CITY OF LAWRENCE, KANSAS

Reconciliation of the Statement of Revenues,

Expenditures, and Changes in Fund Balances of Governmental Funds

To the Statement of Activities

For the Year Ended December 31, 2005

Amounts reported for governmental activities in the statement of activities are different because:

Net changes in fund balances - total governmental funds

$

(10,262,847)

Governmental funds report capital outlays as expenditures.  However, in the statement of

activities the cost of those assets is allocated over their estimated useful lives and reported as

depreciation expense.  This is the amount by which capital outlays exceeded depreciation

in the current period.

12,060,808

Revenues in the statement of activities that do not provide current financial resources are not

reported as revenues in the funds.

2,444,034

The issuance of long-term debt (e.g., bonds, leases) provides current financial resources

to governmental funds, while the repayment of the principal of long-term debt consumes

the current financial resources of governmental funds.  Neither transaction, however, has any

effect on net assets.  Also, governmental funds report the effect of issuance costs, premiums,

discounts, and similar items when debt is first issued, whereas these amounts are deferred and

amortized in the statement of activities.  This amount is the net effect of these differences in

the treatment of long-term debt and related items.

2,034,262

Some expenses reported in the statement of activities do not require the use of  current financial

resources and, therefore, are not reported as expenditures in governmental funds.

(635,477)

The net revenue of certain activities of internal service funds is reported with governmental

activities.

1,167,342

Change in net assets of governmental activities

$

6,808,122

The notes to the basic financial statements are an integral part of this statement