Accrual Basis of Accounting - A method of accounting that recognizes the financial effect of transactions, events, and inter-fund activities when they occur, regardless of the timing of related cash flows (also known as “Full Accrual”).

Ad Valorem Tax - A tax levied on the assessed value of both real and personal property in proportion to the value of the property (also known as “property taxes”).

Agency Funds - Consist of resources received and held by the governmental unit as an agent for others; for example, taxes collected and held by a municipality for a school district.

Arbitrage - The interest rate differential that exists when proceeds from a municipal bond (which is tax-free and carries a lower yield) are invested in taxable securities with a yield that is higher. The 1986 Tax Reform Act made this practice by municipalities illegal solely as a borrowing tactic, except under certain safe-harbor conditions.

Assessed Valuation - The taxable value of any real or personal property. The taxable value of residential real estate is 11.5% of market value. The taxable value of commercial property is 25% of market value.

Assets - Resources owned by the City which have monetary value.

Bank Qualified - When a municipality issues $10,000,000 or less in bonds or notes in a calendar year, the bonds and/or notes issued are designated as “bank qualified.” The bank which purchases the security receives a tax deduction (80% of the interest cost) for this type of purchase. This deduction makes bank qualified bonds and notes an attractive purchase.

BID - Acronym for Business Improvement District.  Revenues for the business improvement districts are derived from fees paid by the businesses within the established districts. (See Aggieville Business Improvement District and Downtown Business Improvement District)

Bond - A written promise to pay a specified sum of money (face value) at a fixed time in the future (maturity), fixed rate of interest, and usually payable over a period of time.

Bond Counsel - A lawyer who writes an opinion on the bond or note as to its tax exempt status and the authenticity of its issuance.  The City’s Bond Counsel is Gilmore & Bell headquartered in Wichita, Kansas.

Bond Rating (Municipal) - A credit rating assigned to a municipality to help investors assess the future ability, legal obligation, and willingness of the municipality (bond issuer) to make timely debt service payments. Stated otherwise, a rating helps prospective investors determine the level of risk associated with a given fixed-income investment. The national rating agencies, Moody's, Standard and Poor’s, and Fitch Ratings, use rating systems which designate a letter or a combination of letters and numerals where AAA is the highest rating and C1 is a very low rating. The City of Manhattan’s current bond rating from all three national rating agencies resides in the AA category.

Budget - A plan for allocating resources to support particular services, purposes, and functions over a specified period of time. Under Kansas law, the annual budget period is on a calendar year basis—January through December. The budget for the coming year must be adopted by August 15.

Budget Law - By state law, cities may not spend more than was adopted by the governing body at a public hearing, unless that city amends the budget. To amend the budget, the governing body must publish a notice in the official newspaper, hold a public hearing, and approve another budget appropriation ordinance.

Budget Message - An annual statement from the City Manager that, among other things, offers context by summarizing the main points of the City budget, explains priorities, describes underlying policies that drive funding decisions, and otherwise justifies the expenditure plan and provides a vision for the future.

Capital Assets - All tangible property used in the operation of government which is not easily converted into cash and has an initial useful live extending beyond a single financial reporting period. Capital assets include land and land improvements; infrastructure such as roads, bridges, water and sewer lines; easements; buildings and building improvements; and vehicles, machinery, and equipment. Communities typically define capital assets in terms of a minimum useful life and a minimum initial cost. (See Fixed Assets)

Capital Outlays - Expenditures which result in the acquisition of, or addition to, fixed assets such as buildings, building projects, equipment, and land.

Capital Projects Fund - Accounts for the acquisition and construction of major capital assets not being financed by proprietary or fiduciary funds.

Cash Balance - Surplus money in any fund that is carried over into the next fiscal year. This calculation is determined by taking total estimated revenues less total estimated expenditures, which equals the cash balance or surplus. For budget purposes, the cash balance line item is treated as revenue in every fund.

Cash Basis Law - Each budgeted fund is treated as a separate operation or "business" referred to as fund accounting. Under state law, money cannot be spent from a fund if there is no cash balance in that fund, even if the fund has remaining budget authority. Also, except for bond issues, a governing body may not obligate funds to a future fiscal year.

Cash Management - The process of monitoring the ebb and flow of money in and out of municipal accounts to ensure cash availability to pay bills and to facilitate decisions on the need for short- term borrowing and investment of idle cash.

Cash Reserves - The budgeted cash surplus at the end of the year. The actual amount carried over into the next year will be more or less, depending upon what happens to revenues and expenditures in the fund during the prior year.

