City of Boise
FY 2010/2011 Biennial Budget
Fund Balance/Retained Earnings Summary
By: Financial Services Division
Overview
Beginning and ending fund balances, reserves, and designations provide indications of the financial position of each fund. Fund position
analysis is a key effort in long term financial planning and in building the Two Year Budget. The Fund Overview schedule provides prior
year audited “actuals” for the two previous fiscal years, adopted budget amounts for the current fiscal year, and includes planned use of
fund balance or retained earnings. Beginning and ending fund balance dollar amounts for all City funds are shown on the Fund Balance
schedule.
Categories
Fund balance and retained earnings measure the City’s financial capacity and position at any point in time. The City monitors fund
balances periodically, whenever any significant financial plans are considered (such as a major capital project), and in the
Comprehensive Annual Financial Report (CAFR).
Fund balance and retained earnings categories include the following:
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Reserved Commitments, represent amounts for which the City is legally responsible, such as repayment guarantee amounts of
bond issues, encumbrances, dedicated purposes, capital repairs, replacements or expansion, and inventory. Reserves are
established for commitments made in executed contracts and can change only in accordance with changes to those documents.
Reserved funds are committed and cannot be reallocated or used for other purposes.
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Designations. City Council may designate, by resolution or other official action, fund balance for specific uses such as future
capital projects, re-budgeted projects from prior fiscal years, to protect the City from financial adversity and preserve its fiscal
integrity, or other planned activities. Designated funds are committed only by policy, not by law or legal commitment. The City
Council may choose to reallocate them to other purposes. Designated fund balances reflect officially approved priority uses and as
such are deemed unavailable. However, they are somewhat discretionary unlike reserves.
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Available Fund Balance is the remaining balance after all obligations (reserves and designations) are deducted. These amounts
are “unreserved and undesignated” fund balance and are available for allocation.
Boise City’s policy is to review the unreserved, undesignated fund balance quarterly and to allocate available funds periodically,
especially in the taxing funds.
Tax Funds
General Fund – For FY 2010 and FY 2011, the Mayor’s proposed budget includes estimated cost of all approved commitments,
including funding to maintain the cash flow reserve and other approved reserves and contingencies. At the end of each fiscal year, the
Mayor recommends allocation of any unused monies according to a predetermined list of unfunded priorities. The list of unfunded
priorities is initially created during budget development process. The City continually reviews one-time requests and changes to the
Capital Improvement Plan. As items are reviewed, the City Council will amend and update the unfunded priority list.
Council has committed to budget funding to increase the cash flow reserve equivalent to 8% of the subsequent year’s base revenues by
the end of FY 2011. At the end of FY 2008, the City cash flow reserve amounted to 6.5%. The strategy employed is to annually budget
the marginal amount to maintain the then current percentage and to allocate end of year monies, if available, to increase the percentage
until the targeted amount is reserved. A marginal increase in the cash flow reserve is not required in FY 2010 to maintain the 6.5%
amount since base revenue is less than the budgeted amount in FY 2009. Approximately $358,000 is budgeted in FY 2011 to maintain
the existing percentage.
The reserved amount for capital expansion is anticipated to increase slightly until FY 2010, in anticipation of the fourth branch library.
These reserves are primarily small gift donations for the Library and contributions related to the Integrated On-line Library System. FY
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City of Boise
FY 2010/2011 Biennial Budget
Fund Balance/Retained Earnings Summary
By: Financial Services Division
2009 will be the last year of accumulated funding for the detoxification facility project and is then anticipated to be spent in FY 2010 or FY
2011 pending completion of the facility. The Mayor is recommending the use of the employee benefit designation to fund one-time
compensation increases for general employees during FY 2010.
Capital Fund - The Capital Fund balance, because of previous and current years’ cost savings and/or revenue gains, is primarily
reserved for current projects or allocated to specific capital projects based on priority needs as determined by the Mayor and City
Council. Unallocated and available balances will be used in accordance with the update of the Capital Improvement Plan.
The reserve for capital expansion is primarily impact fee monies received from prior years
accumulated to complete related park projects. In addition, this reserve tracks donations that
provide park amenities such as benches and trees, or support construction costs for park projects.
It is anticipated that moderate amounts of impact fee funds will be used for new proposed projects
while a majority is accumulated to green up the Marianne Williams park site in FY 2010.
