Capital Project Fund

PENDAHULUAN

            Fund accounting is an accounting system emphasizing accountability rather than profitability, used by non-profit organizations and governments. In this system, a fund is a self-balancing set of accounts, segregated for specific purposes in accordance with laws and regulations or special restrictions and limitations.

            The label, fund accounting, has also been applied to investment accounting, portfolio accounting or securities accounting – all synonyms describing the process of accounting for a portfolio of investments such as securities, commodities and/or real estate held in an investment fund such as a mutual fund or hedge fund. Investment accounting, however, is a different system, unrelated to government and nonprofit fund accounting.

            Nonprofit organizations and government agencies have special requirements to show, in financial statements and reports, how money is spent, rather than how much profit was earned. Unlike profit oriented businesses, which use a single set of self-balancing accounts (or general ledger), nonprofits can have more than one general ledger (or fund), depending on their financial reporting requirements. An accountant for such an entity must be able to produce reports detailing the expenditures and revenues for each of the organization's individual funds, and reports that summarize the organization's financial activities across all of its funds.

            A school system, for example, receives a grant from the state to support a new special education initiative, another grant from the federal government for a school lunch program, and an annuity to award teachers working on research projects. At periodic intervals, the school system issues a report to the state about the special education program, a report to a federal agency about the school lunch program, and a report to another authority about the research program. Each of these programs has its own unique reporting requirements, so the school system needs a method to separately identify the related revenues and expenditures. This is done by establishing separate funds, each with its own chart of accounts.

CAPITAL PROJECT FUNDS

            Capital Project Funds account for financial resources to be used for the acquisition or construction of capital facilities other than those financed by enterprise or internal service funds. The City of Mercer Island has four active capital funds. The Capital Improvement Fund and the Technology and Equipment Fund account for the City’s ongoing investment in parks, buildings, technology and equipment. The Capital Reserve Fund was created by the City Council to set aside funds for future large-scale capital projects. The Community Center Construction Fund was created to account for the costs associated with the construction of a new Community Center at Mercer View.

Capital Improvement Fund

            The Capital Improvement Fund is used to account for the City’s general government capital projects. The Real Estate Excise Tax - 1st quarter cent (REET-1) and - 2nd quarter cent (REET-2) are the main revenue sources for capital reinvestment and new capital facilities projects. Expenditures in this fund are for acquisition or replacement of the City's capital assets. Projects which have a restricted funding source (bond issue or gas tax for streets), or which are associated with an enterprise activity are accounted for in their own fund. The expenditures planned for 2007 and 2008 are described in further detail in the Capital Improvement Program section of the budget.

				2005		2006		2007		2008
	Description			Actual		Forecast		Budget		Budget
RESOURCES
Budgeted
	Beginning Fund Balance		$	0	$	1,698,755	$	1,079,900	$	0
	Property Tax			98,846		100,000		103,000		105,000
	Real Estate Excise Tax - 1			1,854,328		1,247,000		1,154,400		1,316,000
	Real Estate Excise Tax - 2			1,004,645		473,800		438,700		500,100
	General Govt / Grants / Fines			145,514		5,000		0		375,000
	Interest			57,709		0		0		0
	Interfund Transfer - Various			476,382		155,000		100,000		100,000
		Total Budgeted Resources	$	3,637,424	$	3,679,555	$	2,876,000	$	2,396,100
Not Budgeted
	Beginning Fund Balance (Reserved)			1,813,199		1,336,333		1,093,693		1,093,693
TOTAL RESOURCES			$	5,450,623	$	5,015,888	$	3,969,693	$	3,489,793
USES
Budgeted
	Capital Facilities Buildings		$	184,420	$	152,840	$	0	$	0
	Capital Facilities Parks			32		7,500		814,000		362,000
	Capital Facilities Open Space			236,398		585,730		305,000		275,000
	Capital Replacement Buildings			107,595		286,760		416,000		296,000
	Capital Replacement Parks			264,669		304,655		364,000		170,000
	Capital Repl Luther Burbank Park			274,043		131,500		608,000		905,000
	Debt Service CCMV			373,014		373,310		369,000		368,000
	Interfund Transfer - CCMV Bldg			975,000		0		0		0
	Interfund Transfer - Sewer Lake Line			0		1,000,000		0		0
		Total Budgeted Expenditures	$	2,415,535	$	2,842,295	$	2,876,000	$	2,376,000
Not Budgeted
	Ending Fund Balance			3,035,088		2,173,593		1,093,693		1,113,793
TOTAL USES			$	5,450,623	$	5,015,888	$	3,969,693	$	3,489,793

Technology and Equipment Fund

            The Technology and Equipment Fund is used to account for the City's continued investment in technology and new equipment purchases. Contributions from the General Fund are the main revenue sources for this fund. Other funds may contribute resources for specific projects. Expenditures in this fund are for acquisition of technology, new equipment and building furnishings.

