service fund is one that is used primarily to achieve a proper matching of revenues and debt service

during each year by depositing revenues in the fund until they are needed to pay debt service. The
fund must be depleted at least once each year, except for a carryover amount not to exceed one
months debt service on the bonds or one years earnings on the fund.
Other Temporary Periods. As described in Chapter 6, Types of Financing
Obligations Tax and Revenue Anticipation Notes (TRANs), different
temporary period rules apply to proceeds of a working capital borrowing.
Additionally, more restrictive temporary period rules apply to certain types of
refundings, where the bond proceeds are to be used to retire previously issued
bonds (see below). Regardless of the application of a temporary period, the
rebate requirement applies to all gross proceeds, including all proceeds, unless
an exception is satisfied.