Page 20 - KennedaleFY24AdoptedBudget

USING THIS DOCUMENT

The budget is created on a fund basis with similar activities, goals, and funding sources grouped
within each area. Each fund is self-balancing and is accounted for on its own. The General
Fund, which encompasses most operational activities, is primarily funded by maintenance and
operation ad valorem (property) tax, sales tax, and fees, and contains departmental line item
expense budgets.

The Debt Service Fund budgets interest and sinking property taxes for payment of long-term
bonds and notes.

The Utility Funds Section contain budgets for Stormwater, Water/Sewer, Water Impact, and
Sewer Impact Fee Funds.

The financial reporting entity (the city government) includes all funds of the primary
government (i.e., the City of Kennedale as legally defined), as well as each of its component
units. Component units are legally separate entities for which the primary government is
financially accountable. Discretely presented component units are legally separate entities and
not part of the primary government's operations. The Kennedale Economic Development
Corporation (KEDC) is included in the budget and account records as a discretely presented
component unit.

Other Funds include any fund not mentioned above including Capital Funds, Court Funds,
Special Grant Funds, New Hope TIF/TIRZ, Hotel Occupancy Tax Fund, and Special Police Funds.

It is the goal of operational funds like the General Fund, Street Fund, and Water Sewer Fund, to
have revenue that exceeds expenditures to maintain a healthy reserve balance. Leadership
aims to achieve and maintain an unassigned fund balance in the General Fund equal to 18%
(with a goal of 25%) of budgeted annual expenditures to be used for unanticipated costs,
unforeseen revenue fluctuations, or other adverse circumstances, as provided for in the Fund
Balance Policy, a copy of which is included in the Appendix Section.

The City's accounting records for general governmental operations are maintained on a
modified accrual basis, with the revenues being recorded when available and measurable and
expenditures being recorded when goods or services are received and when liabilities are
incurred. Accounting records for the City's utilities (example the Water Sewer Fund) are,
instead, maintained on an accrual basis. In developing and maintaining the City's accounting
system, consideration is given to the adequacy of the internal control structure. Internal
accounting controls are designed to provide reasonable - but not absolute - assurance
regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and
(2) the reliability of financial records for preparing financial statements and maintaining
accountability of assets. The concept of reasonable assurance recognizes that: (1) the cost of a
control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and

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