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MD&A-6

City of Raleigh

Management’s Discussion and Analysis

By far the largest portion of the City of Raleigh’s net position ($1,396.7 million or 62.8%) reflects its investment

in capital assets (e.g., land, buildings, machinery, and equipment) net of any related debt used to acquire those

assets that is still outstanding. The City of Raleigh uses these capital assets to provide services to citizens;

consequently these assets are not available for future spending. Although the City of Raleigh’s investment in its

capital assets is reported net of outstanding related debt, it should be noted that the resources needed to repay

this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate

these liabilities.

An additional portion of the City’s net position ($347.0 million or 15.6%) represents resources that are subject to

external restrictions on how they may be used. The remaining balance of unrestricted net position ($481.7 million

or 21.6%) may be used to meet the City’s ongoing operations.

At the end of the current fiscal year, the City of Raleigh is able to report positive balances in all three categories

of net position both for the City as a whole, as well as for its separate governmental and business-type activities.

The City’s net position increased by $157.5 million in operating results from prior year. In fiscal year 2015-16,

the City had a restatement of fund balance in the General Fund that reclassified the Law Enforcement Officers’

Special Separation Allowance from a pension trust fund to the General Fund in compliance with Governmental

Accounting Standards Board Statement 73. The City’s net pension asset in prior year also changed and is reported

as a net pension liability for June 30, 2016, and there will continue to be fluctuations from year to year due to

actuarial assumptions and investment earnings. The following table summarizes the changes in net position,

including a restatement amount of $3.1 million: