Appendix

Glossary of Terms

Adopted budget

The city council approved annual budget establishing the legal authority for the expenditure of funds as set forth in the appropriation resolution.


Accrual/accrual basis of accounting

A method of accounting that recognizes the financial effect of transactions, events and inter-fund activities when they occur, regardless of the timing of related cash flows.


Annual financial report

A financial report applicable to a single fiscal year.


Appropriation

An authorization made by the city council, which permits officials to incur obligations against and to make expenditures of resources. Appropriations are usually made to fixed amounts and are typically granted for a one-year period.


Assessed valuation

A valuation set upon real estate or other property by a government as a basis for a tax levy.


Audit

A view of the city accounts by an independent auditing firm to substantiate year-end fund, salaries, reserves and cash on hand.


Beginning/ending fund balance

Appropriated resources available in a fund from the prior/current year after payment of the prior/current year’s expenses. This is not necessarily cash on hand.


Bond

A city may raise capital by issuing a written promise to pay a specific sum of money, called the face value or principal amount, at a specified date or dates in the future, together with periodic interest at a specified rate.


Budget

A plan of financial operation embodying an estimate of proposed appropriations for a given period of time and the proposed means of financing them.


Budgetary basis

The method of accounting applied to the budgetary accounts and process.


Budgetary control

The control or management of a government or enterprise in accordance with an approved budget for the purpose of keeping expenditures within the limitations of appropriations and available resources.


Budget message or budget transmittal letter

A general discussion of the proposed budget as presented in writing by the city manager to the city council. The message contains an explanation of principal budget items and summaries found in the prepared budget relative to the current year adopted budget.


Budgetary basis

The form of accounting utilized throughout the budget process.


CAP

Cost Allocation Plan. This is the guiding document as to how total cost is calculated and applied to each function and activity delivering services to the community.


C.O.P.

Community oriented policing.


Debt service

Payment of interest and repayment of principal to holders of the city’s debt instruments (bonds).


Debt service fund

Governmental fund type used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.


Deficit

An excess of expenditures or expenses over resources.


Department

An operational and budgetary unit designated by the city council to define and organize city operations.


Depreciation

The portion of the cost of a fixed-asset charged as an expense prorated over the estimated life of the asset.


Encumbrance

An amount of money committed for the payment of goods and services not yet received or paid for. A purchase order is a common encumbrance.


Estimated revenues

The budgeted, projected revenues expected to be realized during the budget (fiscal) year to finance all or part of the planned expenditures.


Exchange transactions

In government, these are transactions in which each party receives and surrenders essentially equal value. Example: one dollar is paid for a dollar’s worth of water service.


Exchange-like transactions

Similar to exchange transactions, these are transactions in which there is an identifiable exchange between the government and another party, but the values exchanged may not be quite equal or the direct benefits of the exchange may not be exclusively for the parties to the exchange. Example: certain grants and donations.


Expenditure

The actual payment for goods and services.


Expenses

The incurrence of liabilities or the consumption of assets arising from the delivery or production of goods, rendering services or carrying out other activities that constitute the entity’s ongoing major or central operation. The term applies to the city’s enterprise and internal service funds.


Fiscal year (FY)

A 12-month period of time to which the budget applies. For the City of Ukiah it is July 1 through June 30.


Fixed asset

A long-lived tangible asset obtained or controlled as a result of past transactions, events or circumstances. Fixed assets include land, buildings, equipment, improvements to other assets and infrastructure (i.e., streets, highways, bridges, etc.).


Full time equivalent (FTE) position

The amount of time a position has been budgeted for in terms of the amount of time a regular, full-time employee normally works in a year (2,080 hours).


Fund

An accounting entity with a self-balancing set of accounts in which cash and other financial resources, all related liabilities and residual equities, or balances and changes therein are recorded and segregated to carry on specific activities or attain certain objectives in accordance with special regulations, restrictions or limitations.


Fund balance

The difference between the assets (revenues and other resources) and liabilities (expenditures incurred or committed to) for a particular fund. It also represents the accumulated net resources of a fund available for reservation, designation or for appropriation.


Gann

Refers to the last name of the individual who championed proposition 13 and secured the passage of the constitutional amendment that led to the property tax rollback in the 1970’s.


GASB

Governmental Accounting Standards Board.


Generally accepted accounting principles (GAAP)

Uniform minimum standards and guidelines for accounting and reporting. These standards govern the form and content of the annual financial statements of an entity. The primary authoritative body on the application of GAAP to state and local governments is the governmental accounting standards board (GASB).


General fund

The primary governmental fund used to account for all financial resources, except those required to be accounted for in another fund.


