Governmental Accounting Standards Board (GASB) 39 provides guidance to determine whether certain organizations for which the primary government (SMSD) is not financially accountable should be reported as component units based on the nature and significance of their relationship with the primary government.

Organizations that are legally separate, tax-exempt entities and that meet ALL of the following criteria should be discretely presented as component units. These criteria are:

* The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents.

* The primary government, or its component units, is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization.

* The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are SIGNIFICANT to that primary government.