CITY FUND STRUCTURE
The City's accounting system is organized and operated on a "fund basis" under which each fund is a distinct self-balancing accounting entity. A fund is "an independent fiscal and accounting entity used to record all financial transactions related to the specific purpose for which the fund was created." Funds are established for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, legal restrictions or limitations. The City's annual operating budget is prepared in conformity with Generally Accepted Accounting Principles (GAAP).
A number of different funds are utilized to account for the City and Community Development Commission (CDC) financial resources. Funds are classified into the following fund types:
- General Fund
- Special Revenue Fund
- Debt Service
- Capital Projects
- Proprietary
The City has established multiple funds under each fund type to assist in accounting and record keeping for the City and outside agencies.
A brief description of each fund with the above fund types is provided below:
GENERAL FUND TYPE
This fund is the City's largest single fund type and is used to account for unrestricted revenues. Revenues received by the City that have no legal or contractual restriction are placed in the various General Funds. Appropriations may be made from the General Fund for any legal City activity. Although there are no legal or contractual restrictions on the revenues received, City Council policy and administrative policies require that the City use several funds to account for General Fund Type Revenues as follows:
General Fund (Fund 110)
The City's General Fund is the main operating fund for non-restricted revenues, such as general taxes and fees. This fund is used to account for basic City services such as police, fire, building, planning and general administration. Within the General Fund, the City maintains specific designated reserves and contingency reserves that represent the unappropriated fund balance.
Water Sale Proceeds (Fund 113)
The proceeds from the sale of the City's water utility are accounted for in this fund.
Community Enhancement (Fund 114)
This fund was established to account for a one-time credit from Cal-PERS for excess employer retirement contributions and a legal settlement over business license revenues with the former operator of the now closed BKK landfill. Neither legal nor contractual restrictions apply to the assets in the fund. However, City Council policy established the fund as a quasi-endowment fund. Income from related investments is designated for projects and programs that enhance the community. Revenue may be used to augment other funds as necessary.
Equipment Replacement (Fund 115)
This fund has been established to provide for the accumulation of funds to replace major pieces of equipment. Departments that have major pieces of equipment are communications, fire and print shop; and they include a separate line-item within their departmental budgets for equipment replacement. Funds generated are set aside until such time equipment is replaced. Items funded from these revenues are reflected in the department's line-item budget.
Waste Management Enforcement (Fund 120)
This fund is used to account for the City's waste management enforcement efforts directed by the Local Enforcement Agent. A transfer from the Community Enhancement Fund is the fund's sole funding source.
SPECIAL REVENUE FUND TYPE
This fund type accounts for revenue that the City receives for a specific purpose. The City receives a significant amount of tax revenue that is restricted as to its use. The City also assesses property and business owner's fees to be used to provide specific benefits to the assessed property or business. The City also receives grants and contracts that require specific performance. These revenue sources are accounted for in the following Special Revenue Funds.
Air Quality Improvement Trust (Fund 119)
In 1991-1992, the state passed AB 2766, the state's Air Quality Improvement Trust Fund. An increase in motor vehicle license fees collected by the State of California supports this state fund. The City receives a portion of the fees to enhance the City's clean air efforts. Programs supported by the fees include the Rideshare Program, the development of an Air Quality Management Plan and the City's Alternative Fuel Program.
BKK Community (Fund 152)
These resources came from payments from the BKK Landfill pursuant to the settlement agreement. The settlement agreement restricts these revenues for use in and around the closed municipal landfill.
Bureau of Justice Grants (Funds 130, 136, 192 and 193)
These are grants from the Bureau of Justice for law enforcement activities.
Business Improvement District (Fund 190)
This is an assessment district supported by six of West Covina's automobile dealers to fund the construction, maintenance and operation of a reader board adjacent to Interstate 10.
Charter Cable Settlement Fund (Fund 203)
Charter Communications, the City's cable television franchise operator, paid the City $600,000 in 2003-2004 and $400,000 in 2004-2005 as part of a legal settlement with the City. This one million dollar amount is one-time revenue. The $600,000 can be spent on any capital item. During 2003/04, $350,000 of this was allocated towards the Hurst Ranch project. The $400,000 is not restricted and can be spent on any purpose.
Charter PEG (Fund 205)
Beginning in 2004/05, Charter Communications will pay the City a $150,000 Public Education Grant each year. These funds can only be used to make capital expenditures related to the City's Public Access Channel.
