Utilizing the CAFR obtained for Exercise 1-16 and your answers to the questions asked in Chapter 1 through 9, assess the economic condition of the government.

For purposes of this project, the term economic condition is as defined earlier in this chapter. Examine the following issues and questions.

A. Analysis of revenues and revenue sources.

How stable and flexible are the city's revenue sources in the event of adverse economic conditions?

Is the revenue base well diversified, or does the city rely heavily on one or two major sources?

Has the city been relying on intergovernmental revenues for an excessive portion of its operating expenditures?

What percentage of total expenses of governmental activities is covered by program revenues? By general revenues?

Do any extraordinary or special items reported in the statement of activities deserve attention?

B. Analysis of reserves.

Are the levels of financial reserves (i.e., spendable fund balances, contingency funds, and unrestricted net position) adequate to meet unforeseen operational requirements or catastrophic events?

Do total governmental fund revenues exceed total governmental fund expenditures? Do General Fund revenues exceed General Fund expenditures? What has been the trend in the ratio of revenues to expenditures?

Is an adequate amount of cash and securities on hand, or could the city borrow quickly to cover short-term obligations?