HomeMy WebLinkAbout2003 11 10 Informational 303 Solid Waste Fund
lllO03_COMM_ADD_ON_INFORMATIONAL_303_S01id_ Waste]und
Page 1 of3
COMMISSION AGENDA
ADD-ON
ITEM 303
CONSENT
INFORMATIONAL X
PUBLIC HEARING
REGULAR
November 10. 2003
Meeting
MGR.A IDEPT
Authorization
REQUEST: The City Manager wishes to respond to Commission inquiries regarding
the Solid Waste Fund.
PURPOSE:
This item is needed to respond to inquiries made by the Commission related to the Solid
Waste Fund.
CONSIDERATION:
In response to inquiries staff has received regarding the Solid Waste Fund I am providing
you with a copy of the Solid Waste Rate Resolution, and the last audited statement of the
fund year ending September 30, 2002.
On February 10, 1997 the City Commission adopted Resolution 812 setting out the rate
structure for the solid waste.
The Solid Waste Fund is set up in accordance with Generally Accepted Accounting
Principle (GAAP), to account for all residential transactions related to residential solid
waste collection and disposal in Winter Springs. This fund is audited every year. The
fund does not account for commercial solid waste and collection due to the fact that the
contractor bills and collects commercial accounts. The City's governance of commercial
accounts is limited to setting rates.
111003_COMM_ADD_ON_INFORMATIONAL_303_S01id_ Waste]und
Page 2 of3
In addition to setting out rates the resolution also sets out the following allocation of
revenues received by the fund.
Solid Waste Contractor Collection Payments
Solid Waste Contractor Disposal Payments
Sub- Total
$7.55
4.10
$11.65
General Fund Customer Service Payments (Billing and Accounting)
General Fund Franchise Fee Payments (for any General Fund purpose)
Sub- Total
$0.65
0.35
$1.00
Rate Stabilization
$1.03
Total Allocations
$13.68
As shown in the FY02 Audit the following transactions occurred consistent with the rate
resolution.
$1,549,073 was collected from residential customers
$1,316,050 was paid for collection and disposal charges.
$108,000 Customer Service and Franchise Fees were transferred to General Fund.
$125,023 was accumulated to Fund Reserves for rate stabilization.
As shown in the audit there was a total of $602,220 in reserves in the Solid Waste Fund as of
September 30, 2002. It is estimated that these reserves have grown to approximately $660,000
at the close of fiscal period ending September 30,2003.
The reserves for off setting future rate increases has grown faster than estimated due to higher
than anticipated growth in customer base and less than expected increases in cost. Based upon
reserves accumulated to date it appears that stable rates will be possible considerably beyond
the nine year projection. However, this will not be known until a new solid waste contract is
awarded in 2006.
The National Committee on Governmental Accounting (NCGA) which establishes standards
for Governmental accounting in their publication "Governmental Accounting, Auditing, and
Financial Reporting", and Generally Accepted Accounting Procedures (GAAP) establishes that
special revenue funds may be used "to account for the proceeds of specific revenue sources
(other than for major capitol projects) that are legally restricted to expenditures for specified
purposes." The key work here is "may". "The use of a special revenue funds is almost always
permitted rather than required. That is, governments do not have to use a special revenue
fund."
111003 COMM ADD ON INFORMATIONAL 303 Solid Waste Fund
- - -- - - - -
Page 3 of3
The City of Winter Springs uses a special revenue fund for residential solid waste proceeds due
to the fact that it has a legally binding resolution (Resolution 812) governing the use of the
proceeds.
In conclusion, the Solid Waste Fund is administered in accordance with the Solid Waste Rate
Resolution, and NCGA and GAAP Special Revenue Fund Standards. Since the fund is
governed by Resolution 812, it is my opinion that the utilization of revenues will have to be
consistent with the resolution. Therefore, funds may not be utilized for any governmental
purpose inconsistent with the resolution. Therefore, if the City Commission desires to utilize
Solid Waste funds for any purpose other than those set out in the rate resolution, it is my
opinion that the Commission would need to amend the resolution.
FUNDING: N/A
RECOMMENDATIONS: N/A
ATTACHMENTS:
Attachment "A"
Attachment "B"
Resolution Number 812.