				2005		2006		2007		2008
	Description			Actual		Forecast		Budget		Budget
RESOURCES
Budgeted
	Beginning Fund Balance		$	0	$	105,800	$	509,000	$	196,000
	Contributions / Grants / Misc			4,946		46,450		270,000		0
	Debt Proceeds - Fire Fleet			0		0		1,801,000		0
	Interest			37,768		0		0		0
	Interfund Transfers			250,000		482,000		265,000		250,000
		Total Budgeted Resources	$	292,714	$	634,250	$	2,845,000	$	446,000
Not Budgeted
	Beginning Fund Balance (Reserved)			1,086,313		1,197,405		810,405		614,405
TOTAL RESOURCES			$	1,379,027	$	1,831,655	$	3,655,405	$	1,060,405
USES
Budgeted
	Technology Improvements		$	63,779	$	345,500	$	357,000	$	110,000
	Phone System Replace/Improve			0		0		250,000		0
	Fire and EMAC Equipment			12,043		49,600		369,000		54,000
	NORCOMM Regional Dispatch			0		0		18,000		232,000
	Fire Apparatus Replacement			0		0		1,801,000		0
	Other Small Technology & Equip			0		117,150		50,000		50,000
		Total Budgeted Expenditures	$	75,822	$	512,250	$	2,845,000	$	446,000
Not Budgeted
	Ending Fund Balance			1,303,205		1,319,405		810,405		614,405
TOTAL USES			$	1,379,027	$	1,831,855	$	3,655,405	$	1,060,405

Capital Reserve Fund

            The Capital Reserve Fund was created by the City Council in an effort to set aside funds for future large-scale capital facility improvements. The primary source of funding for Capital Reserve is the year end cash carry forward transfer from the General Fund of revenues received in excess of budgeted amounts.

				2005		2006		2007		2008
	Description			Actual		Forecast		Budget		Budget
RESOURCES
Budgeted
	Beginning Fund Balance		$	0	$	0	$	0	$	0
	Interest			37,151		0		200,000		180,000
	Interfund Transfer - CCMV Fund			0		0		248,845		0
		Total Budgeted Resources	$	37,151	$	0	$	448,845	$	180,000
Not Budgeted
	Beginning Fund Balance (Reserved)			1,357,184		1,139,764		1,077,764		1,449,609
TOTAL RESOURCES			$	1,394,335	$	1,139,764	$	1,526,609	$	1,629,609
USES
Budgeted
	I-90 Lobbyist		$	22,887	$	62,000	$	77,000	$	77,000
	Interfund Transfer - Street Fund			231,684		0		0		0
		Total Budgeted Expenditures	$	254,571	$	62,000	$	77,000	$	77,000
Not Budgeted
	Ending Fund Balance			1,139,764		1,077,764		1,449,609		1,552,609
TOTAL USES			$	1,394,335	$	1,139,764	$	1,526,609	$	1,629,609

Community Center Building Construction Fund

            The Community Center Building Construction Fund was created in 2003 to account for the design and construction of a new Community Center at Mercer View.

            During the 2003-2004 biennium, the City Council worked to scale back and modify the design of the Community Center building, reducing the project’s budget from a 13.1 million maximum budget set in July, 2003 to the 12.4 million project budget approved August, 2004.

            On the funding side, the Council and city staff made decisions to reserve unanticipated General and REET revenues to minimize the Debt Financing required for the project. In August, 2004, the Council awarded the construction project and approved the financing plan for the project. Construction of the new Community Center was substantially complete at the end of 2005 and the Center opened for operations in December of 2005. The final project close out is scheduled for year end 2006.

				2005		2006		2007		2008
	Description			Actual		Forecast		Budget		Budget
RESOURCES
Budgeted
	Beginning Fund Balance		$	0	$	1,131,856	$	248,845	$	0
	Interest			147,429		0		0		0
	Interfund Transfer - CIP			975,000		0		0		0
		Total Budgeted Resources	$	1,122,429	$	1,131,856	$	284,845	$	0
Not Budgeted
	Beginning Fund Balance (Reserved)			7,913,933		0		0		0
TOTAL RESOURCES			$	9,036,362	$	1,131,856	$	284,845	$	0
USES
Budgeted
	Community Center Design		$	190,853	$	113,787	$	0	$	0
	CCMV Temporary Space Rentals			48,208		0		0		0
	Community Center Pre-Construction			170,190		2,748		0		0
	Community Center Construction			7,495,256		686,476		0		0
	CCMV N. Annex Improvements			0		30,000		0		0
	CCMV Dedication			0		50,000		0		0
	Interfund Transfer - Capital Reserve			0		0		248,845		0
		Total Budgeted Expenditures	$	7,904,506	$	883,011	$	284,845	$	0
Not Budgeted
	Ending Fund Balance			1,131,856		248,845		0		0
TOTAL USES			$	9,036,362	$	1,131,856	$	284,845	$	0

PENUTUP

            Capital projects funds are used to account for the construction or acquisition of fixed assets, such as buildings, equipment and roads. Depending on its use, a fixed asset may instead be financed by a special revenue fund or a proprietary fund. A capital project fund exists only until completion of the project. Fixed assets acquired and long-term debts incurred by a capital project are assigned to the government's General Fixed Assets and Long-Term Debts.