HomeMy WebLinkAboutResolution No. 4319, Commitment of Special Revenue Fund Balances for GASB.pdf Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brian LaMeres, City Controller
Anna Rosenberry, Director of Finance
Chris Kukulski, City Manager
SUBJECT: GASB 54: Governmental Accounting Standards Board Statement 54 on
Fund Balance Reporting for Special Revenue Funds
MEETING DATE: June 13, 2011
AGENDA ITEM TYPE: Consent
RECOMMENDATION: Adopt Resolution 4319 implementing GASB Statement 54 by
committing fund balances in the City’s Special Revenue Funds to be used only in accordance
with certain stated purposes.
BACKGROUND: In March of 2009, the Governmental Accounting Standards Board
(GASB) issued Statement 54, "Fund Balance Reporting and Governmental Fund Type
Definitions" (GASB54). This new accounting statement is effective for the City’s fiscal year
ending June 30, 2011. It is designed to establish fund balance classifications that are easier to
understand and apply, and its objective is to isolate that portion of fund balance (assets minus
liabilities) that is unavailable to finance the following year’s budget.
GASB54 applies to fund balances reported in the General Fund, Special Revenue Funds, Debt
Service Funds, Capital Projects Funds, and Permanent Funds. This Statement does not apply to
Enterprise Funds and Internal Service Funds. (see attached for Fund Type definitions)
One unique aspect of this statement is the level of governing body involvement that will be
required to effectively implement this statement. Two old fund balance classifications will be
replaced by five new fund balance classifications, one of which (“Committed”) requires action
by the City’s highest decision-making body, the City Commission.
Currently fund balance is classified by the City of Bozeman as either “reserved” or “unreserved.”
GASB 54 will replace those classifications with the following hierarchy of five possible
classifications:
Non-spendable Fund balance includes amounts not in spendable form, such as
inventory, or amounts legally required to be maintained intact legally, such as the
principal in the Cemetery Perpetual Care fund.
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Restricted Fund Balance includes amounts externally constrained to a specific purpose
by their providers (such as State and Federal grant providers, bondholders, and higher
levels of government) through constitutional provisions or by enabling legislation.
Committed Fund Balance includes amounts internally constrained for a specific
purpose by a government’s highest level of decision making authority (City Commission)
such as the Park Improvement Grant program and the Big Box Fund. Amounts reported
as committed cannot be used for any other purpose unless the City Commission takes
action to remove or change the constraint.
The Commission is being asked to take action here to Commit fund balances in the City’s
Special Revenue Funds.
Assigned Fund Balance includes amounts the City intends to use for a specific purpose.
Intent can be expressed by the Commission or by an official or body to which the
Commission delegates the authority. The City Commission delegates this authority to the
City Manager. (e.g., The City’s Annual Budget)
Unassigned Fund Balance is the residual classification of fund balance – what, if
anything, is left over after the above classifications are made. This was formerly known
as “Unreserved Fund Balance”.
Although these new classifications do apply to all of the City’s funds, the area of significant
potential change in how funds are reported in the City’s Financial Statements is with Special
Revenue Funds, and – if these Funds are indeed changed – then the General Fund as well.
The City currently accounts for 51 Special Revenue Funds in its Financial Statements, with a
total combined fund balance of roughly $13.5 million. In order to continue to report these 51
funds separately as Special Revenue Funds – apart from the General Fund – there needs to be
either external action taken (“to restrict”) or internal action taken (“to commit”).
If neither of these actions is taken, then GASB will require that the revenues, expenditures and
ending fund balances of these Special Revenue Funds be combined and reported in the General
Fund for financial reporting purposes. This could potentially skew the ending balance in the
General Fund by $13.5 million and would result in an accounting that did not reflect the activity
supported by general tax dollars and general revenues as we have come to know it.
Many of these 51 Special Revenue Funds are already restricted externally, and therefore do not
need to be addressed in this commitment resolution.
Some have already been addressed by previous Commissions, and the question might arise as to
why are they being presented here again. We are presenting them here again per the
recommendation of our external auditor who advised us to err on the side of caution since not all
authoritative bodies, such as the Government Finance Officer’s Association (GFOA) have
weighed in with their interpretation of GASB 54. Nonetheless, we are required to have this
Commitment Resolution passed before the end of this fiscal year - June 30, 2011.
Therefore, the Finance Department recommends that the fund balances and future revenues in
the Special Revenue Funds listed in the accompanying Resolution #4319 be committed to be
used only for the stated purposes until at which time the Commission takes similar action to
remove or change the commitment.
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FISCAL EFFECTS: The adoption of this resolution will allow the city to comply with the
requirements of GASB Statement #54. It is not intended to affect the calculation of the total
ending fund balances in any of the City’s funds – it is simply a reclassification of these ending
fund balances into five possible categories instead of two.
However, compliance with Generally Accepted Accounting Principles (GAAP) as set forth in
Statements issued by GASB is required in order for the City to receive an unqualified opinion on
its Financial Statements. Failure to receive an unqualified opinion can adversely affect the
City’s credit rating and increase its cost of borrowing. It can also make it more difficult to
qualify for federal and state grant funds.
ALTERNATIVES: As suggested by the City Commission.
Attachments: Resolution 4319
excerpt from FY12 Recommended budget-Special Revenue Funds
excerpt from FY12 Recommended budget-Fund Type Definitions
Report compiled on: June 6, 2011
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Page 1 of 4
COMMISSION RESOLUTION NO. 4319
A RESOLUTION OF THE CITY COMMISSION OF BOZEMAN, MONTANA,
TO APPROVE COMMITMENT OF SPECIAL REVENUE FUND BALANCES IN
ACCORDANCE WITH GASB STATEMENT NO. 54
WHEREAS, the Governmental Accounting Standards Board (GASB) has issued
Statement No. 54 – Fund Balance Reporting and Governmental Fund Type Definitions,
which changes the terminology and classifications used for fund balance reporting on
balance sheets of Governmental Funds; and
WHEREAS, the Finance Department has reviewed the new terminology and
classifications; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Americans With Disabilities Special Revenue Fund be committed
to support Americans With Disabilities; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Community Housing Special Revenue Fund be committed to
support Community Housing; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Development Impacts Special Revenue Fund, also known as the
“Big Box Fund”, be committed to support community issues such as affordable housing
and economic development; and
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Resolution No. 4319, Adopting GASB Statement 54 for Special Revenue Funds
Page 2 of 4
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Disaster Relief Special Revenue Fund be committed to support
disaster relief efforts; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the City of Bozeman-Gallatin County Drug Forfeiture Special
Revenue Fund be committed to support joint drug law enforcement efforts; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Fire Department Capital & Equipment Special Revenue Fund be
committed to purchase buildings, vehicles, equipment, and property for the Fire
Department; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Fish, Wildlife and Parks Management Special Revenue Fund be
committed to support parks and recreation areas under joint management by the City of
Bozeman and the State of Montana Fish, Wildlife and Parks Department; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Highway Safety Special Revenue Fund be committed to reducing
the severity of accidents as well as reducing the number of accidents on all public roads
and highways, including intersections; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Insurance Proceeds Special Revenue Fund be committed to the use
of insurance claim reimbursements to repair or replace damaged or destroyed City
property and equipment; and
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Resolution No. 4319, Adopting GASB Statement 54 for Special Revenue Funds
Page 3 of 4
WHEREAS, the Finance Department recommends that the fund balance in the
Law and Justice Lease Special Revenue Fund be committed to the allocation of the lease
of space in the Gallatin County Law & Justice center for the City’s Police Department
and Municipal Court; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Parks Master Plan Development Fund be committed to support
Park Improvement Grant projects, AND;
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Police D.A.R.E Special Revenue Fund be committed to support
Drug Abuse Resistance Education; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Senior Transportation Special Revenue Fund be committed to
support public transportation for senior citizens; and
WHEREAS, the Finance Department recommends that the fund balance and all
future revenues in the Story Mansion Special Revenue Fund be committed to support
operating expenses of the Story Mansion;
NOW THEREFORE BE IT RESOLVED that the City Commission of the City of
Bozeman hereby accepts the aforementioned recommendations.
