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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Reporting Requirements for Annual Financial Reports of State Agencies and Universities

General Accounting

Government-wide Financial Statements
Program and General Revenue Classification

GASB 34 requires the government-wide statement of activities to report all changes (inflows and outflows of resources) in a government’s net position. The inflows of resources include program revenue, general revenue and others.

GASB 34 requires inflows of resources reported on the government-wide financial statement to be classified as:

  • Program revenue
    • Charges for services
    • Program-specific operating grants and contributions
    • Program-specific capital grants and contributions
  • General revenues
  • Non program-related capital contributions
  • Contributions to permanent and term endowments
  • Contributions to permanent fund principal
  • Transfers
  • Special items
  • Extraordinary items

There are four basic sources of revenue that fall under program or general revenue.

Type Revenue Source Revenue Classification
A Those who purchase, use or directly benefit from the program’s goods, services or privileges Always program revenue
B Parties outside the reporting government’s citizenry (such as other governments, nongovernmental entities or individuals) Program revenue if restricted to a specific program; general revenue if unrestricted
C All the reporting government’s taxpayers (includes all taxpayers regardless of whether they benefit from a particular program) Always general revenue, even if restricted
D The governmental entity itself (such as through investing) Usually general revenue, unless restricted

Program Revenues

Program revenues either derive directly from the program or from parties outside the reporting government’s taxpayers or citizenry. These revenues reduce the net cost of the function to be financed from the government’s general revenues. The statement of activities separates the three categories of program revenues into:

  • Charges for services
  • Program-specific operating grants and contributions
  • Program-specific capital grants and contributions

When identifying the function that pertains to program revenue, the determining factor for charges for services is the function that generates the revenue. For grants and contributions, the determining factor is the function to which the revenues are restricted.

Charges for Services

Charges for services is the term used for a broad category of program revenues generated from charges to customers, applicants or others who purchase, use or directly benefit from the goods, services or privileges provided or are otherwise directly affected by the services.

This category of revenues includes:

  • Fees charged for privileges
  • Payments for goods and services:
    • From other governments or individuals outside the reporting entity
    • Between governmental, fiduciary and proprietary fund types
  • Licenses
  • Permits
  • Lease or rental income
  • Operating special assessments (such as street cleaning or special street lighting) and any other amounts charged to service recipients
  • Fines and forfeitures resulting from direct charges to those who are “otherwise directly affected” by a program or service even though they receive no benefit

Program-Specific Grants and Contributions

Included in this category of revenues are those resulting from mandatory and voluntary non-exchange transactions with other governments, organizations or individuals that are restricted for use in specific programs. These revenues reduce the net expense of the related program to the reporting government and are designated as either:

  • Operating (multi-purpose) grants that include grants and contributions restricted to a program but may be used for either operating expenses or capital assets.
  • Capital grants and contributions that may only be used for capital purposes (in other words, only used to purchase, construct or renovate capital assets associated with a specific program).

Note: Multi-purpose grants that do not provide specific identification of programs and amounts are reported as general revenues.

Earnings on Investments

Report earnings on endowments or permanent fund investments as program revenues (operating grants and contributions) if the earnings are restricted to a program or programs specifically identified in the endowment or permanent fund agreement or contract. When earnings on the invested accumulated resources of a program are legally restricted for use by such program, reduce the net cost financed by the government’s general revenue and report the investment earnings as program revenues. Similarly, earnings on investments not held by permanent funds may also be legally restricted to certain functions or programs and are reported as program revenues.

Note: Earnings that finance “general fund programs” or “general operating expenses” are not reported as program revenue.

General Revenues

All revenues except those required to be reported as program revenues are general revenues. Examples of general revenue include:

  • All taxes, even those levied for a specific purpose
  • All other non-tax revenues that do not meet the criteria for classification as program revenues including:
    • Interest not restricted to a specific program
    • Grants and contributions not restricted to a specific program
    • Royalties not restricted to a specific program

General revenues are reported after the net (expense) revenue of the government’s functions.

The following types of financing sources from governmental and business-type activities are reported in the same manner as general revenues but are reported separately at the bottom of the statement of activities to determine the change in net position for the reporting period:

  • Non program-related capital contributions
  • Contributions to permanent and term endowments
  • Contributions to permanent fund principal
  • Special and extraordinary items
  • Transfers
Glenn Hegar
Texas Comptroller of Public Accounts
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