Foothills Levy Fund – During 2001, voters approved a serial levy in the total amount of $10 million
to purchase land in the Boise foothills for the preservation of the natural habitat and continued
public access. At the end of FY 2008, the remaining balance was nearly $5.1 million. The City will continue to negotiate critical land
acquisitions during FY 2010 and FY 2011.
Enterprise Funds
Retained earnings of the City’s enterprise funds include unreserved resources. However, unlike the tax-supported funds, most of the
resources are not liquid and represent capital assets. Monies are generally accumulated to support capital replacement and/or
expansion needs.
Airport Fund – The Airport Fund accounts for operation and management of the City’s airport terminal. All revenues such as terminal
rent, landing and jet way fees, parking fees, and other charges at the airport, as well as the expenditures that support the maintenance
and general operation of the facility are tracked in this fund. Capital improvements for the airport are primarily funded from Federal
Aviation Administration (FAA) grants, Passenger Facility Charges (PFC’s), and Customer
Facility Charges (CFC’s).
The Airport Fund operating surplus is earmarked to match FAA grant funds for capital
projects. Debt service and capital additions for the airport are accounted for in this fund.
At the end of each fiscal year, the capitalized cost for the capital projects is reclassified
from the income statement to the balance sheet.
Airport’s proposed capital improvement plan includes projects for taxiway and apron
pavement rehabilitation, miscellaneous paving projects, a new parking garage, baggage
system upgrades, building demolition, system upgrade, a new heliport and road
improvements.
Sewer Fund - The Sewer Fund is an enterprise fund that completely supports the management and operation of the City’s sewer
system. The City charges customers user fees to fund the operating expenses and capital improvements. Hook-on fees fund the cost of
line and trunk extensions. When land is developed, the City charges the developer for the cost of installation of sewer trunk lines. The
individual property owner is charged for extending the trunk lines to the structure.
Sewer Fund retained earnings are accumulated to fund expansion, capital replacements and repairs. More than $24.4 million is
committed to the completion of several large capital projects. For FY 2010, retained earnings amounting to $10.3 million support new
capital expenditures. For FY 2011, approximately $7.3 million will be used for capital expansion needs.
Geothermal Fund - Geothermal is a clean, renewable energy source, making it an attractive choice to customers. The City charges
customers a geothermal rate to cover operating costs and fund depreciation of assets. The current rates charged are competitive with
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City of Boise
FY 2010/2011 Biennial Budget
Fund Balance/Retained Earnings Summary
By: Financial Services Division
natural gas rates and change in accordance with natural gas rate changes. Like many of the other enterprise funds, the City
accumulates monies to support capital improvement projects and operating needs.
In FY 2010, the City is planning to extend service to Boise State University. This project will increase the size of the overall system by
about 50%.
Irrigation Fund – In FY 1997, the City initiated a Municipal Irrigation District to provide non-potable, pressurized irrigation water within
the city limits. The City provides this service upon request of the homeowner associations, developers or similar parties. Retained
earnings are comprised solely of contributed assets, and therefore, not available.
Over the next two years, the City will continue to develop long-term plans and coordinate with irrigation service providers to ensure that
water rights are being maintained and that water is being utilized in the most appropriate manner.
Parking Garage Fund - Boise City had a lease agreement for the Grove Street Parking Garage from the Capital City Development
Corporation (CCDC). Under this agreement, the City gave CCDC the net revenue from the garage’s operation; however, should CCDC
meet its bond covenants, it must return a portion or all of the net revenues to the City. The returned revenues are used to support
general governmental expenditures. In 2009, the lease agreement was terminated and the Boise City Council approved a resolution to
dissolve the Parking Garage Fund. The remaining fund balance was transferred to the Capital Facilities Contingency account per the
approval of City Council.
Solid Waste Fund - The Solid Waste Fund is an enterprise fund that completely supports the management and operation of the City’s
solid waste system. The City currently contracts with Allied Waste Services (formerly BFI) to meet the City’s solid waste disposal needs.
The City charges users a fee based on the type of business or residential occupancy. The City extended the
franchise agreement with Allied Waste Services and became effective on January 1, 2009, for an additional ten
years. It expires Jan 1, 2019.
