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Home My WebLink About06012010 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 z 6/1/2010 1 6/1/2010 __ __- 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 3 2 _ ....-- 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 6 6/1/2010 3 6/1/2010 ,, ~.. __ -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. 8 4 __. 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. 9 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. ~o 6/1/2010 5 6/1/2010 ..- 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. ~~ _ f-- 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. ~z 6 ~. 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. 13 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. 14 6/1/2010 7 6/1/2010 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. 15 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. 16 g