02-09-09 Regular Meeting of La Porte Fiscal Affairs Committee

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CITY OF LA PORTE, TEXAS Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For The Year Ended September 30, 2008 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances-total governmental funds: Governmental funds report outlays for capital assets as expenditures because such outlays use current financial resources. In contrast, the statement of activities reports only a portion of the outlay as expense. The outlay is allocated over the assets' estimated useful lives as depreciation expense for the period. This is the amount by which governmental activity capital outlays $2,964,705 exceeded depreciation $2,872,702 and losses of $33,421 from the disposition of capital assets in the current period. Water and sewer capital assets were constructed in a governmental fund in the amount of $4,482,977. The capital asset was reported as governmental activities construction in progress in the prior year in the amount of $1,192,475 and transferred from governmental capital assets to business-type activities in the current year statement of activities. Governmental funds do not present revenues that are not available to pay current obligations. In contrast, such revenues are reported in the statement of activities when earned. Governmental funds report bond proceeds as current financial resources. In contrast, the statement of activities treats such issuance of debt as a liability. Governmental funds report repayment of bond principal as an expenditure. In contrast, the statement of activities treats such repayments as a reduction in long-term liabilities. This is the amount by which proceeds exceeded repayments. Some expenses reported in the statement of activities do not require the use of current financial resources and these are not reported as expenditures in governmental funds: Accrued interest not reflected in governmental funds Additional compensated absences not reflected in governmental funds Amortization of bond issuance costs Amortization of premium on bonds Arbitrage allowance Internal service funds are used by management to charge the costs of certain activities, such as fleet maintenance and information technology, to individual funds. The net revenue (expense) of the internal service funds is reported with governmental activities. Change in net assets of governmental activities See accompanying notes to basic financial statements. 37 $ 538,203 58,582 (1,192,475) (944,656) 1,655,000 20,707 (87,647) 30,535 12,009 (304,474) (142,512) $ (356,728)