Fiscal Note
The adopted 2006 Operating Budget includes $400,000 for prior year encumbrances. Since actual encumbrances at the end of 2005 totaled only $273,780, the difference of $126,220 will be available to increase the Contingent Reserve. Following adoption of this resolution, the available Contingent Reserve balance is expected to total $921,705. There is no impact on the tax levy or State Expenditure Restraint Program eligibility limits.
Title
Allocating funds appropriated in the 2006 Operating Budget for prior year encumbrances to match actual carry forward encumbrances in various departmental accounts and increasing the Contingent Reserve by $126,220.
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PREAMBLE
The City of Madison, along with other municipalities, was required to implement comprehensive new financial reporting requirements under GASB-34 for 2002 and subsequent fiscal years. One required change was the accounting treatment for "encumbrances". Encumbrances are expenditures that have been committed at the end of one budget period, but are not charged to expense or paid until the subsequent period. GASB-34 requires that the adopted budget include a provision to cover prior-year encumbrances.
The City of Madison currently includes a $400,000 appropriation for prior-year encumbrances as part of the annually adopted budget. By including an appropriation for the estimated amount of prior-year encumbrances in the adopted budget, the need for an additional appropriation at a later date is substantially reduced. Any difference between the estimated and actual carry forward encumbrances can be appropriated from, or returned to, the Contingent Reserve.
For fiscal years 2003 and 2004, actual prior-year encumbrances were less than the $400,000 budgeted, and the Contingent Reserve balance was increased by approximately $24,000 and $42,000 respectively for those years. In 2005, the remaining prior-year encumbrances were higher than budgeted, and an additional amount of $101,100 was draw...
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