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Resolution No. 4319, Adopting GASB Statement 54 for Special Revenue Funds
Page 4 of 4
PASSED AND ADOPTED this 13th day of June, 2011.
______________________________
JEFFREY K. KRAUSS
Mayor
ATTEST:
______________________________
STACY ULMEN, CMC
City Clerk
APPROVED AS TO FORM:
______________________________
GREG SULLIVAN
City Attorney
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CHANGES IN FUND BALANCE/WORKING CAPITAL
___________________________________________________________________
CHANGES IN FUND BALANCE/WORKING CAPITAL
Projected Beginning Estimated Appropriations Budgeted Ending
Fund Balance/Revenues Fund Balance/
Working Capital Working Capital
#General Fund
010 General Fund 4,505,743 23,587,268$ 24,121,974$ 3,971,037$
Special Revenue Funds -
100 Planning Fund 218,084 727,260 657,504 287,840
103 Health-Medical Insurance 62,113 2,002,219 2,002,219 62,113
104 Liability Insurance (17,714) - - (17,714)
105 P.E.R.S. Fund 22,601 - - 22,601
106 Police Pension Fund 18,918 - - 18,918
107 Fire Pension Fund 10,808 - - 10,808
108 Community Transportation 49,645 22,160 10,515 61,290
109 Highway Safety Improvement Projects 21,877 - - 21,877
110 Gas Tax Apportionment 601,684 668,460 656,500 613,644
111 Street Maintenance District 237,219 4,197,972 3,883,679 551,512
112 Tree Maintenance 156,784 431,500 439,452 148,832
113 Fire Impact Fee 17,500 150,000 167,500 -
114 Street Impact Fee 7,589,881 700,000 879,400 7,410,481
115 Building Inspection Special Revenue 636,517 869,600 803,136 702,981
116 Dowtown Improvement District 656,312 1,100,158 1,242,878 513,592
118 HUD Projects - - - -
119 Economic Development Loan Fund - - - -
120 Community Housing 319,432 50,000 40,000 329,432
121 Housing Revolving Loan Fund 63,219 7,000 14,400 55,819
122 Blast Clean Up Loans - - - -
125 Drug Forfeiture (65,832) 187,000 166,601 (45,433)
128 Fish Wildlife And Park Management Areas 26,635 - - 26,635
129 Special Projects - Recovery Act, ARRA - - - -
130 Americans With Disability Act 4,210 - - 4,210
131 Beautification Of Bozeman 1,389 - - 1,389
133 Recreation Department Special Revenue 17,330 1,000 1,000 17,330
135 Cemetery Department Special Revenue 2,280 - - 2,280
136 Park Department Special Revenue 10,270 5,500 12,000 3,770
137 Library Department Special Revenue 11,436 5,200 7,900 8,736
138 Law & Justice Center 445,374 - 20,000 425,374
139 Police Department Special Revenue 288,933 104,500 82,322 311,111
140 Police Domestic Violence 1,250 - - 1,250
142 Sustainability Grant - - - -
143 TIF N 7th Corridor 23,545 274,000 505,000 (207,455)
144 TIF NE Urban Renewal 116,562 63,900 75,000 105,462
145 TIF Mandeville Industrial (172,853) 34,000 - (138,853)
146 Lighting Dist.'s (146-170, 181, 182, 200-224)492,275 315,000 315,000 492,275
174 Victim Witness Advocate 369,091 76,000 113,020 332,071
175 Senior Transportation 31,018 82,400 82,400 31,018
176 Business Improvement District 3,588 114,000 114,000 3,588
177 Neighborhood Special Revenue 969 - - 969
179 Diaster Relief Fund 87,560 2,000 - 89,560
