Analysis of the budget and the CAFR for the city of Carson, California 2010-2011



Analysis of the budget and the CAFR for the city of Carson, California

Introduction

The budgetary basis statement of revenues, expenditures and changes in fund balances is prepared on a modified cash basis of accounting that is different from generally accepted accounting principle . Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. [1] Non-GAAP budgetary basis statements of revenues, expenditures and changes in fund balances have been provided for the General Fund and three other budgeted major funds to demonstrate compliance with the annually appropriated budget. The other budgeted major funds are: Community Development, Proposition A Local Transit Assistance, and Solid Waste Resources.

Discussion

The deficit should not be considered, of itself, evidence of economic or financial difficulties. The deficit reflects the extent to which the City has deferred to future periods the financing of certain liabilities (i.e. claims and judgments, workers' compensation, compensated absences). While accounting is primarily concerned with when a liability is incurred, financing focuses on when a liability will be paid. The City, like many other governments, raises and budgets resources needed to liquidate a liability during the year in which the liability is to be liquidated rather than during the year in which the liability is incurred.

The General Fund is the general operating fund of the City and it includes transactions of the Reserve Fund and other accounts that have General Fund type activity for GAAP reporting purposes. At June 30, 2011, the unreserved fund balance of the General Fund was $272.0 million while total fund balance was $437.2 million. The unreserved fund balance includes $120.3 million designated for emergencies and $36.8 million for advances and other budget adjustments. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 6.6% of the total General Fund expenditures of $4.1 billion, while total fund balance represents 10.5% of that same amount. [2]

Fiscal year 2011 operating expenses before depreciation and amortization decreased by $4.8 million (0.7%) from fiscal year 2009. Significant variances were posted in the following categories: increase of $11.5 million in salaries and benefits due to accruals of employee benefits for sick leave and early retirement incentive for Airport employees who qualified and elected to participate in the City's ERIP; decrease of $7.7 million in contractual services mainly due to lower overtime billings by the Los Angles Police Department and decreased consultancy charges; decrease of $7.9 million in materials and supplies resulting from rigorous ...