred but will show as a commitment, reducing the county's unassigned fund balance.

She then asked what remains going into fiscal year 2027. Finance put the estimated fund balance at about $80 million, described it as flat to last year, and cautioned that the books are still being closed. Asked what percentage that represents against county policy, finance said 15 percent, and confirmed the policy recommends 20 to 30 percent.

Down from last year, by the county's own account

Committee chairman Commissioner Michael Whaley asked how this year's cleanup compares with prior years. The deputy director said the total is significantly less than the prior year, which he recalled as roughly 13 to 14 million dollars, and said the corrections number in particular was larger last year. He did not have the exact prior-year figure at the table. Asked whether the trend was moving in the right direction, he agreed it was, while noting the transfer still hits fund balance.

Commissioner Thornton asked for 10 years of historical trend data on the Correction Center Enterprise Fund, the On-The-Job Injury Fund and any other funds tied to tort. Finance agreed to bring it to the full Commission.

Tort liability, and no cap on exposure

Commissioner Henri E. Brooks asked how much the county holds in tort liability. Finance put it at approximately $13 million currently, and explained the figure is reassessed at the end of every year against anticipated liabilities identified with the county attorney's office, with unused amounts reversing back to the general fund.

Asked whether there is a cap on the county's tort liability, an attorney from the county attorney's office told the committee there is no general cap on exposure that can be accrued by the county, though individual caps exist for certain types of cases.

The committee voted five to nothing to send the resolution to the full Commission with a favorable recommendation.

What happens next

The full Commission adopted the resolution on the consent agenda on Monday, August 24, 2026, on 12 aye votes, without discussion. The 10 years of historical trend data Commissioner Thornton requested was not presented at that meeting. Late in the same meeting Commissioner Brooks returned to the resolution to ask whether the tort liability commitment inside it covers the county's school oversight litigation. The county attorney's office said year-end closing includes its evaluation of risk and liabilities and that this is reflected in the resolution, and confirmed that there is no cap on the county's exposure in that particular case. Separately in the same meeting, finance told the audit committee it expects to bring preliminary fiscal year 2026 financials to the second committee meeting in September, with a goal of completing the audit by the end of December.

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