Flow of Funds is a schedule of expenses and interested parties that prioritizes how payments will be made from the revenue generated by a facility financed by a municipal revenue bond.
Applying "Flow of Funds" to Securities Exams:
There are two basic types of revenue pledges. In a net revenue pledge the flow of funds is to first pay the operating and maintenance expenses for the municipal facility and then to pay the debt service on the bond. In a gross revenue pledge the debt service is paid before the operating and maintenance expenses.