CDBG - Acronym for Community Development Block Grant, which funds local community development activities such as affordable housing, anti-poverty programs, and infrastructure development.

Certificate of Deposit (CD) - A bank deposit evidenced by a negotiable or non-negotiable instrument that provides on its face that the amount of such deposit, plus a specified interest, is payable to the bearer or to any specified person on a certain date specified in the instrument, at the expiration of a certain specified time, or upon notice in writing.

CIP - Acronym for Capital Improvements Program. The CIP is the City's six-year plan for purchasing equipment, projects, or public improvements. Each year the plan is updated and modified. The plan is a framework for action. Among other information, a capital budget should identify the method of financing each recommended expenditure, i.e., tax levy or rates, and identify those items that were not recommended. Capital improvements generally are classified as projects or equipment over $5,000 and are depreciated over time. (See Capital Assets, Fixed Assets)

COLA - Acronym for Cost of Living Adjustment, which is often used in municipal budgeting to provide for annual or periodic increases in salaries and wages for employees over the course of the budget year. The amount of an increase is most often granted in January of each budget year based on the community's ability to pay, but is sometimes tied to the annual change in a specified index, i.e., Consumer Price Index (CPI).

Commodities - Items of expenditure which are consumed or show a material change in their physical condition.  Examples include office supplies, repair parts, and fuel.

Contractual Services - Costs of services provided by external entities.

CPI - Acronym for Consumer Price Index, which is an index published by the government each month of price changes in consumer goods and services such as gasoline, food, and automobiles.

Debt Disclosure Statement - Reference to a report showing authorized and issued debt, debt retired and interest paid by the community monthly during the fiscal year, as well as authorized but unissued debt at year-end. Also known as the "Statement of Indebtedness."

Debt Policy - Part of an overall capital financing policy that provides evidence of a commitment to meet infrastructure needs through a planned program of future financing. Often referred to as a “long-term obligation policy.”

Debt Service - The repayment cost, usually stated in annual terms and based on an amortization schedule, of the principal and interest on any particular bond issue.

Debt Service Fund - A fund established to finance and account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Also referred to as the Bond and Interest Fund.

Debt Service Reserve Fund - A bank trustee account established by the trust indenture and used as a backup security for an issuer's bonds. It usually amounts to one year's debt service, and can be drawn on by the Trustee in the event of funding deterioration.

Delinquent Taxes - Taxes remaining unpaid on and after the date to which a penalty for non-payment is attached. The unpaid balances continue to be delinquent until abated, paid, or converted into tax liens.

Depreciation - Expiration of the service life of capital assets attributable to wear and tear, deterioration, action of the physical elements, inadequacy, and obsolescence. 

Eminent Domain - The power of a government to take property for public purposes. Frequently used to obtain real property that cannot be purchased from owners in a voluntary transaction. Property owner receives fair compensation (market value at the time of the taking) as determined through court proceedings. Use of eminent domain has been severely restricted by the Kansas legislature.

Encumbrance - A reservation of funds to cover obligations arising from purchase orders, contracts, or salary commitments that is chargeable to, but not yet paid from, a specific appropriation account.

Enterprise Fund - A fund established to finance and account for operations that are financed and operated in a manner similar to private business enterprises intended to cover the cost of providing services primarily through user charges. Examples of enterprise funds are water, wastewater and stormwater operations.

Expendable Trust Funds - A trust fund in which the fund balance can be expended for a purpose specified in the trust agreement.  

Expenditure - An outlay of cash for the purposes of acquiring an asset or providing a service.

Fee in Lieu of Taxes - On occasion, the City issues Industrial Revenue Development Bonds to finance the construction of manufacturing, retail, or industrial buildings and the purchase of equipment. In some instances, the City exempts these firms from property taxes, and instead imposes a fixed fee in lieu of a property tax. This fee is paid to the County, and the County Treasurer distributes this fee to taxing jurisdictions based on each taxing jurisdiction's tax levy rate. These fees are distributed to applicable funds according to the current tax levy rate. In addition, the City's General Fund charges the Housing Authority, Water, and Sewer operations a fee in lieu of tax, since all real and personal property for the Housing Authority and these utility operations are not on the property tax rolls.

Financial Advisor - An individual or institution that assists municipalities in the issuance of tax-exempt bonds and notes. The City of Manhattan’s financial advisor is Springsted, Inc., headquartered in Minneapolis, MN.

Financial Statement - A presentation of the assets and liabilities of a community as of a particular date and most often prepared after the close of the fiscal year.

Fiscal Year - The City of Manhattan budget is on a calendar year basis, which runs from January 1 to December 31 of each year.

Fixed Assets - Assets of long-term character that are intended to continue to be held or used, such as land, buildings, furniture, and other equipment.

Fixed Costs - Costs that are legally or contractually mandated such as retirement, FICA/Social Security, insurance, debt service costs, or interest on loans.

Franchise Fees - By local ordinance the City charges Westar Energy, Kansas Gas Service, AT&T, and Cox Communications a fee for the right to use city streets and rights-of-way for the placing and maintaining of equipment and property. The franchise fee for electric and gas is 3% of gross revenues, 5% of gross revenues for cable television, and for AT&T the franchise fee is $1.20 per line. In addition, the City charges the municipal water and sewage operations a franchise fee of 5% of gross revenues for the same privilege. Most franchise fees are placed in the General Fund. Some are placed in the City University Fund.

Full Faith and Credit - A pledge of the general taxing power for the payment of debt obligations.  Bonds carrying such pledges are usually referred to as general obligation bonds.

Function - A group of related activities aimed at accomplishing a major service or regulatory program for which the City is responsible. For example, public safety is a function.

Fund - An independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources, (together with all related liabilities, obligations, reserves, and equities) which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

Fund Accounting - Organizing the financial records of a municipality into multiple, segregated locations for money. A fund is a distinct entity within the municipal government in which financial resources and activity (assets, liabilities, fund balances, revenues, and expenditures) are accounted for independently in accordance with specific regulations, restrictions, or limitations. Examples of funds include the general fund, special revenue funds, and enterprise funds.

Fund Balance - The difference between an entity’s assets and its liabilities. From a practical standpoint, for budget purposes, fund balance approximates cash.

GAAP - Acronym for Generally Accepted Accounting Principles. The common set of accounting principles, standards, and procedures that companies use to compile their financial statements. GAAP is a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information.

GASB - Acronym for Governmental Accounting Standards Board, the ultimate authoritative accounting and financial reporting standard-setting body for state and local governments.

GASB 34 - Governmental Accounting Standards Board Statement No. 34 requires the reporting of infrastructure and the depreciation of capital assets within a governmental entity.

GASB 45 - Governmental Accounting Standards Board Statement No. 45 requires that each public entity account for and report other postemployment benefits in its accounting statements. Through actuarial analysis, municipalities must identify the true costs of certain benefits earned by employees over their estimated years of actual service.

Gasoline Tax - Under state law, the gasoline tax is distributed quarterly to cities across the state on a per capita basis. This money is credited to the Special Street and Highway Fund. In addition, each county is required by state law to send to cities within their geographical boundaries 10% of what they receive from the State of Kansas in gasoline taxes.

General Fund - The primary operating fund for any city available for any legal authorized purpose except those required to be accounted for in another fund.

General Obligation (G.O.) Bonds - Bonds that are used to finance public improvement projects authorized by the Governing Body, and are backed by the full faith and credit of the City. Typically, these bonds have a maturity of 10 to 20 years and are financed by special assessments, a property tax levy, or in some instances, user fees. On occasion, State law will require a referendum to issue general obligation bonds, depending upon the nature of the project.

GFOA - Acronym for Government Finance Officers Association, a nationwide association of public finance professionals.

Governmental Type Fund - Includes the general fund, special revenue funds, capital projects funds, and debt service funds.

Highway Aid - Connecting Links - Under State law, payments are received quarterly from the State of Kansas and deposited into the Special Street and Highway Fund. This money is used to maintain state road connecting links.

Industrial Revenue Bonds - Bonds issued by the City, of which the proceeds are used to construct facilities for private industrial concerns.  Bond payments are made by the industrial concern to the City usually via a bond trustee.

Infrastructure - Public domain fixed assets such as roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and similar assets that are immovable.

Inter-Fund Transfers - Any transfer of money from one budgeted fund to another. The City transfers money from the utility funds, for example, to the General Fund to reimburse the General Fund for administrative services. Inter-fund transfers are budgeted twice (as an expenditure and a revenue in each fund), resulting in an artificially high revenue and expenditure budget. However, inter-fund transfers must be budgeted to give the necessary budget authority to both funds that are affected.

Internal Service Funds - Used to account for services performed by one department to another on a cost-reimbursement basis.

