Fund Balance

Enterprise Funds:

(1) The Enterprise funds include the Sewer Fund, Refuse Fund, and Stormwater Fund. The revenue sources are user fees and an impact fee. The Sewer Fund (Wastewater Treatment Plant) provides services to the Veteran's Hospital (VA), Fort Leavenworth, and the United States Penitentiary (USP). In the past three years, the revenues from the VA has declined due to some conservation efforts and system efficiencies that reduce the materials that flow into the City's treatment system. Within the past two years, changes at the Fort and USP have also led to efficiencies that reduce the flow into the City's system, thereby reducing revenues.

(2) The Sewer Fund needed a 6% rate increase to keep reserve levels consistent, however, due to the impact of COVID-19 on residents, the Commission opted only to raise rates by 3%. Therefore, for 2021, the sewer fund reserves are anticipated to decline by 3%.

(3) Due to COVID-19, the City took advantage of extremely low-interest rates and refunded the outstanding bonds paid by the sewer fund. The refundings were structured so that the interest savings were recognized upfront. This saved the City about $44,000 in the 2021 budget.

(4) The Stormwater Fund shows the largest change in reserve level at (70%). This is due specifically to capital projects that were started in 2020 but won't be finished until 2021. Additionally, the City issued bonds to pay for two projects in 2020, and the first bond payment will be in 2021.

(5) The largest increase in reserve levels is in the Refuse Fund. In 2017, based on the long-term financial plan, the City began gradually raising refuse rates because landfill rates were increasing and the Great Recession had put the vehicle replacement plan significantly behind schedule.

In 2018, in response to the county landfill rates doubling, the City went out to bid for landfill services. The savings was significant (almost $20 per ton.) The City purchased two new refuse trucks (one in 2018 and one in 2020) and plans to replace the third truck in 2022. The increase in reserves is for the purchase of the third truck in 2022 and to meet the Commission approved reserve level established in the Reserve policy. This also allowed the City keep the refuse rates the same in 2021 as they were in 2020.

(6) In the early 1990's the City closed its landfill and the EPA mandated the City to implement remediation activities. At that time, the City established a separate fund to track those activities. However, the Refuse Fund transfers monies to pay for those activities. In recent years, the requirements of maintaining the landfill have decreased, and there is no need to maintain a separate fund to track those activities as long as they are adequately documented in the Refuse Fund. Therefore, 2021 reflects the closure of the Refuse Restricted Fund and the consolidation of those activities into the Refuse Fund.

(7) The 2021 Refuse budget also reflects the implementation of phase I of the Commission goal to enhance and improve the recycling center.

The City’s governmental funds use the term fund balance to describe the difference between fund assets and fund liabilities. The City’s enterprise funds use the term working capital to describe the difference between fund assets and fund liabilities.

In March 2017, the City Commission approved a revised Budgetary Reserve Policy which incorporates the GFOA recommended a minimum of two months of expenditures as the City’s minimum reserve levels in fund balance for the General Fund, CIP Sales Tax Fund, County‐Wide Sales Tax Fund, Sewer Fund, and Refuse Fund. The new policy specifies the acceptable uses of excess unassigned reserve balances, mandates periodic reviews and updates as necessary, limits the authorization to use reserves to the City Commission and City Manager, and provides for budgeting 4% of expenditures for the restoration of reserves should they fall below the minimum established in this policy.

In 2009, the Governmental Accounting Standards Board (GASB), the governing body charged with establishing accounting and financial reporting standards for governments, issued Statement 54, which changed the way fund balances are reported on financial statements. The City prepares the budget per Kansas statute on a cash basis where cash balances are not typically presented according to GASB 54 designations. However, the City recognizes that the same constraints apply and is presenting the budgetary cash balances in the GASB 54 format for the purposes of this document.

Non‐spendable:

This includes amounts that are a) not spendable in any form, or b) legally or contractually required to remain intact. This includes items that are not expected to be converted to cash, such as inventories, pre‐paid items, or long‐term notes receivable.

Restricted: This includes amounts that can be spent only for the specific purposes stipulated by external sources, either constitutionally or through legislation. Restrictions may only be lifted with the consent of the

source provider. This includes grants or certain types of sales taxes.

Committed: This includes amounts that can only be used for specific purposes determined by a formal action (resolution/ordinance) of the City’s highest level of decision‐making authority‐the City Commission. Commitments may only be lifted by taking the same formal action that initially imposed the restriction (resolution/ordinance).

Assigned:

This includes amounts intended to be used for specific purposes that are neither restricted nor committed. The intent is expressed by a) the City Commission or b) the City Manager to which the Commission has delegated the authority to assign amounts to be used for specific purposes.

Unassigned: This includes the classification of the residual amount for the General Fund and includes all amounts not contained in the above‐mentioned classifications. for any purpose. Unassigned amounts are technically available

In situations where expenditures are made for a purpose that has amounts available in multiple fund balance classifications, fund balances are depleted in the order of restricted, committed, assigned, and unassigned.