2006 Comprehensive Annual Financial Report

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CITY OF SOUTH BEND RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended December 31.2006 W Amounts reported for govemmental activities in the statement of activities are different because: Net change in fund balances -total govemmental funds (Statement of Revenues, Expenditures and Other Changes in Fund Balances). $ 17,260,755 Govemmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period: Capital outlay 3,910,345 Depreciation expense {14,741,912) Gain on disposal of assets 105,407 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (3,998,825) The issuance aflong-term debt (e.g., bonds, leases) provide current financial resources to govem- mentalfunds, while the repayment of the principal of long-term debt consumes the current financial resources Of govemmental funds. Neither transaction, however, has any effect on net assets. Also, govemmental funds report the effect of issuance costs, premiums, discounts and similar Items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Lang-term debt Incurred during the current period: Bonds (9,880,000) Premium on bonds (46,521) Loans (3,222,000) Capital leases (902,036) Principal debt payments: Bonds 5,516,933 Loans 1,095,313 Capital leases 823,478 Payment to refunded bond escrow agent 8,371,771 Amortization expenses 75,627 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Prepaid expense (21,641) Interest expense 227,952 Compensated absences (73,246) Change in net pension asset and net pension obligatbn (3,320,723) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of the internal service funds is reported with govemmental activties, 684,029 Change In net assets of governmental activities (statement of activities) $ 1,844,844 The notes to the financial statements are an integral part of this statement.