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HomeMy WebLinkAboutCC 12-02-2025 Item No. 11 OpenGov Budget Format Review_Supplemental ReportCC 12-02-2025 #11 OpenGov Budget Format Review Supplemental Report 1 ADMINISTRATIVE SERVICES DEPARTMENT CITY HALL 10300 TORRE AVENUE • CUPERTINO, CA 95014-3255 TELEPHONE: (408) 777-3220 CUPERTINO.GOV CITY COUNCIL STAFF REPORT SUPPLEMENTAL 1 Meeting: December 02, 2025 Agenda Item #11 Subject: OpenGov Budget Format Review Presentation and Finalized Recommendations Recommended Action: a.Receive Budget Format presentation as outlined in the Budget Format Implementation Action Plan (IAP) recommendation numbers 15, 17, 18,19, and 30 b.Approve OpenGov budget format recommendations Staff’s responses to questions received from councilmembers are shown in italics. Q1: I do support the request to put the blackberry farm pool/picnics, and the senior center as their own separate enterprise funds. It's true that such requests have been made repeatedly over the years. How hard is it to do it? Does it require a Council vote? Staff Response: You are correct that the request to establish separate enterprise funds for Blackberry Farm Pool/Picnics and the Senior Center has come up several times over the years. The reason it has not been implemented is that these activities do not meet the definition of an enterprise fund under Governmental Accounting Standards Board (GASB) guidance. GASB Codification Section 1300.109 states that an activity must meet at least one of the following criteria to be reported as an enterprise fund: •It is financed with debt secured solely by the revenues of that activity. •Laws or regulations require the activity to recover its full costs, including capital costs, through fees and charges. •The activity’s pricing policy is designed to recover its full costs, including capital costs. Blackberry Farm Pool/Picnics and the Senior Center do not meet any of these criteria. Their fees do not recover full operating and capital costs, they are not legally required to do so, and they are supported in large part by the General Fund. This is fundamentally different from activities like the golf course, which has distinct operations and cost-recovery requirements that align with enterprise 2 fund criteria. If the intent is simply to understand the full cost of providing these services and compare those costs to the revenue generated, that analysis is already presented each year in the City’s operating budget. The budget clearly reflects total costs, total revenues, and the degree of General Fund subsidy required. That transparency reinforces why these activities would not be appropriate for enterprise fund reporting. For reference, the relevant GASB codification text is included below: Governmental Accounting Standards Board (GASB) Codification, Part I, Section 1300, paragraph .109 is: Enterprise funds may be used to report any activity for which a fee is charged to external users for goods or services or fiduciary activities that have the characteristics in paragraph .116 of this section. Activities are required to be reported as enterprise funds if any one of the following criteria is met. Governments should apply each of these criteria in the context of the activity's principal revenue sources.4 a. The activity is financed with debt that is secured solely by a pledge of the net revenues from fees and charges of the activity. Debt that is secured by a pledge of net revenues from fees and charges and the full faith and credit of a related primary government or component unit—even if that government is not expected to make any payments—is not payable solely from fees and charges of the activity. (Some debt may be secured, in part, by a portion of its own proceeds but should be considered as payable "solely" from the revenues of the activity.) b. Laws or regulations require that the activity's costs of providing services, including capital costs (such as depreciation5 or debt service), be recovered with fees and charges, rather than with taxes or similar revenues6. c. The pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service).7 4These criteria do not require insignificant activities of governments to be reported as enterprise funds. For example, state law may require a county’s small claims court to assess plaintiffs a fee to cover the cost of frivolous claims. However, taxe s, not fees, are the principal revenue source of the county’s court system, and the fees in question cover only the cost of frivolous small claims court cases. In this case, the county would not be required to remove its court system or the small claims court activity from its general fund and report it in an enterprise fund. Conversely, a state department of environmental protection regulation may require a water utility to recover the costs of operating its water plant, including debt service costs, through charges to its customers—the utility’s principal revenue source. Because these charges are the activity’s principal revenue source and because the water utility is required to recover its costs, the utility should be rep orted as an enterprise fund. [GASBS 34, fn33] 5As used in this section, the term depreciation (and related forms of the term) includes amortization of intangible assets. [GASBS 51, ¶5] 6Based on this criterion, state unemployment compensation funds should be reported in enterprise funds. [GASBS 34, fn34] 7The focus of these criteria is on fees charged to external users. [GASBS 37, ¶14] 3 Q2: I do wish to know the funding for BlackBerry farm pool/picnics area, including the CIP projects over the past 10 years. Where do I find such info? Staff Response: The City has had only one Capital Improvement Project (CIP) for Blackberry Farm Pool in the past 10 years: 420-99-073 BBF Park Pool Improvements. This can be found on OpenGov, by accessing the Capital Improvement Plan data set and then filtering the department to include “pool” in the search bar.