----------------------------------------------FY 12----------------------------------------------
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49
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
CHANGES IN FUND BALANCE/WORKING CAPITAL
Projected Beginning Estimated Appropriations Budgeted Ending
Fund Balance/Revenues Fund Balance/
Working Capital Working Capital
183 Fire Department Special Revenue 32,569 - - 32,569
184 Parks Master Plan Develop 146,464 - - 146,464
185 Insurance Proceeds - - - -
186 Development Impacts 655,722 8,000 - 663,722
187 Fire Department Equipment (122,117) 334,600 - 212,483
188 City/County Drug Forfeiture 263,592 55,000 - 318,592
189 Story Mansion Special Revenue 35,515 40,000 34,675 40,840
191 Tourism BID 20,955 - - 20,955
850 Park Land - Cash in Lieu 190,563 - - 190,563
Total Special Revenue Funds 13,538,889 12,628,429 12,326,101 13,841,217
#Debt Service Funds
300 Special Improvement District Revolv. Fund 1,228,196 20,000 - 1,248,196
301 Library Bonds 192,143 314,849 316,132 190,860
302 Bond P & I 1995 Transportation Projects (237,611) 469,088 428,066 (196,589)
305 TIF 2007 Downtown Bonds (3,384) 424,878 424,878 (3,384)
310 SID Funds 2,096,424 1,500,000 1,500,000 2,096,424
Total Debt Service Funds 3,275,768 2,728,815 2,669,076 3,335,507
Construction Funds
Capital Projects - - - -
Enterprise Funds
600 Water 10,916,509 6,127,297 14,542,098 2,501,708
610 Water Impact Fee - Net Assets 7,791,746 475,000 5,250,000 3,016,746
620 Waste Water 6,698,497 6,253,452 7,021,864 5,930,085
630 Waste Water Impact Fee - Net Assets - 404,000 404,000 -
640 Solid Waste 752,500 2,496,811 2,587,042 662,269
650 Parking Enterprise (22,639) 336,350 392,690 (78,979)
Total Enterprise Funds 26,136,613 16,092,910 30,197,694 12,031,829
Internal Service Funds
-
710 Vehicle Maintenance Shop 37,240 794,164 748,716 82,688
720 Health-Medical Self-Insurance Fund (18,055) 3,480,000 3,490,000 (28,055)
-
Total Internal Service Funds 19,185 4,274,164 4,238,716 54,633
Permanent Funds
800 Cemetery Perpetual Care 581,071 92,000 - 673,071
Total Permanent Funds 581,071 92,000 - 673,071
Total All Funds 48,057,269 59,403,586 73,553,561 33,907,294
----------------------------------------------FY 12----------------------------------------------
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City of Bozeman GASB 54 Special Revenue Funds
COMMISSION
ACTION
NEEDED NOW
SPECIAL REVENUE FUND NAME COMMENTS RESTRICTED by:TO COMMIT
AMERICAN WITH DISABILITY TRANSFERRED FROM GENERAL FUND FY95 YES
COMMUNITY HOUSING TRANSFERRED FROM GENERAL FUND FY95 + FY96 YES
DEVELOPMENT IMPACTS (Big Box)PREVIOUS COMMISSION SAID 1/2 AFFORDABLE HOUSING, 1/2 ECONOMIC DEVELOPMENT YES
DISASTER RELIEF (HAIL DAMAGE, etc.)HAIL STORM JUNE 30, 2010 YES
DRUG FORFEITURE CITY-COUNTY INTERLOCAL AGREEMENT w/ GALLATIN COUNTY YES
FIRE DEP CAPITAL & EQUIPMENT 4 MILLS LEVIED, BUT STILL NEED TO COMMIT PER AUDITOR YES
FISH WILDLIFE & PARK MGMT EAST GALLATIN & BOZEMAN PONDS REC AREAS YES
HIGHWAY SAFETY TRANSFERRED FROM GENERAL FUND FY95 YES
INSURANCE PROCEEDS SPRING SNOWSTORM JUNE, 2001 YES