Citywide Maintenance District (Fund 188)
This is the City's most significant special assessment fund. Revenue for the fund comes from annual special benefit assessments from property owners who benefit from covered improvements. The Citywide Assessment District provides the majority of funding for the City's street lighting system and street tree program.
Community Development Block Grant (Fund 131)
The City's Community Development Block Grant (CDBG) is the source of federal funding for the Housing and Community Development Fund. Programs are administered through the community services, public works and CDC departments.
The CDBG Grant provides funding for a variety of programs and projects aimed to benefit lower income households, the elderly and people with handicaps. The most significant CDBG funded program is the Deferred Home Improvement Loan Program that provides low and very-low income homeowners the resources to maintain their homes. A senior citizen assistance program is also provided. Funding is also provided for a variety of public works programs to benefit West Covina's low and very-low income families. Funding for public service programs may not exceed 15% of the CDBG revenues.
COPS/MORE (Fund 151)
These federal funds are provided by the Office of Community Oriented Policing Services (COPS) to supplement public safety programs.
COPS/School-Based Partnership (Fund 134)
This fund accounts for grant revenue. COPS provides federal funds to supplement the Youth at Risk Programs.
COPS/Universal Hiring Program (Fund 136)
This fund accounts for grant revenue. This three-year federal grant that supports a portion of the salary of three field police officers.
COPS/School Based Partnership (Fund 196)
This fund accounts for grant revenue. COPS provides federal funds to supplement the city's Youth at Risk Programs.
COPS/SRO (Fund 197)
This fund accounts for grant revenue. COPS provides federal funds to supplement the City's School Resource Officer Program.
COPS/SLESF (Fund 155)
This fund accounts for grant revenue. These funds are provided by the state to support COPS. Funds must be spent on front-line law enforcement services.
COPS HOMELAND SECURITY OT PROGRAM (Fund 201)
This fund accounts for grant revenue. These funds are provided by the state to pay for overtime related to homeland security activities.
CRV / Litter Removal Grant (Fund 158)
The California Redemption Value / Litter Removal Grant provides funds derived from consumer deposits on beverage containers. These funds are to be used for beverage container recycling and litter cleanup activities.
Drug Enforcement Rebate (Funds 116 and 117)
Drug Enforcement Rebate (DER) revenues are received based on the City's participation in drug-related asset seizures. Funds are received from federal and state agencies. These funds are restricted to uses that enhance the police department's activities.
Electric Vehicle AQMD Match (Fund 157)
Administered through the environmental management department, the City is a participant of the San Gabriel Valley Council of Government's (COG) Electric Vehicle Corridor Communities Program with five other cities and two private companies. The Mobile Source Air Pollution Reduction Review Committee of the South Coast Air Quality Management District (AQMD) has awarded the COG participants funds to install electric vehicle charging stations along Interstate 10. The city is required to match the grant funds with a portion of its AB2766 Air Quality Improvement /funds.
I.S.T.E.A./T-21 (Fund 140)
The Intermodal Surface Transportation Efficiency Act of 1992 (ISTEA) is the Federal Highway Program. This fund accounts for federal money received for use in improving certain major streets. Caltrans and the Federal Highway Administration must approve projects.
Fee and Charge (Fund 111)
This fund applies to recreation services programs in which an individual must pay a registration fee in order to enroll in a recreation class, program or activity (e.g., child care, sports, arts, crafts and tiny tots).
Gasoline Tax (Fund 124)
This fund accounts for State Gas Tax monies received under various state laws. The funds are used to partially fund the City's street maintenance program. Activities include ongoing minor street repairs, upgrades of traffic signals, replacement and installation of new traffic signs and street painting. Programs are administered through the public works department. Funds received under Proposition 111 are restricted for street construction and maintenance. The majority of Proposition 111 Funds are committed to the Street Rehabilitation Program.
Inmate Welfare (Fund 150)
State law requires the City to expend money received from inmate services on behalf of the inmates' welfare. The city has a pay phone used by inmates in the City's jail. The City receives revenue from the payphone.
Integrated Waste Management (Fund 129)
This fund accounts for revenues and expenditures of programs implemented to meet the requirements of the California Integrated Waste Management Act of 1989 (AB 939). Revenues are generated through a waste management fee, with additional funds received from Athens Disposal, the City's contractual trash hauler. Programs funded include the development and implementation of a solid waste reduction and recycling project, household hazardous waste disposal project, and solid waste management activities.