Excerpt from Governmental Accounting, Auditing, and Financial
Reporting published by the National Committee on
Governmental Accounting (NCGA).
Excerpt FY 02 Audit Solid Waste Fund Statement
Attachment "C"
COMMISSION ACTION:
Attachment "A"
Resolution Number 812
~--
RESOLUTION NO. 812
A RESOLUTION OF THE CITY. OF WINTER SPRINGS,
FLORIDA AMENDING RESOLUTION NO. 721, THE SOLID
WASTE COLLECTION RATE RESOLUTION OF THE CITY OF
\VINTER SPRINGS, FLORIDA, CONFLICT, SEVERABILITY
AND EFFECTIVE DATE.
WHEREAS, The City Commission of the City of Winter Springs, Florida,
adopted Resolution No. 721 the Solid Waste Collection Rate Resolution, and
WHEREAS, Ordinance No. 537 as amended requires the rates to be set by
Resolution, and
WHEREAS, the City desires to establish a new rate structure with its Franchisee,
NOW THEREFORE, the City Commission of the City of Winter Springs,
Florida hereby resolves that:
Section I:
Section One of Resolution No. 721 is amended to read as follows:
a) Residential Collection "Contractor Rates" shall be as described in Table
I attached.
b) Residential "Customer Rates" shall be as described in Table II attached.
Ii
Ii
II
j
I
I
Section IT: Section Two of Resolution No. 721 is amended to provide for
c<,?mmercial rates provided in Table III attached.
-
Section ill: Any Resolution in conflict with the provisions of this Resolution
are hereby expressly repealed to the extent of said conflict. .
Section IV: This Resolution shall take effect upon passage, adoption and effect
of Ordinance No. 649.
Passed and adopted this }V tJ.. day of February ----J 1997.
C
ATTEST:
~~~
~ ity Clerk
TABLE I
Solid Waste Collection
Contractor Rates
Effective March 1, 1997
TWICE WEEKLY GARBAGE COLLECTION
ONCE WEEKLY YARD TRASH COLLECTION
ONCE WEEKLY RECYCLABLES COLLECTION
TOTAL COLLECTION (1)
$4.64
$1.33
$1.58
$7.55
DISPOSAL (2)
$4.10
TOTAL COLLECTION AND DISPOSAL
$11.65
(1) DISPOSAL RATES ARE 100% PASS THROUGH AND SHALL BE ADJUSTED
ACCORDINGLY UPON CHANGES IN LAND FILL TIPPING FEES.
(2) BEGINNING MARCH 1, 1998 AN ANNUAL C.P.I. ADJUSTMENT NOT TO EXCEED
2.5% WILL BE APPLIED TO THE COLLECTION RATE.
\. '3 (, ~ .\-o,^" \,€n.. '\ €"'- '<'L ve<L ,^-au- ':.<c ,^'C\. ~
..t
TABLE II
SOLID WASTE COLLECTION
CUSTOMER RATES
SOLID WASTE COLLECTION
SOLID WASTE DISPOSAL
CUSTOMER SERVICES
FRANCHISE FEE
RATE STABILIZATION (1)
TOTAL CUSTOMER RATE
(1) THE RATE STABILIZATION COMPONENT OF THE RATE WILL BE REDUCED
AS THE C.P.1. ADJUSTMENTS ARE MADE AND IF INCREASED LANDFILL
DISPOSAL FEES ARE EXPERIENCED.
\ l~
:.--. -'"-
$7.55/
$4.10 ./
$0.65
$0.35
$1.03
$13.68
TABLE rloI
. -.
-
CITY OF WINTER SPRlNGS
COMMERCIAL RATES
. lC. '.J(....I EFFECTIVE MARCH 1, 1997
+ f''- ---:> IX 2X JX 4X 5X 6X
:.,'t'- -1 2yd ) 1. 70 63.39 95.07 126.78 158.48 190. 17
3yd 47.54 95.08 142.62 190,16 237.70 285.24
4yd 63.39 126.78 190.17 253.56 316:95 380.34
6yd 95.03 190.16 285.2<1 J80.32 475.40 570.48
8yd 126.78 253.56 380.34 507.12 633.90 760.68
Whls.6.00/mrh, Locks - 2.50 each/IS.OO max, Gales - 2.50 each/I 5.00 rnax
Roll-offs: 20 = $130.00 30::; $140.00 40:::; $155.00 plus dump $25.00 delivery
NOTE: BEGINNING MARCH 1, 1998 AN ANNUAL C.P.I. ADJUSTMENT NOT TO EXCEED
2.5% WILL BE APPLIED TO THE COLLECTION DATE.
l' '7
x<
(0
Attachment "B"
Excerpt From
National Committee on Governmental
Accounting (HCGA)
GOVERNMENTAL ACCOUNTING, AUDITING, AND
FINANCIAL REPORTING
18 GOVERNMENTAL ACCOUNTING, AUDITING, AND FINANCIAL REPORTING
General fund
The general fund is the chief operating fund of a state or local government.
GAAP prescribe that the general fund be used "to account for all financial
resources except those required to be accounted for in another fund."6 That
is, it is presumed that all of a government's activities are reported in the
general fund unless there is a compelling reason to report an activity in
some other fund type. This guidance is a practical application of the num-
ber of funds principle.
There are at least three compelling reasons to account for a particular
activity in some type of fund other than the general fund:
· GAAP requirements. In certain instances, GAAP require the use of
another fund type. For example, GAAP expressly require that the
pension (and other employee benefit) trust fund type be used to
report resources that are required to be held in trust for the members
and beneficiaries of defined benefit pension plans, defined contribu-
tion plans, other postemployment benefit plans, or other employee
benefit plans.7
· Legal requirements. There may be legal requirements that a certain
fund type be used to account for a given activity. A government may
be legally required, for instance, to establish a debt service fund to
account for debt service payments on tax-supported bonded debt,
even though the use of a debt service fund may not be required by
GAAP in such circumstances.
· Financial administration. The deplands of sound financial administra-
tion may require the use of a fund other than the general fund. For
example, a government may find it advantageous to set up a separate
fund to account for its management of escheat assets, as specifically
permitted by GAAP,s even though it is notrequired to do so.
GAAP prescribe that a government report only one general fund.9 If a
separate legal entity's data are blended with those of the government, the
general fund of the separate legal entity should be reclassified as a special
revenue fund.1o
Often certain revenue sources are set aside for a specific purpose. For exam-
ple, a government may levy a tax on gasoline with the express purpose of
using the proceeds to finance road maintenance and repair. Similarly, legal
restrictions on grant proceeds often require that they be spent only for spec-
ified purposes. GAAP provide that special revenue funds may be used "to
account for the proceeds of specific revenue sources (other than . . . for
major capital projects) that are legally restricted to expenditure for speci-
fied purposes."n In practice, this definition encompasses legal restrictions
imposed by parties outside the government as well as those imposed by the
governing body.
Special revenue funds
, NCGA Statement 1, paragraph 3.
7 GASB Statement No. 34, paragraph 70.
· GASB Statement No. 34, paragraph 72.
· GASB Statement No. 14, The Financial Reporting Entity, paragraph 54.
10 The term component unit is used to describe a separate legal organization that must be included within
a government's financial report because of the nature of its relationship to the government (i.e., eco-
nomic substance taking precedence over legal form). A blended component unit is one whose funds are
treated as funds of the government with which it is included. A full discussion of component units and
the role they play in defining the financial reporting entity can be found in chapter 4.
11 NCGA Statement 1, paragraph 3.
i
i
/
L.
l" ~.
'.I' I
THE GOVERNMENTAL FINANCIAL REPORTING MODEL 19
Jeht serpiCI! J~mds
The use of a special revenue fund is almost always permitted rather than
required. That is, governments do not have to use a special revenue fund
for any or all of the situations that meet the definition just cited. Indeed,
several of the nation's largest local governments use no special revenue
funds at all, even though they have numerous grants and earmarked reve-
nues that meet the definition of a special revenue fund. As noted, how-
ever, GAAP do require the use of a special revenue fund to account for the
general fund of a.legally separate entity (component unit) that is blended
with the government.12
Special revenue funds are very common even though their use is essen-
tially voluntary. The popularity of special revenue funds seems to reflect as
much a desire to avoid including restricted revenues within the general
fund as to provide separate information on the sources and applications of
restricted resources.
In addition, GAAP require that states use either a special revenue fund
or the general fund to account for their administration of the federal food
13
stamp program.
Often governments set aside resources to meet current and future debt ser-
vice requirements on general long-term debt. GAAP permit the use of debt
service funds "to account for the accumulation of resources for, and the
payment of, general long-term debt principal and interest.,,14
The use of a debt service fund normally is permitted rather than
required. There are, however, two specific instances when GAAP require
the use of a debt service fund rather than the general fund or some other
type of fund. First, the use of a debt service fund is required if legally man-
dated. Second, GAAP prescribe the use of a debt service fund "if financial
resources are being accumulated for principal and interest payments
. . fu "IS
maturmg m ture years. "
Of course, all debt that has not matured by the end of the fiscal year can
be said to be maturing in future years. Yet, it was clearly not intended that
the use of a debt service fund be required in situations involving little more
than the accumulation,of resources for debt service payments due early in
the subsequent year. Rather, this provision generally has been interpreted
to apply only to accumulations of resources in excess of a full year's princi-
pal and interest payments.16
It does not follow from the decision to establish a debt service fund that
all debt service payments related to general long-term debt need be
accounted for in that fund. Rather, debt service payments that do not
involve the advance accumulation of resources, such as capital leases, com-
monly are accounted for in the general fund or in a special revenue fund.
Care should be taken in applying the number of funds principle to debt
service funds. Sound financial management requires that a government
12 GASB Statement No. 14, paragrilph 54.
13 GASB Statement No. 24, Accounting and Financial Reporting for Certain Grants and Other Financial Assis-
tance, paragraph 6.
.. NCGA Statement 1, paragraph 3.
l' NCGA Statement 1, paragraph 30.
16 Governments may, however, voluntarily establish debt service funds to account for accumulations of
resources for payments due early in the subsequent fiscal year. In practice, governments sometimes
budget and accumulate resources in the current period for debt service payments due early in the subse-
quent period in order to avoid the need for short-term borrowings. A debt service fund may be llseful to
account for accumulations of resources in sllch cases.
Attachment "c"
Excerpt
FY 02 Audit
SOLID WASTE SPECIAL REVENUE FUND
CITY OF WINTER SPRINGS, FLORIDA
COMBINING STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES.
NONMAJOR GOVERNMENTAL FUNDS
For The Year Ended September 30, 2002
Revenues:
Taxes and special assessments
Licenses and permits
Intergovernmental revenues
Charges for services
Fines and forfeitures
Investment income
Miscellaneous
Total revenues
:ipecla evenue
Electric Transportation
Streetlighting Solid Waste Franchise Impact
Fund Fund Fee Fund Fee Fund
$ - $ - $ 1,251,069 $ -
- - - 192,095
- - - -
.7,432 1,549,073 - -
- - - -
4 - . 9,996 28,210
- - - -
7,436 1,549,073 1 261 065 220,305
7,619 .1,316,050 291 -
- - - -
- - - 570,410
- - - -
- - - -
- - - -
- - - -
- ~ - -
- - - -
7,619 1,316,050 291 570,410
..
(183) 233,023 1,260774 (350,105)
- - - -
(1,130) (108,000) . (1,260774) -
(1,130) (108 000) (1,260774) -
(1,313) 125,023 - (350,105)
3,398 477,197' - 1,607,010
- - - -
3,398 477 197 - 1,60'Z,010
$ 2,085 $ 602,220 $ - $ 1,256,905
S . IR
Expenditures:
Current:
General government
Public safety
Physical environment
Culture and recreation
Debt Service:
Principal retirement
Interest and fiscal charges
Capital outlay:
General government
Physical environment
Culture and recreation
Total expenditures
Excess (Deficiency) of
Revenues over Expenditures
Other Financing Sources (Uses):
Operating transfers in
Operating transfers oUt
Net other financing sources (uses)
Net Change In Fund Balances
Fund Balances - Beginning:
As previously reported
Prior period correction
As restated
Fund Balances - Ending
/
./
../