SUBJECT
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Adopt resolution to amend the FY 23/24 budget for required Governmental GASB 87 and GASB 96 capital outlay adjustments. Accounting adjustments only - no fiscal impact.
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DESCRIPTION
Polk County follows the accounting requirements of the Governmental Accounting Standards Board (GASB). In accordance with these standards, Statement No. 87 (GASB 87), Leases, was implemented in FY 21/22. Statement No. 96 (GASB96) Subscription-Based Information Technology Arrangements (SBITAS) is effective for the BOCC's fiscal year ending September 30, 2024.
GASB 87 statement requirements:
1. Lessees must establish a right-to-use lease asset, offset by a lease liability, for the present value of the future minimum lease payments. The right-to-use asset is then amortized over the lease term. The monthly lease payments are reclassified as principal (reduction of lease liability) and interest. Accounting adjustments must be made to reclassify lease expenses as Debt Service Principal & Interest. To meet this requirement, the Budget and Management Services Division has prepared administrative budget amendments for County Management's approval across all funds per amendment policies.
2. GASB 87 also requires for new leases with a start date of 10/1/2021 and after (the effective date for GASB 87). Lessees must record capital outlay expenditures, offset by "other financing sources" revenue for the present value of the future minimum lease payments. Due to the requirement to budget for both the revenue and the capital expense, an amendment across all affected funds will be required. The total GASB 87 capital expenditures to record (offset by a credit to other financing sources) in FY 23/24 is estimated at $1,101,550. The largest contributing lease is with Ruthven Business, for a warehouse lease valued at $567,487.
GASB 96 statement requirements:
1. GASB 96 requires the capitalization of Software Subscription Licenses, a termed contract that conveys control o...
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