Page 37 - City of Mansfield FY22 Operarting Budget

The operating budget includes a balanced financial plan for all funds for fiscal year 2021-2022 and
forecasts the results of operations by fund for the period. The effect of the Capital Improvement Program
upon operations is reflected in the Capital Projects Fund. The operating budget includes fund summaries
and presentations by City operating departments without regard to fund. Each division is divided into
operating departments, and a budget summary by department is included for each division. Performance
measures are incorporated for each department within each division.

The Capital Project Fund is presented on a budgetary basis. State Law requires an adequate budget to pay
for the entire construction contract and appropriated in the period in which the contract is entered;
therefore, expenditures are presented on a budgetary basis as opposed to cash flow basis.

Funding sources for the Capital Improvement Program are also presented on a budgetary basis. The
revenue sources are presented in the period that the funding will be realized in order to provide continuity
between the operating budget and the capital budget. As a result of presenting on a budgetary basis,
funding sources may not equal budgeted expenditures in each period, creating a positive fund balance as
cash accumulates for larger expenditures in later years.

BASIS OF BUDGETING AND ACCOUNTING

The operating budget is developed by fund using Generally Accepted Accounting Principles (GAAP),
except that depreciation and amortization are not budgeted. The accounting and financial reporting
treatment applied to a fund is determined by its measurement focus. All governmental funds are
accounted for using a current financial resources measurement focus. All proprietary funds are accounted
for on a flow of economic resources measurement focus.

Governmental Fund Types

Governmental funds are accounted for using the modified accrual basis of accounting. The modified
accrual basis is a combination of cash and accrual accounting in that expenditures are immediately
incurred as a liability while revenues are not recorded until actually received or are “measurable” and
“available” for expenditure. Under the modified accrual basis, revenues and other financial resource
increments are recognized when they become susceptible to accrual, that is, when they become both
measurable and available to finance expenditures of the current period. "Measurable" means that
amounts can be reasonably determined within the current period. "Available" means that amounts are
collectible within the current period or soon enough thereafter to be used to pay liabilities of the current
period.

Proprietary Fund Types

Proprietary funds are budgeted on a full accrual basis. Revenues are recognized in the accounting period
in which they are earned, and expenses are recognized in the period incurred.

The following chart summarizes the basis of budgeting for the City’s major funds by method of
accounting.

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