2011 CAFR Executive Summary - Laserfiche WebLink

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Management Discussion & Analysis The General Fund is the primary operating fund for City operations including general government, public safety, code enforcement, certain highways & streets expenses, certain culture & recreation expenses, and certain debt service obligations. As of December 31, 2011, the General Fund balance of $27,931,216 represents a decrease of $805,926 or 2.8%from the balance as of December 31, 2010. The decrease in General Fund balance was due primarily to the collection of less property tax revenue than originally budgeted due to circuit breaker property tax limitations in Indiana and lower assessed property values. As of December 31, 2011, the General Fund had unassigned fund balance of$26,233,637 which is equal to 40.6%of 2011 General Fund Revenue. The General Fund unassigned fund balance has traditionally been used by the City to fund certain capital projects and emergency contingencies. In addition, the City will use the unassigned fund balance in 2012 as a cash flow bridge to the receipt of property tax revenues from the County collection authority which distributes property tax revenue two times per year (June and December). General Fund unassigned balance will provide sufficient cash to cover City operating obligations without incurring tax anticipation notes and resultant borrowing costs during fiscal 2012. As discussed in Governmental Accounting, Auditing, and Financial Reporting (GAAFR), a general fund unassigned fund balance should be either 1) no less than 5 to 15 percent of regular general fund operating revenues, or 2) no less than one to two months of regular general fund operating expenditures. An unassigned fund balance may be higher if varying circumstances require such as a delay in collection of a major revenue source. The Parks and Recreation Fund experienced an increase in fund balance of $126,844 during fiscal 2011. The increase in fund balance was due primarily to the receipt of payment-in-lieu of taxes from the wastewater and water utilities in the amount of$580,875 beginning in 2011. Parks Board and Parks Administration continued in 2011 with prudent management of expenditures and commitments in light of current and future projected revenue streams. As of December 31, 2011, the restricted fund balance in the Parks and Recreation Fund was $4,463,123, or 39.2%of 2011 revenue. The Public Safety Local Option Income Tax Fund ('Public Safety LOIT") was created in October 2009, with the local legislative passage of an increase in local option income taxes of 0.95%, a part of which (0.25°/x) tax increase was established to fund public safety expenditures. The City has established the Public Safety LOIT Fund as a major governmental fund, due solely to its purpose of creating a funding source to sustain public safety staffing levels, which were compromised by state implementation of property tax reform that has reduced property tax revenues, which historically are the source of public safety funding. Operating transfers are made quarterly from the Public Safety LOIT Fund to the General Fund to cover the personnel costs of police officers and firefighters. Receipts of Public Safety LOIT tax revenue commenced in January 2010. The revenue collected in fiscal 2011 of$5,846,861 exceeded original projections. The resultant increase in fund balance in the amount of$1,084,882 is restricted and will be used in future fiscal periods to fund full staffing levels for police and fire personnel. Fund balances as of December 31, 2011 improved versus the fund balances as of December 31, 2010 in the COIT and EDIT funds as not all planned projects were completed and expended during 2011. The County Option Income Tax Fund ("COIT") and Economic Development Income Tax Fund ("EDIT") funds are used to fund major capital and construction projects, economic development initiatives, certain subsidies and support to organizations and units that benefit city 24