HomeMy WebLinkAboutRes2013-071 Sponsored by: Hunt
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CITY OF SEWARD, ALASKA
RESOLUTION 2013 -071
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, AMENDING THE 2013 BUDGET TO RECORD
DEPRECIATION EXPENSES RELATED TO THE HOSPITAL AND
LONG -TERM CARE FACILITIES
WHEREAS, in order to meet the requirements of Governmental Accounting Standards
Board Statement No. 61, The Financial Reporting Entity: Omnibus, the City of Seward re-
evaluated how it presented annual financial information for Providence Seward Medical & Care
Center (PSMCC) on the city's financial statements, and revised such presentation for the period
ended December 31, 2011 and thereafter; and
WHEREAS, this new presentation has resulted in the financial statements of PSMCC
being reported as a fund of the city solely for external financial reporting purposes, but in no way
changes any provisions of the contractual relationship between the City of Seward and
Providence Health & Services; and
WHEREAS, due to this change in presentation, the PSMCC is now reflected on the
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city's financial statements as an Enterprise Fund rather than as two separate Debt Service Funds,
resulting in a new requirement to report depreciation for the hospital and the long -term care
facilities, necessitating a budget amendment, since depreciation has previously not been budgeted
for the Debt Service Funds.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF SEWARD, ALASKA, that:
Section 1. The 2013 Operating Budget shall be amended to record hospital depreciation
by increasing depreciation expense account no. 801 - 8010 -5650 by $259,916.04.
Section 2. The 2014 Operating Budget shall be amended to record long -term care facility
depreciation by increasing depreciation expense account no. 800 - 8000 -5650 by $2,022,676.89
and by increasing amortization of capitalized interest account no. 800 - 8000 -4710 by $16,243.14.
Section 3. This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 9th
day of September, 2013.
CITY OF SEWARD, ALASKA
RESOLUTION 2013 -071
THE CITY OF SEWARD ALASKA
C-
David Seaward, ayor
AYES: Valdatta, Bardarson, Keil, Shafer, Casagranda, Terry, Seaward
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
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Brenda J. Ballo
Acting City Clerk
(City Se4,)►••• "•'1.r,
OF SEN *.
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COUNCIL AGENDA STATEMENT
Meeting Date: September 9, 2013 f * est,
Through: James Hunt, City Manager i
4 �ASK P
From: Kristin Erchinger, Finance Director
Agenda Item: 2013 Budget Amendment for Hospital and Long -Term Care Facility
Depreciation
BACKGROUND & JUSTIFICATION:
Effective in 2011, the Governmental Accounting Standards Board promulgated a new standard
that required cities to re- evaluate how they presented financial information for certain entities
within their comprehensive annual financial reports (CAFR). In Seward's case, an analysis of
GASB Statement No. 61, The Financial Reporting Entity: Omnibus resulted in the need to revise
the presentation of the hospital and long -term care facilities in the City's annual financial report.
Prior to 2011, the operations of the hospital and long -term care facilities were presented in the
CAFR as a discretely presented component unit (a stand -alone column on the financials). The
major assets and liabilities of the hospital and long -term care facilities were presented in the
CAFR in two separate Debt Service Funds and included in the General Governments' Fixed
Asset listing. Under the prior presentation, it was not possible to see the complete financial
picture of the healthcare system in a single set of financial statements.
Beginning in 2011, the previous presentation was revised and a new Enterprise Fund was created,
the Providence Seward Medical & Care Center Enterprise Fund. This new presentation is done
strictly for the purpose of external financial reporting purposes, but in no way changes any
provisions of the contractual relationship between the City of Seward and Providence Health &
Services, where Providence is responsible for managing the operations of the hospital and long-
term care facility, and the City has no role to play in the day -to -day operations. Under this new
presentation, it is possible to view a complete set of financial statements for the healthcare
system operations.
This new presentation was not contemplated during construction of the 2013 Budget, and under
the new presentation, it is necessary to budget for depreciation, while the former presentation did
not require budgeting depreciation.
CONSISTENCY CHECKLIST: Yes No N/A
1. Comprehensive Plan (document source here): X
2. Strategic Plan (document source here): X
3. Other (list): X
CITY OF SEWARD
RESOLUTION 2013-
, FISCAL NOTE:
This transaction is intended solely for the purpose of estimating the depreciation expense for the
Hospital and the Long -Term Care Facility, so that there is a budget associated with the annual
expense. However, this has no impact on the cash balance of the Enterprise Fund, since
depreciation is an accounting entry reflecting the depletion of a portion of an asset's value during
the year.
Approved by Finance Department a, � � ,.)
ATTORNEY REVIEW: Yes No X
RECOMMENDATION:
Council approve Resolution 2013 - Q 1 amending the 2013 Operating Budget to record
depreciation for the Hospital and the Long -Term Care Facilities.