LAW & JUSTICE LEASE PREPAID LEASE AGREEMENT w/ GALLATIN COUNTY YES
PARKS MASTER PLAN DEVELOP TRANSFERS FROM GENERAL FUND - PARK IMPROVEMENT GRANT PROJECTS YES
POLICE SPECIAL REVENUE D.A.R.E.TRANSFER FROM GENERAL FUND YES
SENIOR TRANSPORTATION 1 MILL LEVIED, BUT STILL NEED TO COMMIT PER AUDITOR YES
STORY MANSION SPECIAL REV RENTALS, DONATIONS, INTEREST INCOME YES
AFFORDABLE HOUSING RLF RECYCLED COMMUNITY DEVELOPMENT BLOCK GRANT HOUSING MONEY FEDERAL GRANT CFDA 14.219 NO
BEAUTIFICATION DONATIONS RESTRICTED TO INTENT OF DONOR MCA 7-8-103 NO
BID TOURISM TBID HOTEL TOURISM BUSINESS IMPROVEMENT DISTRICT MCA Title 7 Chapter 12 Part 11 NO
BOGERT PK SPECIAL REVENUE DONATIONS RESTRICTED TO INTENT OF DONOR MCA 7-8-103 NO
BUILDING INSPECTION MCA 50-60-104 NO
CDBG BLOCK GRANTS COMMUNITY DEVELOPMENT BLOCK GRANTS - GENERAL FEDERAL GRANT CFDA 14.219 NO
CEMETERY SPECIAL REVENUE DONATIONS RESTRICTED TO INTENT OF DONOR MCA 7-8-103 NO
COURT RESTITUTION MCA 46-18-250 NO
CTEP COMMUNITY TRANSPORTATION ENHANCEMENT PROJECTS FEDERAL GRANT CFDA 20.205 NO
DOWNTOWN IMPROV DISTRICT: BID DOWNTOWN BUSINESS IMPROVEMENT DISTRICT MCA Title 7 Chapter 12 Part 11 NO
DOWNTOWN IMPROV DISTRICT: TIFD DOWNTOWN TAX INCREMENT FINANCING DISTRICT MCA Title 7 Chapter 15 Part 42 NO
DRUG FORFEITURE MRDTF MISSOURI RIVER DRUG TASK FORCE MCA 44-12-206 NO
ECON DEVELOP RLF RECYCLED COMMUNITY DEVELOPMENT BLOCK GRANT ECONOMIC DEVELOPMENT FEDERAL GRANT CFDA 14.219 NO
FIRE DEPT SPECIAL REVENUE STATE AND FEDERAL FIRE GRANTS - OPTICOM, ETC.FEDERAL GRANT CFDA 20.205 NO
GAS TAX STATE GAS TAX APPORTIONMENT MCA 15-70-101 NO
GRANTS-ENERGY ENERGY EFFICIENCY AND CONSERVATION BLOCK GRANT PROGRAM FEDERAL GRANT CFDA 81.128 NO
HEALTH INSURANCE MCA 2-9-212 NO
HUD, HOME+NON-CDBG GRANTS DEPT OF HOUSING & URBAN DEVELOPMENT GRANTS - F&H BUILDING, ETC.FEDERAL GRANT CFDA 20.205 NO
LIBRARY SPECIAL REVENUE DONATIONS RESTRICTED TO INTENT OF DONOR MCA 7-8-103 NO
LIGHTING DISTRICTS SPECIAL IMPROVEMENT LIGHTING DISTRICTS MCA Title 7 Chapter 12 Part 43 NO
NEIGHBORHOOD ASSOCIATION DONATIONS RESTRICTED TO INTENT OF DONOR MCA 7-8-103 NO
PARK LAND CASH-IN-LIEU BMC Chapter 18.50 NO
PARK SPECIAL REVENUE (NOT PIG)DONATIONS RESTRICTED TO INTENT OF DONOR MCA 7-8-103 NO
PLANNING MCA 76-1-404 NO
RECREATION SPECIAL REVENUE DONATIONS RESTRICTED TO INTENT OF DONOR MCA 7-8-103 NO
SPECIAL PROJECTS AARA AMERICAN RECOVERY AND REINVESTMENT ACT FEDERAL PASS-THRU MT HB 645 NO
STREET & FIRE IMPACT FEES MCA 7-6-1603 NO
STREET MAINTENANCE MCA Title 7 Chapter 12 Part 44 NO
TIFD MANDEVILLE/WHEAT DR.MCA Title 7 Chapter 15 Part 42 NO
TIFD N.E. URBAN RENEWAL MCA Title 7 Chapter 15 Part 42 NO
TIFD NORTH 7TH CORRIDOR MCA Title 7 Chapter 15 Part 42 NO
TREE MAINTENANCE MCA Title 7 Chapter 12 Part 41 NO
VICTIM / WITNESS ADVOCATE MCA Title 46 Chapter 18 NO
BMC = Bozeman Municipal Code
MCA = Montana Code Annotated
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
An ACCOUNT is an organizational or budgetary breakdown which is found within city funds. Each
department serves a specific function as a distinct organizational unit of government within the given fund.