L.A. County 5th District Grant (Fund 210)
This is a one-time grant for Galster Park improvements.
L. A. County Park Bond (Fund 143)
This fund is used to account for the City's allocation of proceeds received from the voter approved Park Bonds for Los Angeles County. The proceeds are restricted to specific purposes as defined in the bond issue. The County of Los Angeles approves projects.
Land & Water Conservation (Fund 211)
This is a one-time grant for Galster Park improvements.
Maintenance District Funds (Fund 18x)
The City levies special benefit assessments and property taxes upon property within defined districts. Through the Los Angeles County Tax Collector, assessments are placed on the property owner's annual tax bill. These funds are used to maintain and improve the open spaces within the districts by providing landscape maintenance. Assessment districts currently established in the City include:
Maintenance District #1 (Fund 181)
Maintenance District #2 (Fund 182)
Maintenance District #4 (Fund 184)
Maintenance District #6 (Fund 186)
Maintenance District #7 (Fund 187)
Office of Criminal Justice Planning Domestic Violence Grant (Fund 142)
This fund accounts for grant revenue. The City receives funding from the Federal Office of Criminal Justice Planning for programs designed to deter domestic violence and to support victims thereof.
Proposition A (Fund 121)
The City receives a portion of the _% of sales tax collected in Los Angeles County to provide selected transportation-related programs and projects. Through the use of Proposition A Funds, the City provides a variety of transportation services including Dial-A-Ride, the West Covina Shuttle (a fixed route system), bus pass subsidies and recreational transit services.
Proposition C (Fund 122)
Under Proposition C, the City receives a portion of an additional _% sales tax approved for transportation-related programs in Los Angeles County. The funds may be used for certain capital projects or transportation projects similar to those allowed under Proposition A. Projects include street rehabilitation and reconstruction, traffic monitoring systems, congestion management and planning, bus shelter maintenance, and Park-and-Ride lots.
Public Safety Augmentation (Fund 153)
This fund accounts for the permanent extension of the sales tax by _% guaranteed under Proposition 172. These revenues are restricted to the enhancement of public safety services. Revenue is allocated based on each qualified county's proportionate share of statewide taxable sales.
Rivers & Conservation Grant (Fund 209)
This is a one-time grant for Galster Park improvements.
Senior Meals Program (Fund 146)
This program provides meals to low-income seniors with funding from the United States Department of Agriculture and Area Agency on Aging. The program also receives donations from seniors for the meals served.
Sewer Maintenance (Fund 189)
This fund supports the City's street sweeping program and maintenance of the City's sewer system. The City also provides services to the City of Covina through this fund.
Traffic Enforcement Grant (Fund 133)
This fund accounts for revenue received through a state grant to purchase equipment and enhance traffic safety efforts within the city.
Traffic Safety (Fund 123)
This fund receives revenue from two citation sources: 1) moving traffic violations within the city limits and 2) parking violations. These resources are used to support the city's Traffic Enforcement Program to fund certain traffic engineering costs and capital improvements such as traffic signals.
Transportation Development Act (Fund 128)
Transportation Development Act Funds are received through the County and may only be used for specific transportation development purposes. These funds are generally used by the City for sidewalk rehabilitation and construction and the long-term transportation planning efforts within the city.
Tree Fund (Fund 144)
This fund accumulates funds restricted for use in urban forestation projects.
Used Oil Block Grant (Fund 149)
This grant is a three-year grant awarded solely to the City of West Covina. The California Integrated Waste Management Board (CIWMB) provides grant funds to cities to promote used motor oil recycling.
The environmental management department oversees the use of these funds in used oil recycling programs. These grant funds are used to certify used oil collection centers and purchase promotional items to publicize and educate the community about used oil recycling.
Waste Management Enforcement Grant (Fund 145)
This fund accounts for the money received from the State of California to help support the local enforcement agent monitor the local closed landfill.
CAPITAL PROJECT FUND TYPE
This fund accounts for funds that are either restricted or designated for capital projects. The City has established the following Capital Project Funds:
Construction Tax (Fund 161)
The Construction Tax Fund receives monies from developers based on the construction of dwelling units in the city.
These funds are then used to purchase or construct public facilities, such as street reconstruction, traffic signal modifications, curb and gutter replacements and rehabilitation of park structures and equipment.
