PURPOSE

The purpose of this staff report is to formally submit the Fiscal Year End 2001-2002 Comprehensive Annual Financial Report (CAFR) to the City Council.

The City Council engaged an independent certified public accounting firm to perform an annual audit of the City of Burbank and it�s component units. The results of the audit performed are formally published in the CAFR.

Fiscal 2001-02 is the first year that the City of Burbank has reported the annual financial results under the new reporting model required by the Governmental Accounting Standards Board Statement No. 34 (GASB 34), Basic Financial Statements-and Management�s Discussion and Analysis (MD&A)-for State and Local Governments. Because this reporting model changes significantly both the recording and presentation of financial data, the CAFR is significantly different than in previous years. (Discussed in the Analysis below).

The CAFR will be submitted for a national achievement award to the Government Finance Officers Association (GFOA). In order for a City to earn this award, the City must publish an easily readable and efficiently organized CAFR, whose contents conform to the standards of the award programs. This report must satisfy both generally accepted accounting principles and applicable legal requirements. This award is valid for a period of one year only. The City has received this award for 18 consecutive years, and staff believes that the report submitted to the City Council will continue to conform to the standards established by this award program.

Additionally, the CAFR is sent out to numerous financial institutions in order to comply with various financial and subsequent bond disclosure requirements.

The overall financial picture of the City as presented in the CAFR, no longer contains the "Combined Balance Sheet", the "Combined Statement of Revenue, Expenditures and Changes in Fund Balances-All Governmental Fund Types", and the "Combined Statement of Revenues, Expenses, and Changes in Retained Earnings-All Proprietary Fund Types". Instead, the statements are presented pursuant to GASB 34 on a Government Wide basis, which are designed to provide readers with a broad overview of the City�s finances, similar to a private-sector business. These statements show the June 30, 2002 fiscal year balances and overall results of operations for the period then ended, for all funds of the City, Redevelopment Agency, Housing Authority, Parking Authority, the Burbank Community Services Fund, and Youth Endowment Services (YES) Fund. The new statements are as follows:

• The statement of net assets presents information on all of the City�s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. One major component of this statement is worth noting. For the first time, with the adoption of GASB 34, the City of Burbank has inventoried, valued, recorded, and is depreciating general government infrastructure assets (e.g., roads, easements, bridges, sidewalks, storm drains, etc) for financial reporting purposes.
• The statement of activities presents information showing how the City�s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation and sick leave).

Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental actives). The governmental activities of the City include general government, public safety, public services, culture and recreation and interest on long-term debt. The business-type activities of the City include operations of the electric, water, wastewater, solid waste utilities, as well operating the golf course.

Another new feature of the GASB 34 format is the Management�s Discussion and Analysis (MD & A). This analysis starts the financial section of the CAFR and serves as an executive summary. Generally accepted accounting principles (GAAP) requires that management provide this narrative introduction, overview and analysis to accompany the basic financial statements. The letter of transmittal, which precedes the MD & A in the introductory section, is designed to compliment the MD & A and should be read in conjunction with it. The MD & A is found immediately following the report from the independent auditors.

Overall, the new GASB 34 reporting model attempts to accomplish the following:

• Assess the finances of the government in its entirety, including the year�s operating results. This can be found in the MD & A, and the Statement of Activities.
• Determine whether the government�s overall financial position improved or deteriorated. This is discussed in the MD & A, and presented in the Statement of Net assets.
• Evaluate whether the government�s current-year revenues were sufficient to pay for current-year services. This is discussed in the MD & A, and presented in the Statement of Activities.
• See the cost of providing services to its citizenry. This is broken down into functions and programs in the Statement of Activities. Additionally, this is discussed in the MD & A.
• See how the government finances its programs � through user fees and other program revenues versus general tax revenues. This is presented in the Statement of Activities and discussed in the MD & A.
• Understand the extent to which the government has invested in capital assets, including roads, bridges, and other infrastructure assets. The Statement of Net Assets presents this data, and details are discussed in the MD & A.

Following the government-wide statements in the CAFR, a Balance Sheet, and Statement of Revenues, Expenditures and Changes in Fund Balances are presented for all major and non-major governmental funds. This categorization of major and non-major is another new feature of GASB 34. A major fund is one of material significance and is determined through prescribed calculations. The General Fund is always a major fund by definition. Other governmental funds can be declared major funds by management due to other factors, even if they fail the qualifications resulting from the calculations. If a fund is not a major fund, then it is considered a non-major fund, which are all combined together for presentation. Reconciliations between these governmental statements and the government wide statements are also presented, as well as a budget to actual comparison for the General Fund.

Proprietary fund statements follow the governmental. Included here are the Statement of Net Assets, the Statement of Revenues, Expenses and Changes in Fund Net Assets, and the Statement of Cash Flows. As with the governmental funds, these are also broken into major and non-major fund categories. All of these statements are followed by the Notes to the Basic Financial Statements.

The next two sections of the CAFR provide statements for each individual non-major governmental fund, as well as the internal service funds. The governmental funds are presented in their various categories: special revenue funds, debt service funds, and capital project funds.

The last section of the CAFR, which is unaudited, contains statistical data about the City of Burbank. All of the tables and schedules contain numerous facts about the City, many for the last 10 years. This includes such things as population figures, principal taxpayers, and assessed valuations of taxable property.

None.

Staff recommends that the City Council note and file the Fiscal Year End 2001-02 Comprehensive Annual Financial Report.

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