Its primary purpose is to facilitate organizational and budgetary accountability.
An OBJECT OF EXPENDITURE refers to specific, detailed expenditure classification. It relates to a specific
type of item purchased or service obtained. Examples of objects of expenditure include salaries, supplies,
contracted service, travel, etc.
The City’s financial operations and fund structure conform with Generally Accepted Accounting Principals
(GAAP). The funds are grouped under governmental, proprietary, and fiduciary fund types. The City’s fund
structure is comprised of the following funds, all of which are budgeted.
GOVERNMENTAL FUND TYPES
General Fund: The general fund is used to account for all financial resources of the city, except for those
required to be accounted for in another fund. The general fund supports such basic services as the
legislative branch, judicial branch, general administration, police, fire, finance, engineering, recreation,
library services.
Revenue Sources: The city's general fund is financed primarily by property taxes which provide
nearly half of the general fund revenue. Other revenue sources include: licenses and permits,
intergovernmental revenue, charges for services, fines and forfeitures, interest on investments, operating
transfers, and miscellaneous revenues.
Special Revenue Funds: Special Revenue funds are used to account for the proceeds of specific revenue
sources (other than special assessments, expendable trusts, or for major capital projects) that are legally
restricted to expenditure for specific purposes. Special revenue funds support insurance costs, retirement
costs, planning functions, and other services legally restricted for specific purposes.
Revenue Sources: Special revenue funds are supported either through property taxes or through
grants or other restricted revenue sources. Examples of special revenue funds supported by property taxes
include employee health and comprehensive insurance funds. Examples of special revenue funds
supported by grants or other restricted revenue sources include Community Development Block Grant,
Housing and Urban Development, and Gas Tax Apportionment.
Debt Service Funds: Debt service funds are used to account for the accumulation of resources for, and the
payment of, general long-term debt principal and interest. Debt Service funds provide financing for the
city's two general obligation bonds--transportation and library facilities.
Revenue Sources: Debt service funds are supported entirely through property taxes and interest
income.
Capital Project Funds: Capital project funds are used to account for financial resources to be used for the
acquisition or construction of major capital facilities (other than those financed by proprietary funds).
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
Revenue Sources: Capital project funds are supported by special assessments, long term debt
proceeds, donations, and grants.
PROPRIETARY FUND TYPES
Internal Service Funds: Internal service funds are used to account for the financing of goods or services
provided by one department to other departments on a cost-reimbursement basis. Internal service funds
account for the city's vehicle maintenance functions.
Revenue Sources: Internal service funds are supported through billings to other departments
based on the sale of goods and the services provided.
Enterprise Funds: Enterprise funds are used to account for operations that are financed and operated in a
manner similar to private business enterprises--where the intent of the governing body is that the costs
(expenses, including depreciation) of providing goods or services to the general public on a continuing basis
be financed or recovered primarily through user charges. Enterprise funds account for the city's water,
waste water, and solid waste services.
Revenue Sources: Enterprise funds are supported through user charges, penalties, and interest
income.
FIDUCIARY FUND TYPES
Trust Funds: Trust funds are used to account for assets held by a governmental unit in a trustee capacity.
These include (a) expendable trust funds, (b) permanent trust funds, and (c) pension trust funds
Revenue Sources: Trust funds are supported by donations and interest income.
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