The City targets a 45-day cash/investment reserve to be used for day-to-day operations and to fund contingency
events. It is the intent of City Council to use available retained earnings to stabilize fee increases and cover operating
costs in years when costs exceed revenues. At this time, there are no rate increases proposed for FY 2010 or FY
2011.
Other Funds
Community Development Fund - The Community Development Fund supports capital projects and programs benefiting low/moderate
income citizens funded through federal block grants. With the federal grants, the City funds programs such as Community House that
primarily provides emergency and transitional housing. The City does not maintain any retained earnings in this fund since all
expenditures are reimbursed during the fiscal year.
Fleet Services Fund – The Fleet Services Fund (previously the City Shop Fund) accounts for the cost of operating a maintenance
facility for the City’s automotive equipment. The City uses the unreserved Fleet Services fund balance to meet operating shortfalls and
capital needs for the Fleet Services Division.
Debt Service Fund - The Debt Service Fund accounts for the interest and principal payments on bonds issued for tax-funded operations
and capital projects. At the end of FY 2008, $115,560 was reserved to satisfy bond reserve requirements for outstanding indebtedness.
City Council has designated $10,328,715 for post retirement benefits.
L.M. Cunningham Fund - The L.M. Cunningham Fund supports the operating costs of the City arboretum, whereby City departments
purchase trees and plant material at a predetermined rate based on size and condition. The trees and plants are planted along the City
right-of-ways, City parks, and other City areas. Retained earnings are available and held for unexpected shortfalls.
Risk Management Fund - The City accounts for the operation of the City’s comprehensive liability and insurance programs and the
Occupational Safety and Industrial Hygiene program in the Risk Management Fund. Self-insured losses are paid through the Risk
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City of Boise
FY 2010/2011 Biennial Budget
Fund Balance/Retained Earnings Summary
By: Financial Services Division
Management Fund. Costs are billed directly to City departments based on exposure, actual losses and services provided. Unreserved
retained earnings are used to fund operating shortfalls because of unexpected losses and increased liability requirements. The City’s
goal is to maintain a 90% confidence level in retained earnings.
Workers Compensation Fund - This program was initiated in FY 1999, whereby the City funds a claim liability account and self-insured
losses are paid through the Workers Compensation Fund. Costs are billed directly to City departments based on exposure, actual
losses and services provided. Unreserved retained earnings are used to fund operating shortfalls because of unexpected losses and
increased liability requirements. The City’s goal is to achieve a 90% confidence level in retained earnings.
Fiduciary Funds
The City maintains trust and agency funds to account for assets held by the City in a trustee capacity for individuals, private
organizations, other governments, and/or funds.
Health Insurance Trust Fund - The City established the Health Insurance Trust Fund in January 2005, in which the City funds most
medical claims on behalf of its employees. The City is required to maintain enough funding for “incurred but not received” (IBNR) claims.
Each year this amount is actuarially determined. Retained earnings are maintained to fund the IBNR liability and those times when the
City experiences high or unusual utilization of health plans.
The Deferred Compensation Fund accounts for assets held in the deferred compensation plans of the City held in trust for the
exclusive benefit of employees. Annual revenues and expenditures are difficult to project and fluctuate greatly from year to year.
However, generally the fund balance is projected to increase in correlation with employee salaries.
The City also maintains dedicated trust funds such as the Humane Society Trust and Perpetual Care Trust. These funds are trust
funds held for dedicated purposes.
The Housing Rehabilitation Funds account for several revolving loan funds that provide low interest loans for housing. Various federal
grants were used to establish the existing fund balance. The collections of the loans are used to run the program and facilitate new
loans to qualified citizens. The amount reserved for loans is dependent on the number of qualified loan applicants and fluctuates from
year to year.
The Boise City Trust Fund accounts for items that must be held in trust for any other reason. The City also uses this fund to budget
appropriation that can be transferred upon approval and resolution by City Council to other funds for such things as re-budgeted items
from the prior fiscal year, awarded grants and donations, new programs, and unanticipated events. A contingent appropriation amount of
$150 million is recommended to support re-budgeting capital projects in progress and other approved projects in various planning stages
from the current fiscal year into subsequent fiscal years. The contingent appropriation is also used to provide budget for unknown events
when funding sources have been identified, such as grant funding, donations, or partnership contributions. An additional contingent
appropriation of $25 million is recommended to facilitate potential stimulus funding awarded to the City. To access any contingent
appropriation City Council approval is required.
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