A specific operation of the government is funded by 60% from the general fund, 40%...

A special revenue fund is used to account for the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes (other than debt service or capital projects). In this case, 40% of the operation is funded by specific revenues, which triggers the use of a special revenue fund, provided those revenues are legally restricted or committed to the operation.

Even though 60% of the funding comes from the general fund, the existence of a dedicated revenue stream (40%) for a specific purpose qualifies it for reporting in a special revenue fund.

Relevant References:

GASB Statement No. 54 – Fund Balance Reporting and Governmental Fund Type Definitions

GASB Codification Section 1300 – Fund Types

GFOA – Fund Structure Guidance

Answer: B. special revenue fund

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