06012010 FINANCIAL POLICIES PRESENTATIONFinancial Policies
Guidelines and Procedures for
Managing City Resources
June 1, 2010
nancial Policies
• Many types of regulations, policies and practices that
govern and guide the City's financial structure,
management and functions.
LEGAL
REQUIREMENTS
INTERNAL
CONTROLS AND CITY COUNCIL
AUDITING CITY' POLICIES &
PRACTICES 'FINANCIAL ORDINANCES
,STRUCTURE &'
PURCHASING & MANAGEMENT ACCEPTED
PROCUREMENT GOVERNMENT
REQUIREMENTS MANAGEMENT
ADMINISTRATIVE PRACTICES
POLICIES AND
PROCEDURES
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inancial Policies
LEGAL AUTHORITY:
• State and City Code Requirement
• Operating Budget and Capital Im
CITY COUNCIL:
• City-School Revenue Sharing Policy
• F;evenue Dedication Ordinance
• ~~on-Supplanting Policy
• Maintenance & Repair of Aging City
Infrastructure
• [)ebt Management Policies
• Fund Balance Policy
• E~udgetary Appropriation & Control
• Capital Project Appropriation &
Control
• F~evenue Policies
s
~rovement Program Ordinances
CITY MANAGER:
• Administrative Directives
• Resource Administration
• Grant Management
• Sponsorships
• Donations
• Procurement
• Internal Control Procedures
• Petty Cash and Change Funds
• Food, Beverage and
Refreshment Expense Guidelines
• Employee and Department
Payroll
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Po I i c i e s -_ -_ -_---_--
• CIP Projects have a minimum cost of $50,000, last several years and
require multi-year financing.
• New projects should be recommended only if there are new revenues to
support the construction and operations.
• "Adequately maintain what the City has before constructing new
facilities:'
• Only City Council can authorize a new CIP Project or change the scope.
• Projects are prioritized for funding based on City Council priorities and
set criteria.
• Approach to financing:
• Cash first -debt is the source of last resort.
• Project must have a longer life than 20 years to be bond financed.
• Pay-as-you-go funding should balance the impact on services against the
benefit of reducing debt.
• Account for operating budget impacts.
s
~e6t Manageme-n~P~oli-cies
• The City issues bonds for capital improvements that exceed $250,000,
or which cannot be financed from current revenues.
• Debt funding is the last source of financing to be considered.
• Debt financing is most appropriate for projects with a minimum useful
life of 20 years.
Indicators:
• Debt service for general government debt should not exceed 10% of
general government expenditures.
• Total General Obligation Net Debt will not exceed 3.5% of assessed
value.
• Net Debt Per Capital is set at $2,400.
• Net Debt to Income Per Capita should not exceed 6.5%.
• Types of Financing:
• Charter Bonds
• Referendum Bonds
• Public Facility Revenue Bonds
• Lease/Purchase Agreements
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-und Balance Po icy
• The General Fund will maintain an undesignated
balance equal to 8% to 12% of the following
year's estimated revenues with a goal of 10%.
• Fund balance shall not be used to finance
continuing expenditures.
• 'The Operating Budget will contain an estimate of
the undesignated balance at ]une 30tH.
• Program fund balance annually, but not in future
years of the CIP.
evenue Policies
• 'The City will seek a diversified and stable revenue
system to support programs, debt service, and
capital construction.
• Taxes will be equitable to various groups of
taxpayers to the extent allowed by law.
• 'The City will use fees and user charges to offset the
cost of operating the service to the community.
• In the case of Enterprise Funds, fees must be set
sufficient to recoup the operation, maintenance,
capital replacement, indirect costs, depreciation, and
debt service related to that business.
• 'Tax rates and fees will be reviewed annually with
City Council and will be set sufficient to cover
current expenses.
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udget Policies ------
• The highest level of budgetary controls are at the
appropriation units authorized by City Council -
generally a Department or Capital Project.
• Only City Council can approve new, full-time
positions.
• Only City Council can appropriate new revenues,
regardless of the amount.
• Transfers between appropriation units greater
than $100,000, or which starts a new program or
expands an existing one must go to City Council.
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udget Policies
• The City Manager sets further controls for:
Personnel Accounts
• Operating Accounts
• Equipment Over $5,000 (each piece)
• Transfers between $25,000 & $100,000 require
the City Manager's approval (and are reported
to City Council)
• Transfers $25,000 and under must be approved
by Management Services.
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udget Changes - -Example 1
The Aquarium budgeted $250,000 for feeding
the marine animals, but fish food prices
increased 10% because of the Gulf Oil Spill.
What happens next?
Nothing -the Department had enough funding
budgeted in other operating accounts that no
transfers are required.
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Budget Changes -Example 2
~i"he General Registrar must hold a special election to
fill a General Assembly seat. The Department could
not budget for the additional $55,000 in expenses
because the seat was vacated unexpectedly.
What happens next?
The Department is small and unable to absorb the
expense; therefore, a transfer of appropriations is
necessary. The City Manager must approve a
transfer for $55,000 from the Reserve for
Contingencies and report it to the City Council.
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udget Changes -Example 3
The Department of Human Services has
received a $85,000 grant from the State to
fund a new full-time position to provide
additional mental health services.
What happens next?
City Council would have to accept and
appropriate the grant funding and
authorize the new position.
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ant Managemen -- o icies
• All grants must be reviewed by Management
Services staff and forwarded to the City Manager for
approval prior to submission.
• City Council acceptance and appropriation is
required for grants.
• The City will not supplant grant funds therefore, all
grant programs and positions are expected to
discontinue once the grant funding expires.
• Employees of grant-funded positions are notified of
this policy when hired.
• Grants must comply with the City's and Grantor's
financial policies and requirements.
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rocurement Po ides
• Enforce the requirements of the Virginia Public
Procurement Act (VPPA) that governs the purchasing
transactions of localities.
• 'The Purchasing Agent and the City Manager have
authority to execute contracts for the City.
• Requires that funds be available at the time of
purchase.
• Requires purchase requisition for all transactions
aver $1,000.
• IRequires competitive process for services greater
i~han $30,000.
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financial Policies
• Ensure financial integrity and provide a framework
for responsible fiscal decisions.
• The City has effective financial controls and policies
to guide decisions and operations.
• The goal of the City's financial policies is to strike a
balance between flexibility in providing services and
accountability to taxpayers.
• 'The City's policies work well and are adapted to the
changing environment.
The AAA Bond Rating is a measure
of the City's strong financial management.
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