Appendix F: Fund Descriptions

Governmental Fund Descriptions

Most City functions are financed through what are called governmental funds. There are four types of governmental funds maintained by the City: the General Fund, four Enterprise Funds, several Special Revenue Funds, and a few Stabilization Funds. The City Council appropriates the General Fund and Enterprise Funds.

General Fund: The General Fund is the major operating fund of the City government, and it accounts for the vast majority of City operations. The General Fund is supported by revenues from real estate and personal property taxes, state and federal aid, excise taxes, investment income, fines and forfeitures, and fees and charges. Most of the City’s departments, including the schools, are supported in whole or in part by the General Fund.

Enterprise Funds: The City maintains four Enterprise Funds: one for the Sewer Division of Public Works, one for the Water Division of Public Works, one for the Veteran’s Memorial Ice Rink, and one for the Dilboy Athletic Complex. An enterprise operation is a business-type activity supported primarily by charges for services received. Funds raised from charges are dedicated to the specific purpose of the enterprise operation, and cannot be diverted to other unrelated uses. The concept of an enterprise operation also includes the maintenance of the capital facilities of the business. That is, fees for services are charged to recover not only the operating costs of the activity but also the “using up” (depreciation) of the capital investments supporting the service.

Budget and financial reports for enterprise operations utilize terms and concepts that differ significantly from those utilized for General Fund tax-supported reports that are the routine focus of public attention. The purpose of enterprise financial reporting is to measure with reasonable accuracy and consistency the net income derived from operations, and then to measure the availability and use of capital acquisition and construction financing. The presentation of the enterprise budgets utilizes budgetary terms and concepts, and the reporting structure found in the audited financial statements for the same enterprise funds. As such, the key measures are Net Income and Capital Resource Availability.

Special Revenue Funds: The City maintains several Special Revenue Funds, which are used to account for those types of revenues that are legally restricted to being spent for a specific purpose (except expendable trusts, or major capital projects). These revenues must be accounted for separately from the General Fund for a variety of reasons, and do not necessarily follow the same fiscal year as the General Fund. Special Revenue Funds include the following types of funds listed below:

Revolving Funds: Revolving Funds allow the City to raise revenues from a specific service, and use those revenues to support the service without appropriation. Revolving Funds are established by statute or bylaw, and may require re-authorization each year by the City Council. The City maintains a number of Revolving Funds, such as the PEG Access and Recreation Revolving Funds.

1. Receipts Reserved for Appropriation: These receipts are special revenues that are restricted to a specific use, but also require appropriation by the Board of Aldermen, such as insurance settlement monies and the proceeds from the sale of City property.
2. School Grants: These grants account for several specially-financed education programs under grants received from the federal or state governments, including professional development, SPED early childhood development, drug-free school programs, and certain capital improvements.
3. Other Intergovernmental Funds: These funds account for several grants or monies received by the City from the federal or state governments, including a variety of community policing grants, Chapter 90 highway monies, state election grants, state library aid, and various Council on Aging programs, such as “meals-on-wheels.”
4. Other Special Revenue Funds: These funds account for miscellaneous special revenues often involving private donations for a specific purpose, such as departmental gifts for police and fire, various Council on Aging programs, and Planning Board gifts from developers for infrastructure improvements related to proposed projects.

Stabilization Funds: The City has a total of 30 Stabilization Funds including the Capital Stabilization Fund, Rainy Day Stabilization Fund and the Health Claims Trust Fund. The Capital Stabilization Fund is used to fund the City’s pay-as-you-go capital projects. The Rainy Day Stabilization Fund is used to offset potential cuts in services or increases in taxes when projected revenues do not meet projected demands. In 2017 City created the Green Line Stabilization Fund to mitigate the debt service cost. The projected debt associated with the green line project is $50M. The balance of all stabilization funds held by the City was $64,905,242 as of June 30, 2021.

Fiduciary Funds: Fiduciary Funds are used to account for assets held by the City in a trustee capacity, or as an agent for individuals, private organizations, and other governmental units. Fiduciary Funds include expendable trusts, non-expendable trusts, and agency funds.

Expendable Trusts: Expendable Trusts are used to account for monies received by the City in a trustee capacity where both the principal and the earnings of the fund may be expended.

Non-expendable Trusts: These trusts are used to account for trusts where the principal must remain intact (that is, cannot be expended). Generally income earned on the non-expendable trust principal may be expended in accordance with the conditions of the trust.

Agency Funds: Agency Funds are used to account for funds that are custodial in nature, and do not involve the measurement of operations, such as the fund for the City’s deferred compensation plan.

Fund Balances

The City’s audited financial statements are prepared annually by an outside auditor. The Comprehensive Annual Financial Report is available in its entirety online and displays year-end financials reported in a manner consistent with generally-accepted accounting principles. These reporting methods differ from the descriptions in the above sections for that reason.

The following major governmental funds are reported:

The general fund is the primary operating fund. It is used to account for all financial resources, except those that are required to be accounted for in another fund.

The strategic planning and community development fund is used to account for grant activities of the Office of Strategic Planning & Community Development.

The capital projects fund is used to account for activities associated with constructing and acquiring assets for both general city-wide and school construction projects.

The nonmajor governmental funds consist of other special revenue, capital projects and permanent funds that are aggregated and presented in the nonmajor governmental funds column on the governmental funds financial statements.

The 18.8% net increase in fund balance for the General Fund is primarily due to excess revenue collected (Building Permit revenue was historically high in FY21) as well as underspending of appropriated budgets due to the City's inability to complete many projects on schedule because of the COVID-19 pandemic.

The table below illustrates changes in fund balances during FY22:

In addition, the following major proprietary funds are reported:

The water enterprise fund is used to account for the financial activity as a result of the ongoing operations within the water department.

The sewer enterprise fund is used to account for the financial activity as a result of the ongoing operations within the sewer department.

The Veteran’s Memorial Ice Rink enterprise fund is used to account for the financial activity as a result of the ongoing operation of the Veteran’s Memorial and Founder’s ice rinks.

The Dilboy Field enterprise fund is used to account for the financial activity as a result of the ongoing operations of the Dilboy Stadium.