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2002 Approved Budget
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2002 Approved Budget
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6/19/2012 1:16:02 PM
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6/19/2012 1:10:56 PM
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Replacement Funds <br />In 1991, the City began a process of formally establishing replacement funds. Replacement funds <br />are funds set aside to provide funding for infrastructure, equipment, buildings, and specific <br />maintenance. Such funds set aside and properly managed, are to provide for a stable funding <br />source and to assure a reasonable replacement schedule to meet needs and depreciation and <br />ordinary wear and tear occur. <br />Methodology <br />Each asset owned by the city, with the exception of land, is considered to have a life of a given <br />number of years. Annual depreciation is computed on each asset and recorded in the fixed asset <br />system. Current governmental accounting rules do not allow depreciation to be booked, however, <br />the City does provide for an accounting on an annual basis. <br />Included in the various budgets, are depreciation amounts which are generally recomputed each <br />year. At the end of each fiscal year, those depreciation amounts are transferred to the respective <br />replacement fund. In addition, each replacement fund earns interest on any fund balances it may <br />have. The objective is to at least maintain a funding level equal to the accumulated depreciation <br />for each class of asset. It is improbable that a 100% level is practical since the City does not <br />intend to replace all assets at once or necessarily when they are fully depreciated. <br />The following annual depreciation life followed: <br />• General Vehicles 5 -10 years <br />• Fire Vehicles 20 Years <br />• Plant and Equipment 3-15 years <br />• Land Improvements and Buildings 20 -40 years <br />• Street and Bridge Infrastructure 20 -80 years <br />Over the past several years, the City Council has fully endorsed the concept of increasing such <br />replacement funds where appropriate. The existing replacement funds include <br />• General Vehicle <br />Replacement Fund <br />• Fire Vehicle Replacement <br />Fund <br />• Plant Equipment <br />Replacement Fund <br />• Building Replacement Fund <br />• Parks Infrastructure <br />Maintenance Fund <br />III -52 <br />
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