FY2022

PREPARATION OF THE FINANCIAL PLAN

Introduction This Three-Year Financial Plan is for fiscal years 2021 through 2023. The Financial Plan includes the current year revised budget (fiscal year 2021), the one-year annual budget as required by Iowa Code (fiscal year 2022), and an additional projection year (fiscal year 2023) as a planning tool. The City’s fiscal year begins on July 1 and ends June 30. The purpose of the overview is to disclose the basis on which the financial plan has been prepared. The role of a government's operating budget differs from that of a private business. Budgets are an important internal planning tool for business, but they also play an external role for governmental entities. A multi-year financial plan informs parties inside and outside government of future objectives and provision of services to its constituents. The Three-Year Financial Plan also permits a more comprehensive review of the City’s financial condition, allowing analysis of current and future needs and requirements. During preparation of the plan, careful review is made of property tax levy rates, utility and user fee requirements, ending cash balances by fund, debt service obligations, bond financing needs, capital outlay for equipment purchases, and major capital improvement projects. Long range financial plans are developed for all major funds, debt service obligations, capital improvement projects, and other areas that have been identified as areas of risk, need, or general prudence. This document contains operating budgets for the governmental funds: general, special revenue, debt service, capital project and permanent funds. It also includes budgets for the proprietary funds: enterprise and internal service funds. Internal service fund activities are considered non-budgetary in that they are not formally appropriated, reported to the State of Iowa, or included in the adopted budget resolution approved by City Council each year. This is in accordance with the State’s filing requirements. Budget projections are summarized by major revenue and expenditure categories within each division. A separate multi-year Capital Improvements Program (CIP) shows projected capital revenues and expenditures for years 2021 through 2025. Basis of Accounting The modified accrual basis of accounting has been used for preparation of the City’s fiscal year 2022 budget for all funds and fund types including proprietary funds. The modified accrual basis of accounting used in the preparation of the fiscal year 2022 budget is similar to the accounting basis used in the City’s Annual Report for the governmental funds, except for the treatment of administrative chargebacks, UniverCity property and loans, interfund loans, loan repayments, and same fund transfers. All of the City’s governmental funds are accounted for using the modified accrual basis of accounting. The modified accrual basis of accounting uses a current financial resources measurement focus, which generally includes only current assets and current liabilities on

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