Capital projects funds generally do not use the encumbrances control account.

General Fund – During the FY 2019-20 Budget Process, an ordinance was approved by the City Commission to update the Reserves Policy for the General Fund.

The minimum level of unassigned fund balance for the General Fund shall be sixteen percent (16%) of the current audited General Fund operating expenditures (excluding transfers). This is equivalent to the total amount needed to cover two (2) months of regular General Fund operating expenditures. The minimum unassigned fund balance shall be determined based upon the most recently audited Comprehensive Annual Financial Report. In the event, after the annual audit, that the unassigned fund balance falls below 16% of the General Fund operating expenditures, the City Manager will prepare and submit a plan for replenishment (e.g., committed, and/or assigned fund balance reduction, expenditure reductions and/or revenue increases) to the City Commission. The City shall act when necessary, to restore the unassigned fund balance to acceptable levels within three (3) fiscal years. This target is not inclusive of any non-spendable, restricted, committed, or assigned amounts.

Special Revenue Funds – By definition, Special Revenue Funds are created to account for the proceeds of specific revenue sources (other than expendable trusts or for major capital projects) that are legally restricted to expenditures for specified purposes. As such, no specific reservation of fund balance is created by virtue of enactment of this ordinance; rather the amount of any reservation of fund balance shall be governed by the legal authority underlying the creation of the individual fund. Except for the funds listed on the table above.

Enterprise Funds – The City has created five Enterprise Funds to account for the following services: Cemetery, Sanitation, Utility, Utility Impact Fee and Stormwater Management. In the Enterprise Funds, there will be a reservation of retained earnings of no less than one to two months of regular operating expenditures for each fund if that specific fund is not mentioned on the table above.

For the purposes of this calculation, the current fiscal year budget shall be the total budget as originally adopted by ordinance in September. This budget shall be prepared on the modified accrual basis of accounting, and therefore includes such items as capital outlay and operating transfers out. This reserve shall be in addition to all other reservations of retained earnings, including but not limited to amounts reserved for debt service and/or amounts reserved for renewal and replacement of long-lived assets.

Internal Service Funds – The City has created three Internal Service Funds to account for costs of ensuring the City in the areas of General and Auto Liability, costs of providing Workers’ Compensation insurance coverage to employees of the City and Fleet Services. In the Internal Service Funds, a reservation of retained earnings is guaranteed in an amount necessary to ensure that unreserved retained earnings in the fund as of the end of each fiscal year is greater than or equal to zero. A provision in the budget ordinance has set a floor for each of the Internal Service Funds as listed on the table above.

Revenue Policies

The City endeavors to maintain a diversified and stable revenue system to shelter from unforeseeable short-run fluctuations in any single revenue source.

The City estimates its annual revenues by an objective, analytical process. The City will project revenues for the next year and will update this projection annually. Each existing and potential revenue source will be re-examined annually.

Each year, the City will recalculate the full costs of activities supported by user fees to identify the impact of inflation and other cost increases.

The City Commission provides authority for the use of unpredictable or one-time revenues, such that these revenues are not relied upon for ongoing expenditures. The City conservatively projects difficult to predict revenues such as building permits for new construction based on high probability of receipt.

The City Commission identifies the way fees and charges are set and the extent to which they cover the cost of the service provided. This is accomplished in revenue meetings held with the City Manager and Department Directors, in which all fees are reviewed and the level of cost recovery plus a reasonable cushion is determined and submitted to the City Commission for approval. Costs which are not recovered are documented and fully disclosed to the City Commission in the budget workshop sessions held with public participation. In simple language, if the reserves are necessary to balance a segment of the budget, this will be disclosed.

Debt Management Policies

The City’s primary objective in debt management is to keep the level of indebtedness within available resources and debt limitations established by state law. In this regard, the City continues to act very conservatively and tries not to obligate current resources. In November of 2014, the citizens voted for a $57.5 million General Obligation Bond to improve and construct additional parks around the City. Implementing this program is now well underway.

The City has a general obligation legal debt limitation not to exceed 10% of total assessed valuation of the taxable property within the City boundaries. The current calculated general obligation debt limit is $602,360,979 and the balance of the GO debt as of September 30, 2021 will be $52,115,000.

For the time first time in the City’s history, in FY 16 the City has obtained a financial credit rating. The City issued two (2) bonds in FY 16, the GO Bonds, and the Capital Improvement Revenue Bonds. The issuance of the GO Bonds in June provided the capital resources to complete the Parks Master Plan, which was approved through a referendum held in November 2014. Fitch Ratings and S&P Global Ratings have assigned the GO Bonds a rating of AA+ and AA, respectively. The Capital Improvement Bonds were issued for the refunding of the 2007 Series A Revenue Bonds to take advantage of lower interest rates and to provide funding to build the Main Fire Station. The assigned rating to the Capital Improvement Bonds from Fitch Ratings and S&P Global Ratings were AA and AA-, respectively

The City issued General Obligation (GO) Bonds, Series 2016 on June 21, 2016 in the amount of $57,500,000. The GO Bonds were issued for the purpose of funding the costs of construction, expansion, renovation and improvements of City-wide parks and recreation facilities in accordance with the City’s Parks Master Plan. The bonds bear interest at rates ranging from 3.00-5.00% and are to be repaid from ad valorem revenue. Interest is to be paid semi-annually on January 1 and July 1 of each year; and the first principal payment was due on July 1, 2017 and each July 1 thereafter until the maturity date of July 1, 2046.

The Revenue Bonds, Series 2007A were issued for the purpose of financing the acquisition of park land. The bonds were refunded in FY 15/16 and are now known as “Capital Improvement Refunding Revenue Bonds, Series 2016” with an issuance date of June 29, 2016. The bonds are not a General Obligation Bond. The interest rates are ranging from 4.00-5.00% and are to be repaid solely from non-ad valorem revenue. Principal is payable annually on October 1 with the first payment due October 1, 2018 and interest is to be paid semi-annually on April 1 and October 1 of each year. The bonds mature on October 1, 2027.

In addition to the refunding of the Revenue Bonds, Series 2007A, an additional $8,270,000 for the construction of the Main Fire Station was added to this issue. The bonds are not General Obligation Bonds; bear interest at rates ranging from 2.00-5.00% and are to be repaid solely from non-ad valorem revenue. Principal is payable annually on October 1 with the first payment due October 1, 2017 and interest is to be paid semi-annually on April 1 and October 1 of each year. The bonds mature on October 1, 2035.

Why is encumbrance accounting generally used for capital projects funds?

Under what circumstances are capital projects funds used?

Which of the following funds would be used to account for an activity that provides centralized?

Which of the following funds should use the accrual basis of accounting?