Ordinance 023-16RECORD OF ORDINANCES
Dayton Legal Blank, Inc.
Form No. 30043
Ordinance No. 23 -16 Passed , 20
AN ORDINANCE CHANGING THE FUND TYPE CLASSIFICATIONS
OF CERTAIN FUNDS ACCORDING TO GUIDANCE ISSUED BY
THE GOVERNMENTAL ACCOUNTING STANDARDS BOARD AND
THE STATE OF OHIO AUDITOR'S OFFICE
WHEREAS, the Governmental Accounting Standards Board (the "GASB ") promulgates
generally - accepted accounting principles applicable to all governmental entities subject
to its authority in the United States of America, including the City of Dublin (the "City'7-
and
WHEREAS, the GASB has issued Statement Number 54, Fund Balance Reporting and
Governmental Fund -Type Definitions ("Statement No. 54'x, which provides definitions of
fund types for financial reporting purposes, and
WHEREAS, the Office of the Auditor of the State of Ohio issued Bulletin 2011 -004,
which provides guidance for classifying funds into the proper fund types based on GASB
Statement No. 54 and Ohio Revised Code; and
WHEREAS, the City must comply with all the provisions of GASB Statement No. 54 so
that the City may retain its eligibility to receive an unqualified Independent Auditors"
Opinion on its financial statements: and
WHEREAS, the City should adopt these changes to ensure the City is presenting its
financial statements fairly according to generally accepted accounting principles as
determined by GASB.
NOW, THEREFORE, BE IT ORDAINED by the Council of the City of Dublin, State of
Ohio, of the elected members concurring that:
Section 1. The accrued Leave Reserve Fund shall be reported with the General Fund
rather than as a special revenue fund. GASB states that "Special revenue funds are
used to account for and report the proceeds of specific revenue sources that are
restricted or committed to expenditure for specified purposes other than debt or capital
projects. The term proceeds of specific revenue sources establishes that one or more
specific restricted or committed revenues should be the foundation for a special revenue
fund." Transfers in cannot be the foundation for establishing a special revenue fund.
Since the Accrued Leave Reserve Fund is funded solely by transfers from other funds, it
shall reported with the General Fund.
Section 2. The Unclaimed Monies Fund shall be reported as part of the General Fund
rather than as an agency fund. According to the Governmental Accounting Standards
Board, an agency fund is intended to "report resources held by the reporting
government in a purely custodial capacity" (the receipt, temporary investment, and
remittance of fiduciary resources). This intent is inconsistent with the intent of the
Unclaimed Monies Fund. Ohio Revised Code Section 9.39 stipulates that if money held
in the Unclaimed Monies Fund is not claimed by its lawful owner within five years, the
money shall revert to the General Fund. Thus, any money not claimed within the five
year limit becomes general resources of the government rather than remitted to an
outside party.
Section 3. The Cemetery Perpetual Care Fund shall be reported as a permanent fund
rather than as a special revenue fund. According to the Governmental Accounting
Standards Board, a permanent fund "should be used to account for and report resources
that are restricted to the extent that only earnings, and not principal, may be used for
purposes that support the reporting government's programs - that is, for the benefit of
the government or its citizenry." The Cemetery Perpetual Care Fund was established
under Ohio Revised Code Sections 759.12 and 759.15. These Sections stipulate that the
monies received into the fund shall be held in perpetuity and only the interest earned on
Dayton Legal Blank, Inc.
Ordinance No.
23 -16
RECORD OF ORDINANCES
Form No. 30043
Passed Page 2 of 2 .20
such money shall be expended for care of the cemetery. Therefore, the Cemetery
Perpetual Care Fund shall be more properly classified as a permanent fund.
Section 4. This ordinance shall take effect and be in force in accordance with
Section 4.04(b) of the Revisedl,,,aarter.
