Page 43 - CityofSaginawFY25Budget

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 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 that are on the cash basis: Compensated
absences (accrued but unused vacation/sick leave and compensatory time) are not budgeted but
are reported as an expense in the Comprehensive Annual Financial Report. Contributed assets
are not budgeted but are booked as revenue. Depreciation and gains or losses on assets are not
budgeted but are reported 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 Comprehensive Annual Financial Report 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 Comprehensive Annual Financial Report and
audited by the independent auditors are appropriated. Each of the funds is listed and described
below.

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