Reference no: EM133065008
Question - Assume the following information was derived from the fund financial statements prepared by the city of Tallahassee, Florida for the fiscal year ended September 30, 2019:
City of Tallahassee General Fund Balance Sheet (in thousands)
Assets:
Cash and cash equivalents $7,440
Due from other governments 0
All other assets 35,434
Total assets $42,874
Liabilities:
Total current liabilities $33,861
Fund balance:
Non spendable 4,390
Committed 0
Assigned 0
Unassigned 4,623
Total fund balance 9,013
Total liabilities and fund balance $42,874
City of Tallahassee General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance (in thousands)
Total revenues $329,593
Total expenditures 493,419
Excess of revenues over (under) expenditures -163,826
Other financing sources (uses):
Transfers in 148,791
Transfers out -64,566
Proceeds from sale of capital assets 1,290
Total other financing sources (uses) 85,515
Net change in fund balance -78,311
Fund balance, October 1, 2019 87,324
Fund balance, September 30, 2019 $9,013
A note to Tallahassee's financial statements reads as follows: "Fund Balance: The City Commission has established an emergency reserve policy and fund, referred to as the Deficiencies Fund, in order to meet unforeseen expenditures. The target amount per the policy is a maximum level of two (2) months of general government operating expenditures of the ensuing year's operating budget. Use of the Deficiencies Fund requires approval by the City Commission. The Deficiencies Fund is contained as a separate sub-fund within the General Fund and the balance is classified as committed fund balance within the General Fund." The notes, however, also disclose that the entire cushion was used in October 2018 when Hurricane Michael struck the city. The city also disclosed that it expended more than $84 million in response and that it expects to receive $72 million in reimbursements.
In its required reconciliation of the governmental funds balance sheet to the government-wide statement of net position, the city reports $91.2 million of long-term receivables that do "not yet meet the criteria for recognition in the governmental fund financial statements prescribed by the Governmental Accounting Standards Board."
Required -
a) Calculate the current budgetary cushion using the data as reported.
b) Using the GFOA Best Practices guideline, would the budgetary cushion be considered reasonable, too high, or too low?
c) Analysts would likely consider the $91.2 million long-term receivable as 'available' in their calculations. Calculate the budgetary cushion including the $91.2 million receivable.
d) Using the GFOA Best Practices guideline, would the adjusted budgetary cushion be considered reasonable, too high, or too low?