HomeMy WebLinkAbout15.F.2. Reclassification of Recreation Fund
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CITY OF SHAKOPEE
Memorandum
TO: Mayor and Council CO~JSENT
Mark McNeill, City Administrator
FROM: Gregg Voxland, Finance Director
SUBJ: Recreation Fund Reclassification
DATE: May 17 , 2004
:Introduction
The Recreation Fund is currently classified as an enterprise fund or
"business type" activity. It is requested to change its classification
to a "governmental type" activity.
Background
The Recreation Fund was established when the Community Center was
built . The main reason was to be able to separately show the revenues
and costs of the recreation function. Initially, operating revenues
were more than the transfer from the General Fund. However, in recent
years, the transfer from the General Fund (taxes) has provided more
than 50% of the funding needed for the operation. Therefore, the
rational for having this classified as an enterprise fund (supported by
charges for services) has largely gone away.
As a result of going through the implementation of GASB 34 (accounting
rule changes) and due to the funding status as cited above, I am
requesting that Council change the classification of the Recreation
Fund to one of two options.
1. Pull the operation back into the General Fund as a separate.
division. We will still account for the revenues and costs of
the operation, including depreciation, just as we do now.
2. Establish the operation as a Special Revenue Fund. This
option still keep it as a separate fund and more clearly shows
the financial status of the operation. We will still account for
the revenues and costs of the operation, including depreciation,
just as we do now.
Either option will also make it easier for staff to account for and
reconcile records under the new accounting rules.
Recommendation
I feel that a division in the General Fund is technically more correct
and would be somewhat easier to work with accounting wise. However,
having the activity as a special revenue fund is common and given
previous council's action to separate it as an enterprise fund and
recent discussions, the second option is recommended.
Action Requested
Move to reclassify the Recreation Fund from an enterprise fund to a
special revenue fund.
Gr~Xland
Finance Director
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