Issue:

How should the existing expendable trust funds be classified under the new guidelines for fiduciary funds in GASB Statement #34?

Reference:

GASB Statement #34, ¶ 69-¶ 73:
"Fiduciary funds should be used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government's own programs. "

Funds held in a fiduciary capacity for individuals, private organizations or other governments fall into one of three types of trust funds or are agency funds. Agency funds account for situations where the government's role is only custodial, and involve the receipt, temporary investment and remittance of the funds to third parties.

The three types of trust funds defined in GASB Statement #34 are:

1. Pension (and other employee benefit) trust funds. These funds include defined benefit pension plans, defined contribution plans, other postemployment benefit plans, and other employee benefit plans where resources are held in trust for members and beneficiaries.
2. Investment trust funds. These funds are the external portion of investment pools reported by the sponsoring government.
3. Private-purpose trust funds. All other trust arrangements "under which principal and income benefit individuals, private organizations, or other governments" are private-purpose trust funds.

In the case of private-purpose trust funds, additional clarification of what constitutes private purpose is needed. Since the definition of a fiduciary fund includes the limitation that "funds cannot be used to support the government's own programs," then the term is "best understood as referring to the absence of a public purpose rather than to the presence of a private benefit" (GAAFR Blue Book, 2001 edition, p.107). The case of a trust fund for a municipal cemetery is used. Even though the cemetery provides a benefit to individuals and their families, it is also a government program and therefore cannot be classified as a private-purpose trust fund.

Permanent funds are not fiduciary funds. This new governmental type fund "should be used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs--that is, for the benefit of the government or its citizenry." (GASB Statement #34, ¶ 65)

If a fund does not meet the above criteria to be reported as a trust or agency fund, or a permanent fund, it may be reported as a special revenue fund.

Evaluation:

All the expendable trust funds are located in Trust Fund 600 in the County's financial accounting system. Within Trust Fund 600 there are six separate subfunds used to account for different sources of funds.

An analysis of the County's expendable trust funds was conducted. None of these funds meet the criteria to be reported as one of the new types of trust funds. Some funds will be reclassified to agency funds or permanent funds

Position:

All agency funds and permanent funds in Trust Fund 600 will be moved to new or existing locations within the FAMIS reporting structure. The funds remaining in the six separate subfunds will be reported as follows:

Subfund 601, Other Trust Funds:
All remaining projects will be combined into a new special revenue fund titled "Other Special Purpose Funds".

Subfund 602, State of Florida LETF

Subfund 603, US Treasury LETF

Subfund 604, US Justice LETF

Subfund 605, Federal LETF Prior to 1996
These funds administered by the Miami-Dade Police Department (from forfeited assets) will be combined into a new special revenue fund titled "Law Enforcement".

Subfund 606, Other Trust Funds-All Years
These funds administered by DERM will be reported as a new special revenue fund titled "Wetlands Protection".