What are special funds primarily used for in governmental budgets?

Special funds in governmental budgets are primarily designed to collect designated revenues for specific purposes. This structure allows governments to allocate resources effectively for predefined projects or services, ensuring that the funds are used for their intended outcomes.

Special funds help maintain financial accountability and transparency, as they separate revenue sources and expenditures related to specific functions. For example, a government might create a special fund for environmental protection initiatives, with revenues flowing only from taxes or fees designated for that purpose. This ensures that the revenue is used exclusively for those initiatives, rather than being absorbed into the general fund, which can be used for a broader range of expenses.

In contrast, options focused on creating surpluses or managing employee retirement plans typically involve a more general budget approach or specific financial liabilities. Similarly, foreign aid and grants often fall under different budgetary categories that do not specifically relate to special funds, which are defined by their restricted use of revenues.