Governmental Accounting Finance Budget 101 Topics for Discussion

Governmental Accounting Finance Budget “ 101”

Topics for Discussion Generally Accepted Accounting Principles (GAAP) Basis of Accounting Fund Accounting Governmental Property Bond Budgeting Taxes Issuance

Generally Accepted Accounting Principles Common standards and procedures set by policy boards used to record and report accounting information and compile financial statements

Basis of Accounting Determined by when transactions are recorded in the financial statement 4 Bases Cash Accrual Modified Accrual Budgetary

Cash Basis of Accounting Transactions recorded when cash is received and disbursed Easy to understand Not GAAP compliant for governmental financial statements Budgetary Basis of Accounting Used for budget preparation Not GAAP compliant for governmental financial statements

Accrual Basis of Accounting Used to prepare government-wide & fund financial statements Revenue recorded when earned or expected to be realized Expenses recorded when incurred or goods/services used Cash exchange is not a factor GAAP compliant Modified Accrual Basis of Accounting Used to prepare fund financial statements Cross between Cash Basis of Accounting and Accrual Basis of Accounting Revenue recorded when measurable & available to pay current expenses Expenditures recorded in period the liability is incurred GAAP compliant

Fund Accounting Consists of financial statements for governmental accounting entities (Funds) The number of separate entities (funds) varies by agency Legal requirements Management judgement City of Friendswood uses 19 separate funds for financial reporting

City of Friendswood Funds Listing GENERAL FUND POLICE INVESTIGATION FUND FIRE/EMS DONATION FUND COURT SECURITY/TECHNOLOGY FUND TDRA GRANT FUND SIDEWALK INSTALLATION FUND PARK LAND DEDICATION FUND STREETS IMPROVEMENT FUND ECONOMIC DEVELOPMENT IMPROVEMENTS FUND TAX DEBT SERVICE FUND GO BOND CONSTRUCTION FUNDS VEHICLE REPLACEMENT FUND WATER & SEWER FUND 2006 WATER & SEWER BOND CONSTRUCTION FUND 2009 WATER & SEWER BOND CONSTRUCTION FUND 2016 WATER & SEWER BOND CONSTRUCTION FUND WATER & SEWER CIP/IMPACT FEE FUNDS WATER & SEWER REVENUE DEBT SERVICE FUND 1776 PARK TRUST FUND City of Friendswood uses, both, Accrual Basis of Accounting and Modified Accrual Basis of Accounting.

City’s Budget Process December – January (Multi-Year Financial Plan Update) February – March (Departmental Narratives & Goals Determined) April (Departmental Decision Package Submission) May (Current Services Budget “Scrubbing”) June (Revenue Projections) July (Tax Rate Calculations & Property Tax Revenue Projections) August (Proposed Budget Delivered to City Council) September (Budget Work Sessions) October (Budget and Tax Rate Adoption)

Property Tax Rate & Levy Certified Property Values Galveston County received in Late July / Harris County received in September Net Taxable Value = Appraised value less exemptions Effective Tax Rate generates same levy on properties taxed in current and prior tax years. Total Tax Rate has 2 parts Debt Service Rate and Maintenance & Operations Rate Friendswood’s tax rate is $0. 5324 (I&S Rate = $0. 0952 and M&O Rate = $0. 4372) Debt Service Rate is determined 1 st Set to meet principal and interest payments on outstanding G. O. debt Debt Service Rate = Levy needed / Net taxable property value Maintenance & Operations Rate is based levy needed for City operations.

Financial Transparency https: //www. ci. friendswood. tx. us/budget-and-financial-reports City of Friendswood is a great source of financial information! Financial Policy Comprehensive Annual Financial Reports Adopted Annual Budgets Debt Information

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