What Is a Statement of Revenues and Expenditures?

A statement of revenues and expenditures is a state or local government’s fiscal-year operating report, showing how much money came into each governmental fund and how much went out, and whether the year ended with a larger or smaller fund balance than it began with. Its full name on the page is usually the Statement of Revenues, Expenditures, and Changes in Fund Balances, and it sits inside the government’s Annual Comprehensive Financial Report. It covers the funds that finance core public services like police, fire, roads, and general administration, and it measures results against the legally adopted budget rather than against a profit target.

What the Statement Is Actually Measuring

The Governmental Accounting Standards Board requires governmental funds to use a measurement approach focused on current financial resources, so this statement only captures items that affect near-term spending power.¹ The question it answers is narrow and practical: did the money available this year cover the commitments made this year?

That framing is why the statement looks unfamiliar to anyone used to corporate financials. A for-profit income statement is built to measure net income, matching expenses to the revenue they helped generate and spreading long-lived costs across future periods through depreciation. The governmental version does none of that. When a city buys a fire truck or a library building, the entire purchase price shows up as a capital outlay expenditure in the year the money leaves the fund. When it makes a principal payment on a bond, the full payment appears as a debt service expenditure rather than as a reduction of a balance-sheet liability. Both treatments push the same idea: what matters here is cash and near-cash resources going out the door right now.

The Columns You’ll See

GASB Statement 34 identifies five governmental fund types, and each one that a government uses produces its own column on the statement (or is aggregated into an “other governmental funds” column if it is not considered major).¹ The far-right column combines them.

General Fund: the main operating fund for unrestricted revenues like property and sales taxes; every government has one and it usually carries the largest share of day-to-day spending.
Special Revenue Funds: revenue sources legally earmarked for specific purposes, such as a local gas tax dedicated to road repairs.
Capital Projects Funds: money used to build or acquire major assets like schools, bridges, or water treatment plants.
Debt Service Funds: resources set aside to make principal and interest payments on long-term bonds.
Permanent Funds: principal that must remain intact while the earnings finance a designated purpose, such as maintaining a public cemetery.

Because the money in each fund is legally restricted to a particular use, a healthy total across all funds does not necessarily mean the general fund is healthy. Reading fund by fund is the point.

Reading the Revenue Section

Revenues are listed by source. For most local governments, property taxes dominate, followed by sales taxes, franchise taxes, and any local income taxes. Beyond taxes, the common groupings are intergovernmental revenues (grants and shared revenues from federal or state governments, often tied to specific programs), charges for services (building permits, recreation fees, court filing fees), fines and forfeitures, and investment earnings.

The rule that most often surprises new readers is the timing rule. Under modified accrual accounting, revenue is recognized only when the amount is measurable and the money is available, meaning it was collected during the year or is expected to arrive soon enough after year-end to pay current bills.² For property taxes, GASB caps the post-year-end collection window at 60 days; taxes expected to trickle in later are deferred and kept off the current year’s statement.³ A government can be owed millions in taxes that are technically receivable, yet only a fraction shows up as revenue because the rest falls outside the availability window. The remainder appears as deferred inflows on the balance sheet, not here.

Reading the Expenditure Section

Expenditures are organized by function, meaning by the purpose the money served rather than by the type of cost. Typical functional categories include general government, public safety, public works, health and welfare, and culture and recreation. Within each function, you’ll find salaries, supplies, contracted services, and similar line items.

On the spending side, modified accrual mostly tracks full accrual logic: an expenditure is recorded when the related liability is incurred, so supplies received in June hit the books in June regardless of when the check clears.⁴ The big exception is long-term obligations. Interest on general long-term debt is not accrued over time. It is recognized only when the payment comes due, because that is when the current-period budget must cover it. The same “due and payable” logic applies to claims, judgments, and compensated absences owed to employees.

Capital Outlay

When a government buys equipment, vehicles, or land, or when it constructs a building, the entire cost is reported as a capital outlay expenditure in the period the purchase is made.⁵ The asset itself lives on the government-wide Statement of Net Position, not here.

Debt Service

Principal and interest payments on long-term bonds appear as separate expenditure line items, usually inside a dedicated debt service fund.⁵ Recording the full principal payment as an expenditure can look odd, but the logic is budgetary: the government appropriated those dollars for debt repayment this year, and the statement is designed to show that commitment.

Why Depreciation Never Appears

Depreciation allocates the cost of a long-lived asset across its useful life, but it never requires anyone to write a check. Because the statement tracks flows of spendable resources, depreciation has no place on it. GASB requires governments to report depreciation in the government-wide Statement of Activities instead, where full accrual accounting applies.¹

The Bottom Half: Fund Balance

After all revenues and all expenditures are listed, the statement produces a subtotal called “Excess (Deficiency) of Revenues Over Expenditures.” A positive number means normal operations generated more resources than they consumed. A negative number means the government spent more than it collected and had to lean on reserves or other sources.

Below that subtotal is a section for “Other Financing Sources and Uses.” These are transactions that move resources around without qualifying as ordinary revenues or expenditures. Bond proceeds are the most common source: issuing $20 million in bonds immediately adds $20 million in available resources, but calling that “revenue” would mislead readers because the bonds also create a matching obligation. Transfers between funds appear here too, since shifting money from the general fund to a debt service fund is not a new inflow or a service cost.

Combining the excess or deficiency with other financing sources and uses gives the “Net Change in Fund Balance.” Add that to the beginning fund balance and you get the ending fund balance, which is the single most-watched number on the statement. A declining fund balance over several years signals that recurring spending is outpacing recurring revenue, and it often prompts a closer look from credit analysts.

What the Statement Deliberately Leaves Out

Because the statement excludes long-term items by design, GASB requires a reconciliation schedule that bridges the net change in fund balances to the change in net position on the government-wide Statement of Activities.¹ Reading that reconciliation is the fastest way to see exactly what is missing.

The adjustments fall into predictable categories. Capital outlay expenditures get reclassified as assets, then depreciation is subtracted. Debt principal payments, which showed up as expenditures on the fund statement, are reversed because they reduce a liability rather than consume economic resources. Revenues that failed the availability test under modified accrual are added back as full-accrual revenues. Accrued interest on long-term debt, ignored on the fund statement until the payment date, is recognized as an expense.

These adjustments can be large. A government that spent $50 million building a new school will show a massive expenditure and a corresponding drop in fund balance, while the reconciliation reveals that net position on the government-wide statements barely moved because the spending created a $50 million asset. Both statements need to be read together to see the whole picture.

Where to Find It

Every state and local government publishes its statement of revenues, expenditures, and changes in fund balances inside its Annual Comprehensive Financial Report, or ACFR (previously called the CAFR). The ACFR also contains the government-wide statements, all other fund financial statements, notes, required supplementary information such as the budgetary comparison schedule, and the independent auditor’s opinion.⁶ Most governments post the full ACFR on their finance department’s website as a downloadable PDF.

For municipal bond investors, the Electronic Municipal Market Access (EMMA) system is the SEC-designated portal for municipal securities disclosures. EMMA provides free access to official statements, continuing disclosure filings, and financial data submitted by issuers across the country.⁷ Searching for a specific issuer will surface the most recent financial filings, which typically include the ACFR containing this statement. Filing deadlines vary by state but generally fall between three and nine months after the fiscal year ends.

1
Governmental Accounting Standards Board. Summary – Statement No. 34
2
Governmental Accounting Standards Board. Summary – Statement No. 33
3
Governmental Accounting Standards Board. Interpretation No. 5 – Property Tax Revenue Recognition in Governmental Funds
4
Government Accounting Standards Board. GASB Codification 1600 – Basis of Accounting
5
National Center for Education Statistics. Financial Accounting for Local and State School Systems – Chapter 5 – Reporting of Expenditures
6
National Center for Education Statistics. Exhibit 7 – Contents of a Comprehensive Annual Financial Report
7
Municipal Securities Rulemaking Board. Electronic Municipal Market Access