2020 Comprehensive Annual Financial Report

As required by North Carolina General Statutes, appropriations in Governmental Funds are encumbered upon issuance of purchase orders, contracts or other forms of legal commitments. Even though goods and services have not been received, the transactions are accounted for as a reservation of fund balance in the year that the commitment is made. While appropriations lapse at the end of the Fiscal Year, the succeeding year’s budget ordinance specifically provides for the re-appropriation of year-end encumbrances. The outstanding encumbrances are amounts needed to pay any commitments related to purchase orders and contracts that remain unperformed at year-end are as follows:

Encumbrances

General Fund

Debt Service Fund

Non-Major Funds

$

83,502,343

$

4,485,873

$

90,050

$

78,926,420

Supplemental budgetary amendments increased the General Fund appropriation by $784,294 for programs being funded by interfund transfers and appropriated fund balance. No expenditures exceeded appropriations at the legal level of control during Fiscal Year 2020. B. Deficit Fund Equity The following funds report deficit fund balances as of June 30, 2020:

State, Federal and Other Grants Fund Street and Sidewalk Capital Project Fund

$

(2,521,807) (4,798,498) (2,920,536)

Performing Arts Operating Fund

The project fund deficits are from current expenses that were incurred at the end of the fiscal year but reimbursement had not yet been received from the federal and state granting agencies. These project fund deficits will be eliminated with the future reimbursements of federal and state grants. The opening of the new performance venue has been delayed due to state-imposed coronavirus restrictions and once the facility is opened, revenues generated from the facility and from the County occupancy tax are planned to eliminate the deficit going forward. IV. Detailed Notes on all Funds A. Deposits and Investments 1. Deposits All deposits of the City of Greensboro are either insured or collateralized by using one of the two methods. Under the Dedicated Method, all deposits that exceed the federal depository insurance coverage level are collateralized with securities held by the City’s agents in the City’s name. Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer’s agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the City, the deposits are considered to be held by the City’s agent in the City’s name. The amount of the pledged collateral is based on an approved averaging method for non-interest bearing deposits and the actual current balance for interest-bearing deposits. Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the City or the escrow agent. Because of the inability to measure the exact amount of collateral pledged for the City under the Pooling Method, the potential exists for under collateralization, and the risk may increase in periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for each depository that collateralizes public deposits under the Pooling Method. The City does not have a formal investment policy regarding custodial credit risk for deposits. At June 30, 2020, the City’s deposits had a carrying amount of $531,152 and a bank balance of $5,871,132. Of the bank balance, $444,022 was covered by federal depository insurance and the remainder was covered by the collateral held under the Pooling Method. At June 30, 2020, the City had $164,353 cash on hand. 37o