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CITY OF MONTE VISTA, COLORADO <br /> MANAGEMENT'S DISCUSSION AND ANALYSIS <br /> 1 December 31, 2011 <br /> 1 Financial Analysis of the Government's Funds <br /> The City of Monte Vista uses fund accounting to ensure and demonstrate compliance with finance-related legal, <br /> federal and state requirements. <br /> • Governmental Funds. The focus of the City's governmental funds is to provide information on near-term <br /> inflows, outflows and balances of resources that are available for spending. Such information is useful in <br /> assessing the City's financing requirements. In particular, fund balances may serve as a useful measure of <br /> a government's net resources available for spending at the end of the fiscal year. Types of governmental <br /> funds reported by the City of Monte Vista include the General Fund, Recreation Fund, Grant Fund, <br /> ' Capital Projects Fund, and other nonmajor funds. As of the end of the current fiscal year, the City's <br /> governmental funds reported combined ending fund balances of$2,778,685, a decrease of$63,501 from <br /> the prior year ending fund balances. Beginning in fiscal year 2011, the City implemented GASB <br /> Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This statement is <br /> intended to improve the usefulness of fund balance information by providing clearer fund balance <br /> classifications that can be more consistently applied and by clarifying the existing governmental fund type <br /> definitions. As a result the City's fund balances are classified based on the extent to which the City is <br /> bound to honor constraints for the specific purpose on which amounts in the fund can be spent. In <br /> accordance with the Statement the fund balances for the City were classified in the following categories: <br /> Restricted Fund Balance—are restricted when constraints placed on the use of resources <br /> are either (a) externally imposed by creditors, grantors, contributors, or laws or <br /> regulations of other governments or(b) imposed by law through constitutional provisions <br /> or enabling legislation. As of December 31, 2011, the City's governmental funds <br /> reported a restricted fund balance of $2,003,678, a majority of this fund balance is <br /> restricted for capital projects and improvements. <br /> SCommitted Fund Balance— are amounts that can only be used for specific purposes as a <br /> result of constraints imposed by the City Council. Committed amounts cannot be used <br /> for any other purpose unless the Council removes those constraints by taking the same <br /> type of action. Committed fund balances differ from restricted balances because the <br /> constraints on their use do not come from outside parties, constitutional provisions, or <br /> enabling legislation. The City's governmental funds reported a committed fund balance <br /> of$74,142 as of December 31,2011. <br /> Assigned Fund Balance—are amounts a government intends to use for a specific purpose: <br /> intent can be expressed by the City Council or by an official or body to which the <br /> governing body delegates the authority. The City's governmental funds reported an <br /> assigned fund balance of$49,927,which is designated for subsequent year expenditures. <br /> Unassigned Fund Balance — are amounts that are available for any purpose; these <br /> amounts are reported only in the General Fund. The City's General Fund reported an <br /> unassigned fund balance of$650,938 as of December 31, 2011. <br /> Revenue. Revenues in governmental funds decreased from $4,121,736 to $3,738,817, a decrease of $382,919 <br /> from the prior year. The majority of the decrease was in intergovernmental revenue with a decrease of$255,844, <br /> and other revenues decreased by $152,211, mostly due to a decline in grant activity. Tax revenue increased by <br /> $6,598 and charges for services increase by $18,538 compared to 2010. Of total revenue received in 2011, <br /> $1,987,751 (53%) was generated by tax revenue, $1,277,508 (34%) by intergovernmental revenue, $249,535 <br /> (7%)by charges for services,and$224,023 (6%)by other sources. <br /> ' 10 <br />