Financial Reporting

 

How should State Street Aid be reported in the government-wide financial statements and how should the reserve be calculated?

State Street Aid funds should be reported as program revenue (operating grants and contributions) in the government wide financial statements. Because the tax is not derived from the municipalities’ taxing authority and is not restricted to capital acquisition, the revenue represents an operating grant/contribution.

 

If state street aid funds are reported in the general fund, the reserve calculation should be based on the revenues and expenditures recognized at the fund level (modified accrual basis of accounting). That is, expenditures include capital outlays but do not include depreciation expense. At the government wide financial statement level, restricted assets should be recorded based on the reserve established in the general fund or the ending fund balance in the separate special revenue fund established to account for state street aid funds. Please refer to the Codification of Governmental Accounting and Financial Reporting Standards, Section 2200, and GASB Comprehensive Implementation Guide – 2007-2008, Question and Answer 7.39.4, for applicable reporting guidance.