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Management Discussion and Analysis - Continued April 20, 2005 The government-wide fmancial statements include not only the City itself (known as the primary government), but also a legally separate Ecouomic Development Authority (EDA) for which the City is financially accountable. The EDA, although legally separate, functions for all practical purposes as a department of the City, and therefore has been included as an integral part of the primary government. The government-wide financial statements can be found on pages 4 - 6 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other State and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide fmancial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide fmancial statements. By doing so, readers may better understand the long-term impact by the government's near-term fmancing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditmes and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 17 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditmes and changes in fund balances for the General, Debt Service Municipal Street and Hunter's Crossing funds, all of which are considered to be major funds. Data from the other nonmajor governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements or schedules elsewhere in this report. The City adopts an armual appropriated budget for its General fund. A budgetary comparison statement has been provided for the General fund to demonstrate compliance with this budget. The basic governmental fund fmancial statements can be found on pages 7 - 13 of this report. Proprietary funds. The City maintains one type of proprietary fund Enterprise funds are used to report the same functions presented as business-type activities in the government-wide fmancial statements. The City uses enterprise funds to account for its water and sewer. Proprietary funds provide the same type of information as the government-wide fmancial statements, only in more detail. The proprietary fund financial statements provide separate information for each of the enterprise funds. The basic proprietary fund fmancial statements can be found on pages 14 - 17 of this report. Notes to Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund fmancial statements. The notes to the fmancial statements can be found on pages 18 - 34 of this report. Other Information The combining statements referred to earlier in connection with norunajor governmental funds and internal service funds are presented following the notes to fmancial statements. Combining and individual fund statements and schedules can be found on pages 35 - 48 of this report. -IV-