Notes to Financial Statements

1) Summary of Significant Accounting Policies Reporting Entity

The City of Boise (the City) was chartered in 1866 under the laws of the Territory of Idaho. Since 1961, the City has been governed through a Mayor-Council form of government. Pursuant to City Code, the Mayor directs the operations of the City, participating with a six-member City Council in developing policy.

The accompanying financial statements present the financial position and results of operations of the entity as a whole, by major fund, and non-major funds in aggregate, that are governed by the Mayor.

The accounting and reporting policies of the City conform to generally accepted accounting principles in the United States (GAAP) as applicable to state and local governments. The City’s reporting entity consists of the primary government as well as its component units, which are legally separate organizations for which the elected officials of the primary government are financially accountable. Financially accountable is defined as appointment of a voting majority of the component unit’s board and either (a) the ability to impose will by the primary government or (b) the potential for the component unit to provide a finance benefit or impose financial burden on the primary government. Additionally, a component unit may be another organization for which the nature and significance of its relationship with a primary government is such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Organizations for which the City is accountable because it appoints a voting majority of the board but is not financially accountable are referred to as related organizations. Financial information of related organizations is not included in the City’s financial statements. The related organizations of the City are Capital City Development Corporation (CCDC) and the Boise City/Ada County Housing Authority (the Authority).

Blended Component Units

Blended component units are legally separate from the City but are so intertwined with the City that they are, in substance, the same as the City. The component units are reported as part of the primary government and blended into the appropriate funds.

Harris Ranch Community Infrastructure District No. 1 (the District) is a separate legal entity that is duly organized and operated under Chapter 31, Title 50 of the Idaho Code to facilitate the costs of regional community infrastructure in advance of actual development growth needs. The assets, deferred outflows, liabilities, deferred inflows, revenues, and expenditures of this entity are blended within the City’s financial statements since three members of the City Council serve as the District’s board, this component unit was created solely to provide financing for construction needs to directly benefit within City limits and management of the primary government has operational responsibility for the component unit.

Boise Municipal Health Care Trust (the Health Trust) is a separate legal entity that is organized as a joint public agency self-funded health care plan pursuant to Title 41, Chapter 41 of the Idaho State Code. The Health Trust provides health care service benefits to employees of the City of Boise, Valley Regional Transit, and COMPASS, each of which are separate governmental entities recognized by the state of Idaho. The Health Trust is funded through contributions from employers and employees. Claims for self-funded benefits are processed and paid by third-party claims processors and are then reimbursed by the Health Trust.

The Health Trust Board is comprised of 5 members elected by the Boise City Council and one member for each additional public agency elected by that governing body of that public agency as its representative. The member elected by the governing body of each additional public agency member shall be a nonvoting member of the Board. As a result, the Health Trust’s financial statements are blended within the City’s financial statements. The Health Trust’s financial statements may be obtained from the following address: Boise Municipal Health Care Trust, 150 N Capitol Blvd, Boise, ID 83702.

Related Organizations

The Boise City/Ada County Housing Authority (the Authority) was organized on February 14, 1963, by Boise City under Section 50-1905 of the Idaho Code, for the purpose of providing housing to low-income residents of Boise City through participation in federal assistance programs administered and financed by the U.S. Department

Notes to Financial Statements

of Housing and Urban Development (HUD). The appointment of the Authority’s commissioners alternates every other year between Ada County, Idaho and the mayor. The Authority is a separate and distinct legal entity and does not meet the financial benefit or burden relationship or imposition of will requirements in order to be considered a component unit for financial reporting purposes.

Capital City Development Corporation (CCDC) is an urban renewal agency created by and existing under the Idaho Urban Renewal Law of 1965, as amended, and is an independent public body, corporate and politic. The appointment of CCDC’s directors alternates every other year between Ada County, Idaho and by the Mayor. CCDC is a separate and distinct legal entity and does not meet the financial benefit or burden relationship or imposition of will requirements in order to be considered a component unit for financial reporting purposes.

Government-Wide and Fund Financial Statements

The government-wide financial statements and the major-fund financial statements along with the notes to the financial statements comprise the City’s basic financial statements. The government-wide financial statements (the statement of net position and the statement of activities) concentrate on the City as a whole and do not emphasize fund types but rather a governmental and business-type classification. The governmental activities and business-type activities comprise the primary government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The purpose of the government-wide financial statements is to allow users of the financial statements to be able to determine if the City is in a better or worse financial position than the prior year.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues are defined as charges for services, operating grants and contributions, and capital grants and contributions directly associated with a given function. Taxes and other revenues are reported as general revenues.

The City’s major funds are presented in separate columns on the governmental fund financial statements and the proprietary fund financial statements. The definition of a major fund is one that meets certain criteria setforth in Governmental Accounting Standards Board (GASB) Statement Number 34, Basic Financial Statements

– and Management Discussion and Analysis – for State and Local Governments. The funds that do not meet the criteria of a major fund are combined into a single column on the fund financial statements.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule include charges between the City’s sewer and solid waste functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions presented. Indirect charges have been eliminated in the entitywide statements.

Internal service fund activity is reported in full on the proprietary fund financial statements. The individual internal service funds are combined and thus reported in a single summary column on the proprietary fund financial statements. However, the internal service fund activity has been eliminated – except for outside activity – and is combined on the government-wide financial statements as governmental activities. The outside activities may be premiums paid from outside entities for auto and equipment repair.

Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity or net position, revenues, expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled.

The basis of accounting refers to when revenues and expenditures, or expenses, are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied.