Accounting Method Tustin utilizes accounting practices designed to provide transparency, fiscal accountability, and meaningful financial information to decision-makers, residents, and stakeholders. Governmental funds are maintained using the modified accrual basis of accounting, which is the standard methodology prescribed for local governments and emphasizes the measurement of current financial resources and obligations. Under the modified accrual basis, revenues are recognized when they are both measurable and available to finance current operations. Revenues are considered measurable when the amount can be reasonably determined and available when collection is expected within the current fiscal period or soon enough thereafter to pay current liabilities. Expenditures are generally recognized in the period in which the related liability is incurred and goods or services are received. Certain long-term obligations, including debt principal and interest, claims and judgments, and compensated absences, are recognized when payment becomes due. This approach provides a practical and reliable measurement of the City’s near-term financial position and budgetary compliance. To further enhance financial accountability and stewardship, the City utilizes fund accounting to segregate resources based on their intended purpose and legal restrictions. Individual funds are maintained for governmental operations, capital improvement projects, debt service, and other designated activities. In accordance with governmental accounting standards, fund balances are classified as non-spendable, restricted, committed, assigned, or unassigned based on the nature and level of constraint placed on the use of financial resources.
The modified accrual basis supports effective financial management by providing City leadership with timely and accurate information for budget development, operational oversight, long-term planning, and fiscal sustainability initiatives.
The City’s Water Enterprise Fund is accounted for using the full accrual basis of accounting, which is consistent with accounting practices utilized by private-sector enterprises. Under this method, revenues and expenses are recognized when earned or incurred, regardless of the timing of related cash flows. The full accrual basis provides a comprehensive view of the financial condition and operational performance of the utility, including long-term assets, liabilities, capital investments, and infrastructure obligations.
Together, these accounting methodologies support the City’s commitment to sound financial management, transparent reporting, and responsible stewardship of public resources.
Budget Method Tustin utilizes a comprehensive budget development process designed to support fiscal sustainability, operational accountability, and long-term strategic planning. The biennial budget serves as the City’s primary financial planning document and provides a framework for aligning available resources with community priorities, service delivery objectives, and City Council policy direction. The budget process is conducted in accordance with California law and incorporates industry best practices intended to promote transparency, public participation, and responsible stewardship of public funds. Development of the budget is a collaborative effort involving the City Council, City management, operating departments, and the community.
The City’s budget development process generally includes the following components:
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