Page 38 - Saginaw FY21 Annual Budget

CITY OF SAGINAW
DESCRIPTION OF FUNDS

The City of Saginaw budget is made up of various funds. A fund is a grouping of related accounts that
is used to maintain control over resources that have been segregated for specific activities or objectives.
Funds are used to track revenues and expenditures/expenses for different programs and functions. All
of the funds of the City can be divided into two categories – governmental funds and proprietary funds.
Governmental funds include the General Fund, Debt Service Fund, and Capital Projects Fund. Special
revenues are accounted for in the Special Revenue Funds and are a type of Governmental fund. The
City of Saginaw operates and maintains its own water and sewer utility system. The Enterprise Fund,
a proprietary fund, is used to account for water and sewer utility system funds.

The City’s budgets of governmental funds (General Fund, Debt Service Fund, Capital Projects Fund
and Special Revenue Funds) are prepared on a modified accrual basis. This means that obligations
of the City such as outstanding purchase orders are budgeted as expenditures. However, revenues
are recognized only when they are measurable and available.

The budgets of the City’s proprietary funds (Enterprise Fund and Water/Wastewater Escrow Fund) are
prepared using a full accrual basis. This means it recognizes expenses as encumbrances when a
commitment is made, such as through a purchase order. Revenues, on the other hand, are recognized
when they are earned by and due to the City (for example water user fees are recognized as revenue
when bills are produced).

The Comprehensive Annual Financial Report (CAFR) shows the status of the City’s finances on a basis
of generally accepted accounting principles (GAAP). In most cases, this conforms to the way the City
prepares its budget. There are several exceptions: Compensated absences (accrued but unused
vacation/sick leave and compensatory time) are not budgeted but are reported as an expense in the
CAFR. Contributed assets are not budgeted but are booked as revenue. Depreciation and gains or
losses on assets are not budgeted but are reported in the CAFR as an expense or revenue (gain on
asset). In the Enterprise Fund capital expenses are budgeted but at year end are booked as additions
to capitalized assets. Bond principal payments are budgeted expenses but booked as a reduction to
liability at year end. The CAFR shows fund revenues and expenditures/expenses on both a GAAP
basis and Budget basis for comparison purposes.

All of the City’s funds that are included in the CAFR and audited by the independent auditors are
appropriated. Each of the funds is listed and described below.

GENERAL FUND
The General Fund is the major operating fund of the City. It is used to account for all revenues and
expenditures except those required to be accounted for in another fund. Expenditures for General
Administration, the Municipal Court, the Fire Department, the Police Department, Public Services, Park
Maintenance, the Community Services Department, the Library, Inspections/Code Enforcement,
Animal Services, Fleet Maintenance, and the Economic Development Department, and Information
Technology are included in the City’s General Fund.

DEBT SERVICE FUND
The Debt Service Fund is used to account for the accumulation of resources for, and the payment of,
general obligation long-term debt principal and interest.

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