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CITY OF EUGENE, OREGON <br />Notes to Basic Financial Statements <br />(1) Summary of Significant Accounting Policies, continued <br />(L) Compensated Absences <br />Liabilities for accumulated or vested vacation leave and compensation time benefits (compensated absences) are <br />recorded in the government-wide financial statements and proprietary fund financial statements.The governmental <br />fund financial statements do not report liabilities for compensated absences unless they are due for payment. Sick <br />leave does not vest and is recorded in all funds as taken. <br />(M) Noncurrent Obligations <br />Noncurrent obligations are reported in the government-wide and proprietary fund financial statements as liabilities. <br />The governmental fund financial statements do not report noncurrent obligations because they do not require the use <br />of current financial resources. Bond discounts and premiums are deferred and amortized over the term of the bonds <br />using the bonds-outstanding method in the government-wide and proprietary fund financial statements, but are <br />recognized during the current period in the governmental fund financial statements. The bonds-outstanding method <br />does not differ significantly from the effective interest method. Bond issuance costs are expensed in the period <br />incurred. <br />The limited tax pension obligations are deep discount bonds that increase in value based on the initial yield to <br />maturity. This increase in value is reflected as an increase in noncurrent liabilities on the Statement of Net Position <br />and as interest expense on the Statement of Activities. <br />(N) Deferred Inflows/Outflows of Resources <br />The government-wide and fund financial statements will sometimes report deferred outflows of resources and <br />deferred inflows of resources. Items in these categories represent a consumption or acquisition of net position (fund <br />balance) that applies to future periods. <br />(O) Pensions <br />For purposes of measuring the net pension asset (liability), deferred outflows of resources and deferred inflows of <br />resources related to pensions, information about the fiduciary net position of the Oregon Public Employees <br />Retirement System (OPERS), and additions to/deductions from OPERS's fiduciary net position have been determined <br />on the same basis as they are reported by OPERS. For this purpose, benefit payments (including refunds of <br />employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are <br />reported at fair value. <br />(P) Fund Balance <br />In the fund financial statements, the fund balance for governmental funds is reported in classifications that comprise a <br />hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific <br />purposes for which amounts in those funds can be spent. <br />Fund balance is reported as nonspendable when the resources cannot be spent because they are either in a <br />nonspendable form or legally or contractually required to be maintained intact. Resources in nonspendable form <br />include inventories, prepaids and deposits, and assets held for resale. <br />Fund balance is reported as restricted when the constraints placed on the use of resources are either: (a) externally <br />imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other <br />governments; or (b) imposed by law through constitutional provisions or enabling legislation. <br />Fund balance is reported as committed when the City Council passes an ordinance that places specific constraints on <br />how the resources may be used. The City Council can modify or rescind the ordinance at any time through passage <br />of an additional ordinance. <br />Resources that are constrained by the City’s intent to use them for a specific purpose, but are neither restricted nor <br />committed, are reported as assigned fund balance. Intent is expressed when the City Council approves which <br />resources should be “reserved” during the adoption of the annual budget. The policies that address the designation <br />of “reserves” are included in the City’s financial management goals and policies adopted by the Council. The City’s <br />Finance Director uses that information to determine whether those resources should be classified as assigned or <br />unassigned for presentation in the City’s Comprehensive Annual Financial Report. <br />continued <br />46 <br />