Notes to Financial Statements

and Administration the authorization to assign amounts to specific purposes approved by Council as described in the City’s adopted fund balance policy.

• Unassigned fund balance – represents resources that have not been classified in one of the aforementioned categories. The general fund is the only fund that reports a positive unassigned fund balance.

It is the policy of the City that expenditures, for which more than one category of fund balance could be used, will be expended in the following categorical order: restricted, committed, assigned, and unassigned.

A stabilization arrangement is incorporated into the City’s adopted fund balance policy that was formally adopted by resolution. This stabilization arrangement consists of two components: cashflow reserve and service maintenance reserve. The cashflow reserve is intended to be a reserve for unexpected events that would have a significant impact on the City’s ability to maintain sufficient working capital. The service maintenance reserve may be used to provide funding associated with fluctuations in fiscal cycles and operating requirements that exceed $500. Policy allows funding for the two reserves to be between 5-8% of the subsequent annual budgeted general fund base revenues. As of September 30, 2022, $20,781 is recorded as the total stabilization arrangement which is 8.0% of the 2023 General Fund adopted budget. Any usage or addition to the reserves must be appropriated/approved by City Council. The reserves are recorded in the governmental funds balance sheet within the unassigned fund balance category.

Recently issued and Adopted Accounting Pronouncements

GASB 89: The City has completed the implementation of GASB 89, Accounting for Interest Cost Incurred before the End of a Construction Period. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest costs incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund. Early adoption was implemented by the City with the issuance of the FY19 ACFR.

GASB 87: The City has completed the implementation of GASB 87, Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract.

GASB 96: The City is preparing for the implementation of GASB 96, Subscription-Based Information Technology Arrangements (SBITA). This Statement also will enhance the relevance and reliability of a government’s financial statements by requiring a government to report a subscription asset and subscription liability for a SBITA and to disclose essential information about the arrangement. The disclosures will allow users to understand the scale and important aspects of a government’s SBITA activities and evaluate a government’s obligations and assets resulting from SBITAs.

GASB 93: The City has completed the implementation of GASB 93, Replacement of Interbank Offered Rates This Statement establishes accounting and financial reporting requirements related to the replacement of IBORs in hedging derivative instruments and leases. It also identifies appropriate benchmark interest rates for hedging derivative instruments. The City did not possess any of these types of investments in FY22.

GASB 97: The City has completed the implementation of GASB 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans— an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. This Statement requires that for purposes of determining whether a primary government is financially accountable for a potential component unit, except for a potential component unit that is a defined contribution pension

Financial Section