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EXECUTIVE SUMMARY This Executive Summary has been prepared as a general overview of the City of South Bend's 2005 Budget. The 2005 Budget for all City funds totals $ 154.9 million for operating expenditures and $30.5 million for capital expenditures. As explained in more detail in Section D of this document, the City's current practice is to submit an operating budget to the City's Common Council during September for the fiscal year commencing the following January. A capital budget is then submitted for approval during February of the budget year. The main objective behind the delay in finalizing a capital budget stems from the City's desire to approve capital expenditures based upon actual cash on hand at the end of the fiscal year. Both the operating budget and the capital budget are approved by the Common Council through the passage of several ordinances. The budget becomes legally enacted after the City Controller receives approval from the Department of Local Government and Finance. The City uses "funds" and "account groups" to report its financial position and the results of its operations. A fund is a separate accounting entity with aself-balancing set of accounts. An account group is a financial reportiaag device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. Funds are classified into three categories: governmental, proprietary and fiduciary. Each category, in turn, is divided into separate "fund types": Governmental funds are used to account for all or most of a government's general activities, including the collection and disbursement of earmarked moneys ("special revenue funds"}, the servicing of general long-term debt {"debt service funds") and the acquisition or construction of general fixed assets ("capital project funds"). The "general fund" is used to account for all activities of the general government not accounted for in some other fund. Proprietary funds are used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful to sound financial administration. Goods or services from such activities can be provided either to outside parties ("enterprise funds") or to other departments or agencies primarily within the government (`internal service funds"). Fiduciary funds ("trust and agency funds"} are used to account for assets held on behalf of outside parties, including other governmental units, or on behalf of other funds within the same government unit. When these assets are held under the terms of a formal trust agreement, a pension trust fund or an expendable trust fund is used. The term "expendable" means the City is under na obligation to maintain the trust principal. Agency funds generally are used to account for assets that the gavernrrxent holds on behalf of others as their agent. The City establishes operating and/or capital budgets for thirty-one separate funds. These thirty- one budgets are grouped into six major fund types as follows: General Fund, seven Special Revenue Funds, three Internal Service Funds, nine Capital and Debt Service Funds, two Trust B- I