Park Dedication Fees (Fund 17x)
The City receives fees from developers to fund recreation facilities. The City has been divided into seven park districts. Staff has historically used the funds from developers for recreational facilities within the same district as the development that generated the fees. If desired, the City Council can direct staff to use Park Dedication Fees for qualified recreational purposes anywhere in the City. The following Districts have been established:
Fund 170 Park District "A"
Fund 171 Park District "B"
Fund 172 Park District "C"
Fund 173 Park District "D"
Fund 174 Park District "E"
Fund 175 Park District "F"
Fund 176 Park District "G"
Fund 176 Park District "H"
Parks (Fund 163)
This fund accounts for park-related revenue, such as franchise fees received from park-related activities.
Capital Projects (Fund 160)
This fund provides funding for capital needs within the city. The fund was established by the City Council to serve as the source of capital funding for projects that have no other funding source.
DEBT SERVICE FUND TYPE
The City has established one Debt Service Fund to accumulate assets for the repayment of long-term debt. Funds are transferred from the operating accounts of the various departments that benefit from the assets financed through the creation of the debt.
Debt Service Fund - City (Fund 300)
The City's Debt Service Fund accounts for all scheduled long-term debt repayments (interest and principal) under all debt agreements, primarily capital leases negotiated by the City.
PROPRIETARY FUND TYPES
Proprietary Fund Types use the full accrual basis of accounting and operate as if they were private businesses. There are two categories of Proprietary Fund Types: 1) Internal Service Funds that provide services to departments within the City and 2) Enterprise Funds that provide services to other governmental and non-governmental entities, including individuals and businesses. The City has established the following proprietary funds:
Internal Service Funds:
Fleet Management (Fund 365)
The maintenance division of the public works department operates the fleet management function for the City. Fleet management oversees the purchase, use, repair and disposal of City vehicles and heavy equipment.
Revenue for the fleet management fund is generated through charges to operating departments. Each department that operates assigned vehicles is charged based on the departmental usage of the vehicles, including depreciation costs. Fleet management costs are reflected in each department's line-item budget.
Self-Insurance - Uninsured Loss (Fund 360)
Self-Insurance - General and Auto Liability (Fund 361)
Self-Insurance - Workers' Compensation (Fund 363)
The function of insurance coverage is administered through the City's risk management department.
Funding for general/auto liability claims and uninsured losses is provided through a set charge per full-time employee and assessed on all operating departments.
Funding for workers' compensation is derived from a percentage charge of all salaries with different rates levied for the various employee categories.
The City strives to contain insurance costs through self-insurance and safety training.
Enterprise Funds:
Police Enterprise (Fund 375)
This fund accounts for the computer services provided by the police department to other public safety agencies for a fee. The programs are marketed to both public and private agencies. The program also provides these products and services to the West Covina Police Department.
Community Development Commission
The West Covina CDC Operating Budget uses the following funds to account for revitalization efforts within the city:
CDC - Capital Projects (Fund 876)
CDC - Citywide Project Area (Fund 877)
CDC - H.O.M.E. Program (Fund 863 and 864)
CDC - Housing Set-Aside (Fund 862)
Funding for CDC is provided through the tax increment generated by enhanced property values within CDC's project area.
As required by state law, 20% of the CDC's tax increment is deposited into the Housing Set-Aside Fund. These funds must be used to increase and improve housing stock available to low and moderate income households. A portion of the City's Economic Development Promotional and Marketing Program is funded through CDC's funds. H.O.M.E. Fund is a federally funded program to assist low and very low-income households purchase homes within the city. The Agency also uses three funds to account for debt service as follows:
Community Facilities District Debt Service (Fund 853)
This Mello Roos type district recovers revenues from property owners, the City and CDC to make debt service payments on improvements made at the West Covina Plaza Mall.
CDC Capital Projects Debt Service (Fund 882)
This fund receives tax increment from the "Merged Project Area" (Fund 876). The fund provides for the operation of the project area and pays for all scheduled long-term debt repayments (interest and principal) under debt agreements, primarily notes and bonds payable, incurred within the project area.
CDC Citywide Debt Service Fund (Fund 883)
This fund receives tax increment from the "Citywide Project Area" (Fund 877). The fund provides for the operation of the project area and pays for all scheduled long-term debt repayments (interest and principal) under debt agreements, primarily notes and bonds payable, incurred within the project area.
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