Kansas Government Finance Officers Association (KSGFOA) - A professional organization promoting the advancement of the profession of public finance in Kansas.

K.S.A. - Acronym for Kansas Statutes Annotated.

Line Item - Accounts within each division that further classifies the seven expenditure categories.

Line-Item Budget - A budget that separates spending into categories, or greater detail, such as supplies, equipment, maintenance, or salaries, as opposed to a program budget.

Liquor Taxes - A state liquor tax of 10% on all alcohol sold within the city limits by a club, caterer, or drinking establishment. Each retailer collects the tax and remits the tax to the State. The State allocates 70% of the amount collected to cities and counties. The City receives quarterly payments from the State. Under State law, one-third of the amount collected goes into the General Fund, one-third into the Special Parks and Recreation Fund, and one-third into the Special Alcohol Fund.

Long-Term Debt - Community borrowing, or outstanding balance at any given time, involving loans with a maturity date of 48 months or more.

M-FRO District - Multi-Family Redevelopment Overlay District is designed to ensure that multiple-family infill development is functionally integrated into surrounding areas and compatible with the traditional character of the older neighborhoods of Manhattan. 

Market Value - The appraised market price of real property. Market value is also called the "100% value" of property.

Material Weakness - A term used in connection with financial auditing. This is a significant deficiency in a community’s internal financial control. It is a reportable condition (internal control weakness) of such magnitude that it could potentially result in material misstatements of financial condition.

Mill Rate - The tax rate property owners pay on the assessed valuation of their property. A "mill" is $1 of property taxes for each $1,000 of assessed valuation. For example, a homeowner having a $5,000 assessed valuation on his/her home will pay $5 in property taxes for each mill levied by the City, County, State, and School District.

Modified Accrual Basis of Accounting - A method of accounting that recognizes revenues in the accounting period in which they become available and measurable.  Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable.

Motor Vehicle Tax - State law levies a tax upon every motor vehicle. The county wide average mill rate is the total amount of general property taxes levied within the county divided by the total assessed valuation of property within the county. The motor vehicle tax received by the City is credited to each property tax supported fund based on that fund's pro-rata share of the mill levy in the preceding budget year.

Municipal Bond Insurance - An insurance policy that guarantees the interest and principal on a bond issue will be paid as scheduled. The municipal bond insurer will pay the debt whether or not the default was caused by an economic crisis or a natural disaster.

Official Statement - A document prepared for potential investors that contains information about a prospective bond or note issue and the issuer. The official statement is typically published with the notice of sale. It is sometimes called an offering circular or prospectus. The official statements offered by municipalities across the nation can be viewed at the Electronic Municipal Market Access (EMMA) website.

Operating Budget - A plan of proposed expenditures for personnel, supplies, and other expenses for the coming fiscal year.

Operational Expenditures - Total expenses less budgeted cash reserves, debt service, capital outlays, and transfers out. In general, they are the day-to-day expenses necessary for that division or department to function properly.

Operational Revenues - Total revenues of any fund less the cash balance from the previous year plus the transfers into a Fund from another budgeted fund.

Outside Services - Part of the General Fund, these expenditures are for programs or agencies which are not considered city government operations. Often the Governing Body will contract separately with these agencies on an annual basis.

Overlapping Debt - A community's proportionate share of the debt incurred by an overlapping government entity, such as a school district, county government, etc.

P&R - Acronym for the City’s Parks & Recreation Department.

Performance Budget - A budget that stresses output both in terms of economy and efficiency.

Performance Measure - A quantitative means of assessing the efficiency and effectiveness of services performed by departments and divisions.

Personnel Costs - The costs of salaries, wages, and related employment benefits.

P.I.L.O.T. Fees - See “Fee in Lieu of Taxes”.

Present Value - The current value (present time) of a future sum or sums at a discounted rate.

Principal - The face amount of a bond, exclusive of accrued interest.

Program Budget - A budget that relates expenditures to the programs they fund. The emphasis of a program budget is on output.

Property Tax Levy - The calculated ratio used to assess against real property in order to determine the amount of property tax dollars necessary to meet budgeted requirements. The formula used to determine this ratio is as follows:

Proprietary Funds - Include the Enterprise and Internal Service Funds.  These funds are self-supporting, in that the user fees totally support all operational and capital costs. 

Purchase Order - An official document or form authorizing the purchase of products and services.

Receivables - An expectation of payment of an amount certain accruing to the benefit of a municipality.