General plan

A comprehensive, long-range policy guide intended to promote efficient and desirable growth in the community.


Governmental funds

Distinguished by their measurement focus on determining financial position and changes in financial position.


Grants

Contributions of gifts or cash or other assets from another government to be used or expended for a specific purpose, activity or facility.


Infrastructure

Facilities that support the continuance and growth of a community. Examples include streets, water lines, sewers, public buildings, parks and airports.


Interfund transfers

Monies moved from one fund to another. The money is transferred to finance the operations of another fund or to reimburse the fund for expenses.


Line item

The description of an object of expenditure, i.e. Salaries, supplies, professional services and other operational costs.


Maintenance & operation (M&O) costs

The day-to-day operating and maintenance costs of a municipality. These costs include personnel, gas, electric utility bills, telephone expense, reproduction costs, and postage and vehicle maintenance.


Modified accrual

An adaptation of the accrual basis of accounting for governmental funds types. Revenues and other financing resources are recognized when they become available to finance expenditures of the current period. Expenditures are recognized when the fund liability is incurred.


Nonexchange transactions

Transactions in which a government gives or receives values (benefit) to or from another party without giving or receiving equal value in exchange. Example: taxes.


Notes

A paper that acknowledges a debt and promises payment to a specified party of a specific sum, describing a time of maturity that is either definite or will become definite.


Object

An individual expenditure account.


Objective

A measurable output that an organization strives to achieve within a designated time frame. The achievement of the objective advances an organization toward a corresponding goal.


Operating budget

Plans of current expenditures and the proposed means of financing them. The annual operating budget, as distinguished from the capital program budget, is the primary means by which most of the financing, acquisition, spending and service delivery activities of a government are controlled.


Operating deficit

The deficiency of operating revenues under expenditures.


Operating expenses

Expenditures for materials, supplies and services which are ordinarily consumed within a fiscal year and which are not included in the program inventories.


Operating surplus

The excess of operating revenues over operating expenditures.


Ordinance

A formal legislative enactment by the city council. It is the full force and effect of law within the city boundaries unless preempted by a higher form of law.


Performance measures

Measurement of service performance indicators that reflect the amount of money spent on services and the resulting outcomes at a specific level of services provided.


Primary funds

Funds that account for the majority of operating activities of the City.


Program

A group of related activities performed by one or more organizational units for the purpose of accomplishing a city responsibility.


Proposed (Recommended) budget

This refers to the status of an annual budget, which has been submitted to the city council by the city manager and is pending public review and city council adoption. Also referred to as the “preliminary budget”.


Reserve

An account used to indicate that a portion of a fund’s balance is legally restricted for a specific purpose and is, therefore, not available for general appropriations.


Resolution

A special order of the city council, which has a lower legal standing than an ordinance.


Resources

Total amounts available for appropriation including estimated revenues, fund transfers and beginning fund balances.


Retained earnings

An equity account reflecting the accumulated earnings of an enterprise or internal service fund.


Revenue

Income received through such sources as taxes, fines, fees, grants or service charges that can be used to finance operations or capital assets.


Risk management

An organized attempt to protect an organization’s assets against accidental loss in the most cost effective manner.


Self-insurance

A term often used to describe the retention by an entity of a risk of loss arising out of the ownership of property or the activity of the agency. It is distinguished from the transfer of risk to a third party (insurance company).


Service effort

A measure of expected output by a budgetary program.


Special revenue funds

A governmental fund type used to account for the proceeds of specific revenue sources (other than for major capital projects) that are legally restricted to expenditure for specified purposes.


Subventions

Revenues collected by the state (or other level of government), which are allocated to the city on a formula basis. The major subventions received by the city come from the state of California and include motor vehicle in-lieu and gas tax.


Tax allocation bonds

A bond issued that has a specific tax revenue source that backs the payment of the debt. In the city, these are not issued for general fund purposes.


Transfer in/out

Movement of resources between two funds. Example: an interfund transfer would include the transfer of operating resources from the general fund to an enterprise fund.


Transient occupancy tax (TOT)

This revenue source originates in a tax placed on lodging facilities for the occupancy of a room. Ukiah has a 10% tax for such occupancies.


Trust funds

Funds held by the city that are subject to the terms of the trust that created the source of funding.


User charges

The payment of a fee in direct receipt of a public service by the party who benefits from the service.


Working capital

The difference between current assets and current liabilities. It is often used to approximate fund balance in proprietary funds (enterprise and internal service), which are accounted for using the full accrual basis, in comparison to governmental funds, which are accounted for using the modified accrual basis.


Workload indicators

Statistical information that indicates the demands for services within a given department or division. Workload indicators are a type of performance measure utilized by departments or divisions to assess its level of service.