ACFR - FY2020 5-28-21 FINAL - Flipbook - Page 63
NOTES TO FINANCIAL STATEMENTS
CITY OF EUSTIS, FLORIDA
(Continued)
Note 1 - Description of Funds and Summary of Significant Accounting Policies (Continued)
Assets, Liabilities and Fund Equity (Continued)
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Deferred Outflows and Inflows of Resources
In addition to assets, the statement of financial position reports a separate section for
deferred outflows of resources. This separate financial statement element, deferred
outflows of resources, represents a consumption of net position that applies to a future
period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The deferred outflows of resources reported in the
City’s statement of net position represent differences between expected and actual
economic experience, changes in actuarial assumptions, the net difference between
projected and actual earnings on investments, changes in the proportion and
differences between the City’s contributions and proportionate share of contributions,
and the City’s contributions subsequent to the measurement date, relating to the City’s
defined benefit pension plans. The city also has deferred outflows of resources due to
the implementation of GASB 75 related to the OPEB Plan. These amounts will be
recognized as expenses in future years.
In addition to liabilities, the statement of financial position reports a separate section for
deferred inflows of resources. This separate financial statement element, deferred
inflows of resources, represents an acquisition of net position that applies to a future
period(s) and so will not be recognized as an inflow of resources (revenue) until that
time. The deferred inflows of resources reported in the City’s statement of net position
represent the difference between expected and actual economic experience and
changes in the proportion and differences between the City’s contributions and
proportionate share of contributions relating to the City’s defined benefit pension plans.
The city also has deferred inflows of resources due to the implementation of GASB 75
related to the OPEB Plan. These amounts will be recognized as reductions in expenses
in future years.
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Fund Balances
The City adopted a policy that will set aside funds for the purpose of maintaining
sufficient working capital. This is approximately equal to two to three months of
operating expenses. The 25% balance set aside will be calculated as a percentage of
normal operating expenses not inclusive of debt service, capital outlay and other
financing uses. This amount is required to cover short-term cash flow variations,
economic downturns, and emergencies. As part of the annual budget process, the City
Commission will also approve an amount to be set aside for a contingencies such as
catastrophic event or unforeseen losses through insurance or litigation.
The City has classified governmental fund balances as follows:
Non-spendable: This classification includes amounts that cannot be spent because
they are either (a) not in spendable form or (b) are legally or contractually required to
be maintained intact. The City has donations to the Library Trust Fund, which must
maintain the principal. Only the interest earnings may be used.
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