Fort Walton Beach Council agenda — 03-22-11 regular — reading text

A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The City of Fort Walton Beach, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City of Fort Walton Beach can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. FUNDS Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements are reported using an accounting method called modified accrual accounting, the focus of which is on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government' s near -term financial requirements. The basic governmental fund financial statements are on pages 17 -21 of this report. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long -term impact of the government' s near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Fort Walton Beach maintains six individual governmental funds ( General Fund, Law Enforcement Trust Fund, Law Enforcement Training Fund, Debt Service Fund, Community Development Block Grant Fund, and Beal Memorial Cemetery Perpetual Care Fund). Information is presented 11  separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the General Fund. Data from the other five governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non- major governmental funds is provided in the form of combining statements elsewhere in this report. The City of Fort Walton Beach adopts an annual appropriated budget for its General Fund. A budgetary comparison statement is provided for the General Fund to demonstrate compliance with this budget. Proprietary Funds All proprietary funds of the City of Fort Walton Beach are maintained as enterprise funds. Enterprise funds are used to report the same functions presented as business -type activities in the statement of net assets and the statement of activities. The City of Fort Walton Beach uses enterprise funds to account for its utilities operations ( water operations and distribution, sewer collections and treatment, and storm water management), sanitation operations ( garbage), and golf club operations. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information on utilities operations, sanitation operations, stormwater operations, and golf club operations, all of which are considered major funds of the City of Fort Walton Beach. The basic proprietary fund financial statements are found on pages 22 -26 of this report. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. o The City' s fiduciary funds include the Pension Trust Funds ( general employees, police officers, and a firefighters). Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the City of Fort Walton Beach' s own programs. The a accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements are found on pages 27 -28 of this report. NOTES TO THE FINANCIAL STATEMENTS The notes to the financial statements provide additional information that is essential to the full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements begin on page 29 of this report. OTHER INFORMATION In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Fort Walton Beach' s progress in funding its obligation to provide pension benefits to its employees. The required supplementary information is found on pages 77 -79 of this report. The combining statements referred to earlier in connection with non -major governmental funds immediately follow the required supplementary information on Pension funds and can be found beginning on page 79 of this report. GOVERNMENT -WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government' s financial position. In the case of the City of Fort Walton Beach, assets exceeded liabilities by $ 58. 6 million (net assets), as reported in Table 1. The government' s net assets decreased by $ 392, 317 for the fiscal year ended September 30, 2010. By far, the largest portion of the City' s net assets, $ 39. 5 million or 67. 5 %, reflects its investment in capital assets ( e. g. land, infrastructure, buildings, machinery, and equipment) less any related debt still outstanding that was used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Fort Walton Beach reports investment in its capital assets net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City' s net assets, 5. 6 %, represents resources that are subject to external restrictions on how they may be used. The remaining balance of $15. 8 million is unrestricted and may be used to meet the government' s ongoing obligations to citizens and creditors. Table 1 Statement of Net Assets As of September 30 In Thousands of Dollars) Governmental Activities Business- Type Activities Total 2010 2009 2010 2009 2010 2009 Current and Other 13, 858 13, 918 $ 14, 712 15, 075 28, 570 28, 993 Capital Assets 25, 361 25, 494 26, 886 27, 175 52, 247 52, 669 Total Assets 39, 219 39, 412 41, 598 42, 250 80, 817 81, 662 Long -Term Liabilities Outstanding 5, 225 5, 453 13, 349 14, 150 18, 574 19, 603 Other Liabilities 1, 675 1, 408 1, 736 1, 677 3, 411 3, 085 Total Liabilities 6, 900 6, 861 15, 085 15, 827 21, 985 22, 688 Net Assets Invested in Capital Net of Related Debt 20, 605 20, 564 18, 928 17, 773 39, 533 38, 337 Restricted 2, 738 2, 679 543 570 3, 281 3, 249 Unrestricted 8, 975 9, 308 6, 792 8, 080 15, 767 17, 388 Total Net Assets 32, 318 32, 551 $ 26, 263 26,423 58, 581 58, 974 TheThe overalloverall decrease decrease inin thethe City'City' ss netnet assetsassets waswas $ $ 392,392, 317317 duringduring thethe fiscalfiscal year.year. TheThe governmentalgovernmental activitiesactivities experienced experienced aa decrease,decrease, primarilyprimarily relatedrelated toto earlyearly retirementretirement incentivesincentives offeredoffered toto employeesemployees andand reducedreduced interinter - - fundfund transfers,transfers, bothboth ofof whichwhich werewere slightlyslightly offsetoffset byby thethe salesale ofof land.land. TheThe businessbusiness activities activities experiencedexperienced aa slightslight decrease decrease duedue primarilyprimarily toto reducedreduced interinter - - fundfund transferstransfers toto thethe generalgeneral fund,fund, earlyearly retirementretirement incentivesincentives offeredoffered toto employees,employees, andand aa changechange inin estimateestimate forfor thethe depreciationdepreciation onon previouslypreviously purchasedpurchased waterwater meters.meters. TheThe detailsdetails relatedrelated toto thisthis decreasedecrease areare analyzedanalyzed furtherfurther inin thethe FinancialFinancial ImpactsImpacts sectionsection ofof thisthis discussion.discussion. 3131  Reported in Table 2 are the key elements of the decrease in net assets for the current year. Table 2 Governmental Activities Business -Type Activities Total Activities 2010 2009 2010 2009 2010 2009 Revenues Program Revenues: Charges for Services 4, 008, 506 4, 364, 638 12, 668, 076 12, 623, 971 16, 676, 582 16, 988, 609 Operating Grants and Contributions 639, 370 1, 119, 033 639, 370 1, 119, 033 Capital Grants & Contributions 731, 275 88, 941