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Indian River County, Florida <br />Notes To Financial Statements <br />Year Ended September 30, 2012 <br />NOTE 2 - RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL <br />STATEMENTS - Continued <br />B. Explanation of Differences Between Governmental Fund Operating Statements and the <br />Statement of Activities <br />The "net change in fund balances" for governmental funds, ($13,182,985), differs from the "change in <br />net position" for governmental activities, $4,303,294 reported in the statement of activities. The <br />differences arise primarily from the long-term economic focus of the statement of activities versus the <br />current financial resources focus of the governmental funds. The effect of the differences is illustrated <br />below. <br />Capital related items <br />When capital assets that are to be used in governmental activities are purchased or constructed, the <br />resources expended for those assets are reported as expenditures in governmental funds. However, in <br />the statement of activities, the costs of those assets are allocated over their estimated useful lives and <br />reported as depreciation expense. As a result, fund balances decrease by the amount of financial <br />resources expended, whereas net position decreases by the amount of depreciation expense charged for <br />the year. <br />Capital outlay $ 27,751,553 <br />Depreciation expense (20,004,763) <br />Transfers to business -type activities (40,489) <br />Capital contributions 1,918,753 <br />Loss on assets (948,213) <br />Difference $ 8,676,841 <br />Long-term debt transactions <br />Payments of bond principal, bond premium, and pollution remediation costs are reported as an <br />expenditure in the governmental funds and, thus, have the effect of reducing fund balance because <br />current financial resources have been used. However, the payments reduce the liabilities in the <br />statement of net position and do not result in an expense in the statement of activities. <br />Bond principal payments made $ 8,060,000 <br />Bond premium payments made 93,225 <br />Medicaid settlement costs (790,434) <br />Pollution remediation costs 83,300 <br />Total $ 7,446,091 <br />Governmental funds report interest and OPEB expenditures based on when they are paid. The statement <br />of activities reports interest expense as it is incurred. This is the net number of the previous year accrual <br />and the current year accrual. <br />Net accrued OPEB expense $ 132,097 <br />Net accrued bond interest payable 75,842 <br />Total $ 207,939 <br />57 <br />