Fiscal Year 2013-2015 Special Budget Meeting

To: Honorable Mayor & City Council Subject: Kids First 3% True-Up Calculation and Adjustment of Proposed Budget for Kids First FY 2013-14 and FY 2014-15 Date: June 18, 2013 ^ Page 2 Generally Accepted/Accounting Principles ("GAAP"), and City Attorney opinions interpreting City Charter Article XIII. GAAP is the professional financial reporting standard for governmental accounting, and the basis for the City's audited annual financial statements, the Comprehensive Annual Financial Report (CAFR). The City performed the Kid's First set-aside true-up calculation of the unrestricted revenue of the General Purpose Fund based on audited financial statements of the City for FY 2009-10 and FY 2010-11 and determined that the City overpaid the Kid's First fund and, therefore, no adjustment was required to true-up the Kids First fund for FY 2009-10 and 2010-11. On the Calculation of the FY 2011-12, the City determined that it has underpaid the Kid's First Fund. The following table summarizes the budgeted 3% transfer amount and the total Kids First unrestricted revenue 3% allocation: Description FY 2009-10 Calculation Set-Aside Basis FY 2010-11 Calculation Set-Aside Basis FY 2011-12 Calculation Set-Aside Basis Unrestricted GPF Revenue Subject to Kids First! Set-Aside $379,996,801 $375,769,510 $393,517,632 Total Kids First IJnrestricted Revenue Allocation (3%) 11,399,904 11,273,085 11,805,529 Kids First Budgeted Actual Allocation (Transfer) 11,451,580 11,515,710 10,928,487 Due to / (From) Kid's First $ (51,676) $ (242,625) $ 877,042 NET Due to / (From) Kid's First FY 2010 - FY 2012: $582,741 As indicated in the table above, since the City overpaid in FY 2009-10 and then again in FY 2010-11 due to the budgeted unrestricted revenues being lower than the final actuals in each year, the City had to .adjust the overpayments in FY 2011-12, after the audit was completed. Therefore, the. City, was not late in funding the Kid's First fund per Article XIII of the City Charter, but had'actually overpaid the fund until which time the City could make the adjustment in a subsequent year when the City underpaid the fund. Since the City underpaid for FY 2011- 12, this is the first time that the City can make the necessary "true-up" to recoup the overpaid funds. As a result, this true-up calculation will fully fund the Kids First.fund for FY 2011-12.