Cityof Champaign, Illinois CAFR
Cityof Champaign, Illinois CAFR
Aftera thorough analysis of the 2014 Champaign City Comprehensive AnnualFinance Report, I was able to determine the city’s financialstatus. A fund according to the report is a grouping of relatedaccounts that is used to maintain and control over resources thathave been set aside for specified objectives. Champaign city’ssignificant funds include government finances which are used toaccount for the functions reported as governmental activities, andthe city maintains twenty-one individual governmental funds (Malin,& Noppe 2015).They are classified in two the general fund used to account for allactivities apart from those legally required for accounting and thespecial revenue funds which account for the specific sources ofincome, regulated or committed. Significant resources comprise ofmotor fuel fund, debt service fund, storm water management fund, thegeneral fund, the proprietary fund and Champaign public library fund. Champaign City maintains two different types of these resources.Enterprise funds which are used to report utilities presented asbusiness-type undertakings in the government-wide financialstatements. The other one is internal service funds, they amass andapportion costs internally among the city’s varied functions.Examples of such funds include the city’s assets, cash, andinvestments, receivables, taxes, interests on taxes et al. Fiduciaryfunds are the other funds for the city, they are used forjustification of resources held for the benefit of parties outsidethe government. They comprise funds such as the city’s assetsexamples funds from treasury funds, police pension, firefighter`spension, receivables, etc.
Thecity of Champaign fund balance are classified into four categories,the non-spendable which are in unspendable form, the restrictedamounts only spent for specific purposes, the committed amounts spentfor a particular purpose only determined by the city council and theassigned and unassigned values. The designated value is intended fora particular function that is neither restricted nor committed. Theunallocated costs are not included in another spendable consortium.The city’s total fund balances in the 2014 CAFR resulted fromgovernment activities, the grant revenues as it was earnedirrespective of the time it was received. It also came from the statefunds, capital outlays, depreciation expenses and disposals which arethe costs net of the depreciation accumulated that year.
Theincrease in the net pension asset also contributed in the fundbalances. Another source included the funds from the issuance oflong-term debts they provided financial resources to governmentfunds. They include decrease in the net pension obligation,refunding payments, the retirement of general obligation bonds andothers outlined in the report. The internal service funds are used bythe city to charge costs of services provided to individualresources. The city’s general fund balance decreased in the nextyear according to 2015 report (Planning,2015Inthe past year, the city had no outstanding obligation debt. However,in the past years, the debt trend has been decreasing. The city’sgeneral obligation bond that the government issues for theacquisition and construction of the capital facilities have beendeclining for Champaign city since 2005, though the trend is an upand down graph wherein some financial years it increases thendecreases, in 2015 it generally fell by 7% (Planning,2015). The city’s old landfill referred to as Old Champaign Landfillclosure, and post-closure maintenance costs contribute to the debttrend since it has a liability associated with the care.
Champaigncity has recently been issuing for debts. According to the 2014-2015financial year report, the long-term liability activity necessitatesthe city to issue debt. The long-term debt includes governmentoperations such as compensated absences, net pension liability,benefit obligation, the landfill closure and post- closure, the IPEAloans payable, the general obligation bonds and the unamortized bondpremium which result in an increase ending balances. There arebusiness-type activities debts, but their beginning balances arehigher than the ending balances (Neal, 2016). The city in last yearissued a value of the general obligation refunding bond of 2015 topay off a 2008 bond. Such refunding helps the city to save someamounts in the debt payment. In past years, the city defeated generalobligation bonds by assigning ensues of new bonds in an irretrievabletrust for the provision of all future debt service payment on oldbonds. Champaign’sbondsremain outstanding.
Champaign’scity experiences natural disasters such earthquakes that necessitaterisk management funding, one of which affects the city’s financialhealth. It ensures and accounts for losses and risk managementexpenses in two service funds, the retained risk fund, and theworker`s compensation fund (Peck,2012).Retained risk capital is the city’s risk management program forgeneral liabilities it covers funding for a range of activities likethe losses, as well as other debt types that occur. The worker`scompensation fund serves the city’s self-insured workers’reimbursement plan. There is also a claim liability which arises whenit is likely that debt has been experienced, and the amount of itsfunding can be estimated.
Anotherissue that affects the city’s financial condition is contingentliabilities (Brown, & Pennacchi, 2015). They include litigation,Champaign city is a defendant in several lawsuits and thereforerequires funding for resolution of the matters it is legally involvedin. Grants are another contingent liability, where any amountsreceivable are subject to an audit and adjustment by the grantoragencies. Any forbidden claims including those already collected maycreate a liability for the city.
Thecity participated in a joint venture in the Champaign-Urbana SolidWaste Disposal System consisted of these two cities only. Champaignis responsible for 61.8% of financial contribution to the entitywhose estimated period of running is up to 2022. Another program thecity is involved in is the HOME program. This program was establishedto provide affordable housing activities it consists of City ofUrbana, Champaign City, and Champaign County. The Department ofHousing and Urban Development guides the running of the consortium,and its regulation requires that each year’s grant funds becontractually obliged within two years of the grant award and aspending span of five years.
Thecity is a participant in the Metropolitan Computer Aided Dispatch aswell together with Urbana City, Champaign County and the Universityof Illinois. Champaign city is the lead agency thus responsible forthe administration of members. METCHAD’s operation id budgetedannually and expenses are based on a cost-sharing plan established bythe members. Champaign city sustains pension liabilities as well thatcontribute to her financial expenditure. They include police pensionschemes, firefighter`s pension plans, and other post-employmentbenefits.
Brown,J. R., & Pennacchi, G. G. (2015). Discountingpension liabilities: funding versus value(No. w21276). National Bureau of Economic Research.
Malin,J. R., & Noppe Jr, R. J. (2015). Illinois. Journalof Education Finance, 40(3),314-318.
Neal,L. (2016). Financial Markets and Cliometrics. Handbookof Cliometrics,333-352
Peck,J. (2012). Austerity urbanism: American cities under extremeeconomy. City, 16(6),626-655.
Planning,B. (2015). FY15-FY16 Budgets.