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Board Policy No. 17 <br />Budget Development <br />Page 1 of 6 <br />Summary <br />This policy ensures that proper procedures and controls are followed in the development and <br />implementation of the North County Transit District (NCTD, District) annual operating budget and <br />capital improvement program, pursuant to Resolution No. 18-09, dated October 18, 2018. <br />Basis of Accounting and Financial Principles <br />NCTD accounting records are maintained in accordance with generally accepted accounting <br />principles (GAAP) as established by the Government Accounting Standards Board (GASB). The <br />District utilizes a single enterprise fund for operating and capital purposes. Accordingly, the <br />District does not have traditional “fund balances” as typically found at other government agencies. <br />The enterprise fund is used to account for operations financed and operated in a manner similar <br />to a private business enterprise where the expense, including depreciation, of providing goods or <br />services to the general public on a continuing basis are financed or recovered through user <br />charges and grants. Although the District does budget for capital improvement projects, the <br />related capital outlays are recorded as increases in “capital assets” and “net position – invested <br />in capital assets” on the statement of net position of the enterprise fund. <br />NCTD uses the accrual basis of accounting in its audited financial statements. The budget for the <br />enterprise fund is also prepared on an accrual basis except for depreciation expense, which is <br />not budgeted. Accrual accounting records financial events based on economic activity rather than <br />financial activity. Revenues are recognized when they are earned and realized, regardless of <br />when actual payment is received. Expenses are recognized when incurred, regardless when they <br />are actually paid. <br />NCTD financial principles include the following: <br />1. Ongoing operations – Fund ongoing operations with ongoing revenues in a changing <br />environment where safety, compliance, and effectiveness are paramount. <br />2. Budget – Adopt an annual balanced budget where total revenues are equal to or exceed <br />total expenses to support service, operations, and capital decisions. Engage staff, NCTD <br />Board of Directors (Board) members and other stakeholders to identify significant budget <br />issues, focus on anticipated revenues and expenses, integrate business capital needs into <br />the capital program focused on maintaining an adequate level of capital investment, and <br />implement effective financial analysis, prioritization, and performance-based budgeting. <br />Additionally, coordinate long-range financial planning with the San Diego Association of <br />Governments (SANDAG), the county metropolitan planning organization (MPO), which <br />provides regional guidance in planning, programming, and construction to ensure an <br />integrated, regional transportation framework for San Diego County. <br />3. Revenues – Estimate revenues conservatively while being cognizant of federal, state, and <br />local conditions, considering new sources and assessing fare and route changes as <br />needed while using one-time revenues for one-time expenses or for capital investments.