Refunding of Debt - Transaction where one bond issue is redeemed and replaced by a new bond issue under conditions generally more favorable to the issuer.

Reserve - An account recording a portion of the fund equity that must be segregated for some future use and is not available for further appropriation or expenditure.

Revenues - All monies received by a governmental unit from any source.

Revenue Bonds - Bonds that are used to finance public improvement projects authorized by the Governing Body and are backed by revenues or user fees. For example, the City could issue water revenue bonds in which revenue from water bills will be pledged to pay off the bonds. Because revenue bonds are not backed by the full faith and credit of the City, namely a property tax levy, they are a riskier investment for a prospective buyer of these bonds. Consequently, the interest rate the City will pay is higher than a general obligation bond. Usually a referendum is not required to issue revenue bonds.

Sales Tax - The City levies a 1.25% sales tax on items sold at retail. One-half percent goes to the General Fund, one-half percent goes to the Sales Tax Fund (which is used to reduce property taxes), and the remaining one-fourth percent goes to voter-approved “quality of life” improvements.  In addition, the City receives a portion of the sales tax levied by Riley County, which is also credited to the General Fund.

Short-Term Debt - Outstanding balance, at any given time, on amounts borrowed with a maturity date of 48 months or less.

Single Audit Act - For any community that expends $500,000 or more per year in federal grant awards, the Single Audit Act establishes audit guidelines that reduce to only one the number of annual audits to be completed to satisfy the requirements of the various federal agencies from which grants have been received.

Special Assessments - "Specials" consist of revenues from property owners who benefit from certain public improvements such as water and sewage lines, sidewalks, streets, and storm sewers. Special assessments are not a "tax" but a "user fee."  The assessments, however, are included on the property tax bill sent out by the County each November.  "Specials" are usually paid by the property owner over a period of 10 to 20 years.  The interest rate paid by developers or property owners is the same rate that the City is able to sell its general obligation bonds.  In many cities, public improvements are not publicly financed.  Instead a developer is required to find private financing at conventional interest rates.  These costs are attached to the price of the lots and homes sold by the developer.  Because the City of Manhattan issues tax exempt general obligation bonds to finance public improvements, developers and homeowners are able to secure lower interest rates.  By publicly financing public improvements through the use of special assessment bonds, a government is able to help the construction industry keep the cost of housing down and stimulate the local economy.

Special Revenue Fund - A fund used to account for the proceeds of specific revenue sources that can only be spent for certain purposes.

STAR Bonds - The STAR (sales tax revenue) bond program provides Kansas municipalities the opportunity to issue bonds to finance the development of major commercial entertainment and tourism areas and use sales tax revenue generated by the development to pay off the bonds.

Surplus Revenue - The amount by which cash, accounts receivable, and other assets exceed liabilities and reserves.

Tax Increment Financing (TIF) - Debt secured by an incremental tax earmarked for servicing the debt, such as a half-cent sales tax, or payable from taxes derived from incremental growth in the tax base that was financed by the tax increment.

TNO District - Traditional Neighborhood Overlay District addresses infill housing and neighborhood stability issues in the older neighborhoods of the community.  It is tailored to address the unique site plan and building character issues found in these areas.

Transient Guest Tax - The City imposes a 5% tax on all hotel and motel rooms within the City limits. The Kansas Department of Revenue collects the tax and remits it to the City on a quarterly basis. The proceeds go into the Tourism and Convention Promotion Fund.

Trust Fund - In general, a fund for money donated or transferred to a municipality with specific instructions on its use. As custodian of trust funds, the treasurer invests and expends such funds as stipulated by trust agreements, as directed by the commissioners of trust funds, or by town meeting.  Both principal and interest may be used if the trust is established as an expendable trust.

Unfunded Mandate - A requirement imposed by federal or state law, regulation or order without underlying financial support, thereby resulting in direct or indirect costs to the municipality made responsible for its implementation.

U.S.D. 383 - Unified School District 383 is the public school district within the geographical area of the City of Manhattan.

User Fees - A municipal funding source where payment is collected from the user of a service to help defray the cost of providing the service. Fees charged by the City for the use of certain programs or facilities that include the zoo, recreation programs, permits, licenses, airport, etc.  

Zoo Admission Fees - The City began a zoo admission fee in 1989. Income generated from the zoo admission fee is credited to the Special Sunset Zoo Fund and is used to finance special zoo improvements either on a pay-as-you-go basis or to pay principal and interest on zoo improvement bonds.