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6.1 B Page 46 CITY OF REDWOOD CITY, CALIFORNIA RECONCILIATION OF THE NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS WITH THE STATEMENT OF ACTIVITIE� FOR THE YEAR ENDED JUNE 30, 201C The schedule below reconciles the Net Changes in Fund ealances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis. $ NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS (12,383,287) Amounts reported for governmental activities in the Statement of Activities are different because of the following: CAPITAL ASSETS TRANSACTIONS Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. The capital outlay expenditures are therefore added back to fund balance. 5,025,308 Depreciation expense is deducted from the fund balance. (Depreciation expense is net of internal service fund depreciation of $1,080,447 which has already been allocated to serviced funds.) (8,139,383) Loss on retirements of capital assets (20,415) LONG TERM DEBT PROCEEDS AND PAYMENTS Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Assets the repayment reduces long-term liabilities. Repayment of debt principal is added back to fund balance. 14,657,321 ACCRUAL OF NON-CURRENT ITEMS The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change): Change in compensated absences 58,854 Change in interest payable 131,249 Interest accreted on capital appreciation debt (1,515,545) Amortization of bond premium 31,057 Amortization of issuance costs (67,976) Interest receivable and intergovernmental revenue (808,002) Transfer net OPEB obligation from Employee Benefits internal service fund to governmental activities (5,749,379) ALLOCATION OF INTERNAL SERVICE FUND ACTIVITY Internal Service Funds are used by management to charge the costs of certain activities, such as equipment acquisition, maintenance, and insurence to individual funds. The portion of the net revenue (expense) of these Internal Service Funds arising out of their transactions with governmental funds is reported with governmental activities, because they service those activities. Change in Net Assets - Ail Internal Service Funds 6,380,393 CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES (2,399,805) See accompanying notes to financial statements 23