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City of Redwood City 7.1.A. - Page 35 <br /> Management's Discussion and Analysis <br /> For the year ended June 30, 2014 <br /> Proprietary funds are maintained in two ways. Enterprise funds are used to report the same functions <br /> presented as business -type activities in the government -wide financial statements. The City uses <br /> enterprise funds to account for water, sewer, parking, Port, and Docktown Marina operations. Internal <br /> services funds are used to account for costs of the City's equipment services, the City's insurance program, <br /> the costs of the City's telephone /communications and information technology services, maintenance and <br /> repair of buildings, custodial services, and employee benefits. Because these services predominantly <br /> benefit governmental rather than business -type functions, they have been included within governmental <br /> activities in the government -wide financial statements. <br /> The proprietary fund financial statements may be found on pages 29 -31 of this report. <br /> Since the City's internal service funds provide goods and services only to the City's governmental and <br /> business -type activities, their activities are reported only in total at the fund level. Internal service funds <br /> may not be major funds because their revenues are derived from other City funds. These revenues are <br /> eliminated in the City -wide financial statements and any related profits or losses are returned to the <br /> activities which created them, along with any residual net assets of the internal service funds. <br /> Comparisons of budget and actual financial information are presented only for the general fund and other <br /> major funds that are special revenue funds. As the Housing Legal Aid Society Fund was created after the <br /> dissolution of the Redevelopment Agency and is currently under litigation, there is no adopted budget for <br /> this fund. <br /> Fiduciary Funds <br /> The City maintains fiduciary funds that consist of a Private Purpose Trust Fund and Agency Funds. The <br /> Private Purpose Trust Fund accounts for the activity of the former Redevelopment Agency of Redwood <br /> City, while the Agency Funds account for tax free employee and employer contributions made under the <br /> provisions of section 125 of the Internal Revenue Code (cafeteria benefits fund), and for transactions <br /> involving the Pacific Shores Community Facilities District, the Shores Transportation Improvement District, <br /> and the One Marina Community Facilities District. The City's fiduciary activities are reported in the <br /> separate Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position, and the <br /> Agency Funds Statement of Changes in Assets and Liabilities. The accounting used for fiduciary funds is <br /> much like that used for proprietary funds. These activities are excluded from the City's other financial <br /> statements because the City cannot use these assets to finance its own operations. <br /> The fiduciary fund financial statements may be found on pages 32 -33 of this report. <br /> Notes to the Financial Statements <br /> Notes to the Financial Statements provide additional information that is essential to a full understanding <br /> of the data provided in the government -wide and fund financial statements. <br /> The Notes to the Financial Statements may be found on pages 34 -75 of this report. <br /> 7 <br />