ATTEST:
Clerk of Council
2016
Office of the City Manager
5200 Emerald Parkway � Dublin, OH 43011 -1090
C1ty of Dublin phone, 614 - 410-4400 � Fax; 614 - 410.4490
Tac Members of Dublin Ciry Council
From; Dana L, McDaniel, City Mana
Date; May 19, 2016
Initiated By; Angel L. Mumma, Director of Finance
Jerry O'Brien, Chief Accountant
Re; Ordinance No, 23-16— Changing the Fund Type Classification of
Certain Funds According to Guidance Issued by the Governmental
Accounting Standards Board and the State of Ohio Auditor's Office
Summary
The Governmental Accounting Standards Board (the "GASB ") is an independent nonprofit
organization, established by an agreement of the nationwide Financial Accounting Foundation and
various other national associations of state and local government officials, The GASB is recognized
by governments, the accounting industry, and capital markets as the official source of generally
accepted accounting principles for state and local governments in the United States, including the
City of Dublin (the "Ciry'"j,
In 2011, the GASB issued Statement Number 54� Fund Balance Reporting and Governmental Fund
Type Definitions ("'Statement Na. 54 "), Guidance therein significantly affected how individual
funds are displayed and haw fund balances of the individual funds are categorized in the City's
Comprehensive Annual Financial Report ( "CAFR'�. It also provided guidance on the classification
of funds into the various fund types (i,e, General, Special Revenue, Internal Service, Enterprise,
anA Fiduciary),
At the time GASB Statement No, 54 was implemented, an analysis of the City's funds was
performed to determine the classification of funds into the proper fund types and to determine the
proper classifications for the reporting of fund balances However, upon reconsideration ofthe
classification of certain funds into the fund types, staff has determined that three funds would be
mare appropriately reported in other fund types from those in which they are currently being
reported, The funds that staff is proposing to change are the Accrued Leave Reserve Fund, the
Cemetery Perpetual Care Fund, and the Unclaimed Monies Fund,
Accrued Leave Reserve Fund
The Accrued Leave Reserve Fund is funded solely by charges to other funds, primarily the General
Fund, far the purpose of paying out an employee's accrued leave when they separate from service
from the Ciry These charges have been reported in the past as revenue (charges for services) in
the Accrued Leave Reserve Fund and as expenditures in the funds in which payroll expenditures
are charged, According to GASB Statement No, 54, when charges for services are reported as
committed resources, they can be reported in a special revenue fund as was done with the
Accrued Leave Reserve Fund.
Ord, 23.16 — Changing Fund Type Classification
May 19, 2016
Page 2
However, since the fund is used merely to accumulate resources to make future severance
payments, there is not an actual service provided by the fund. Therefore, the inflows into the fund
are more properly classified as transfers in, According to the GASB and the Auditor of State of
Ohio, transfers in cannot be used as a foundation revenue to classify a fund as a special revenue
fund. Therefore, the proper treatment is to report the Accrued Leave Reserve Fund as committed
resources within the General Fund,
Cemete Perpetual Care Fund
The Cemetery Perpetual Care Fund is a fund established to set aside funds so that when all the
City's cemetery burial lots are sold, there are funds remaining to properly maintain all cemetery
tats in perpetuity, The Cemetery Perpetual Care Fund was established under Ohio Revised Code
Sections 759,12 and 759,15, These Sections stipulate that marries received into the fund shah be
held in perpetuity and only the interest earned an such money shah be expended for care of the
cemetery, This fund has been reported as a special revenue fund based on the commitment of
the charges for services to a specific purpose However, according to the GASB, a permanent fund
"should be used to account for and report resources that are restricted to the extent that only
earnings, and not principal, may be used for purposes that support the reporting government's
programs • that is, for the benefit of the government or its citizenry," Therefore, the Cemetery
Perpetual Care Fund should be reported as a permanent fund,
Unclaimed Monies Fund
Ohio Revised Code Section 9,39 stipulates that if a government is in possession of money that has
not been paid out according to law and the rightful owner cannot be located, the money is to be
paid into a trust fund and held until claimed by the rightful owner. If the money is not claimed
within five years, the money shall revert to the General Fund,
In the past, the Unclaimed Monies Fund has been reported as an agency fund, According to the
GASB, an agency fund is intended to "report resources held by the reporting government in a
purely custodial capacity" (the receipt, temporary investment, and remittance of fiduciary
resources) The purpose of agency funds is to hold money for outside parties and is not intended
to benefit the government,
However, any money in the Unclaimed Monies Fund not claimed within the five -year limit becomes
general resources of the government rather than remitted to an outside party, Therefore, a fund
used for unclaimed marries should be reported within the General Fund.
Recommendation
Staff recommends that Ordinance 23 -16 be adopted at the second reading�public hearing on
June 13, 2016