1. Governmental Accounting Finance Budget “101”

2. Topics for Discussion Generally Accepted Accounting Principles (GAAP)
Basis of Accounting
Fund Accounting
Governmental Budgeting
Property Taxes
Bond Issuance

3. Generally Accepted Accounting Principles
Common standards and procedures set by policy boards used to record and report accounting information and compile financial statements

4. Basis of Accounting
Determined by when transactions are recorded in the financial statement
4 Bases
Cash
Accrual
Modified Accrual
Budgetary

5. Budgetary Basis of Accounting
Cash Basis of Accounting
Transactions recorded when cash is received and disbursed
Easy to understand
Not GAAP compliant for governmental financial statements
Budgetary Basis of Accounting
Used for budget preparation
Not GAAP compliant for governmental financial statements

6. Modified Accrual Basis of Accounting
Used to prepare government-wide & fund financial statements
Revenue recorded when earned or expected to be realized
Expenses recorded when incurred or goods/services used
Cash exchange is not a factor
GAAP compliant
Modified Accrual Basis of Accounting
Used to prepare fund financial statements
Cross between Cash Basis of Accounting and Accrual Basis of Accounting
Revenue recorded when measurable & available to pay current expenses
Expenditures recorded in period the liability is incurred
GAAP compliant

7. Fund Accounting
Consists of financial statements for governmental accounting entities (Funds)
The number of separate entities (funds) varies by agency
Legal requirements
Management judgement
City of Friendswood uses 19 separate funds for financial reporting

8. City of Friendswood Funds Listing
GENERAL FUND
POLICE INVESTIGATION FUND
FIRE/EMS DONATION FUND
COURT SECURITY/TECHNOLOGY FUND
TDRA GRANT FUND
SIDEWALK INSTALLATION FUND
PARK LAND DEDICATION FUND
STREETS IMPROVEMENT FUND
ECONOMIC DEVELOPMENT IMPROVEMENTS FUND
TAX DEBT SERVICE FUND
GO BOND CONSTRUCTION FUNDS
VEHICLE REPLACEMENT FUND
WATER & SEWER FUND
2006 WATER & SEWER BOND CONSTRUCTION FUND
2009 WATER & SEWER BOND CONSTRUCTION FUND
2016 WATER & SEWER BOND CONSTRUCTION FUND
WATER & SEWER CIP/IMPACT FEE FUNDS
WATER & SEWER REVENUE DEBT SERVICE FUND
1776 PARK TRUST FUND
City of Friendswood uses, both, Accrual Basis of Accounting and Modified Accrual Basis of Accounting.

9. City’s Budget Process
December – January (Multi-Year Financial Plan Update)
February – March (Departmental Narratives & Goals Determined)
April (Departmental Decision Package Submission)
May (Current Services Budget “Scrubbing”)
June (Revenue Projections)
July (Tax Rate Calculations & Property Tax Revenue Projections)
August (Proposed Budget Delivered to City Council)
September (Budget Work Sessions)
October (Budget and Tax Rate Adoption)

10. Property Tax Rate & Levy
Certified Property Values
Galveston County received in Late July / Harris County received in September
Net Taxable Value = Appraised value less exemptions
Effective Tax Rate generates same levy on properties taxed in current and prior tax years.
Total Tax Rate has 2 parts
Debt Service Rate and Maintenance & Operations Rate
Friendswood’s tax rate is $ (I&S Rate = $ and M&O Rate = $0.4372)
Debt Service Rate is determined 1st
Set to meet principal and interest payments on outstanding G.O. debt
Debt Service Rate = Levy needed / Net taxable property value
Maintenance & Operations Rate is based levy needed for City operations.

11. Financial Transparency
City of Friendswood is a great source of financial information!
Financial Policy
Comprehensive Annual Financial Reports
Adopted Annual Budgets
Debt Information

12. Questions???