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HomeMy WebLinkAboutLEGISLATION"x City of Miami City Hall 3500 Pan American G �CF,-Man, Legislation Drive Miami, FL 33133 vdww.miamigov.com Ordinance File Number: 10-00989 Final Action Date: AN ORDINANCE OF THE MIAMI CITY COMMISSION AMENDING CHAPTER 18/ ARTICLE IX/DIVISION 2, OF THE CODE OF THE CITY OF MIAMI, FLORIDA, AS AMENDED, ENTITLED "FINANCE/FINANCIAL POLICIES/FINANCIAL INTEGRITY PRINCIPLES", BY CLARIFYING THE FINANCIAL INTEGRITY PRINCIPLES; CONTAINING A SEVERABILITY CLAUSE AND PROVIDING FOR AN IMMEDIATE EFFECTIVE DATE. WHEREAS, the City of Miami ("City") recognizes it has made improvements in its financial position through adherence to financial "best practices;" and WHEREAS, the City has formalized a series of financial principles, many of which are currently utilized by the City, which will serve as the basis for governing the City's finances in the future; and WHEREAS, the City desires to clarify and expand the financial integrity principles it had adopted and implemented to comply with required federal standards; NOW, THEREFORE, BE IT ORDAINED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. The recitals and findings contained in the Preamble to this Ordinance are adopted by reference and incorporated as if fully set forth in this Section. Section 2. Chapter 18/Article IX/Division 2, entitled "Finance/Financial Policies/Financial Integrity Principles," is amended in the following particulars:{1} "CHAPTER 18 FINANCE ARTICLE IX. FINANCIAL POLICIES City of Miami Page I of 7 File Id: 10-00989 (Version: 1) Printed On: 812712010 File Number: 10-00989 DIVISION 2. FINANCIAL INTEGRITY PRINCIPLES Sec. 18-542.- Financial integrity principles. The following financial integrity principles are hereby adopted: (1) Structurally balanced budget. The city shall maintain a structurally -balanced budget. Recurring revenues will fund recurring expenditures. (2) Estimating conference process. The city shall adopt budgets and develop its long and short-term financial plan utilizing a professional estimating conference process. Conference principals shall include, but not be limited to: one principal from the budget office; one principal from the finance department and two non -staff principals with public finance expertise. (3) Interfund borrowing. The city shall not borrow or use internal fund transfers to obtain cash from one fund type or reserve to fund activities of another fund type or reserve unless such use is deemed lawful, and unless the estimating conference has determined that (a) the funds to be loaned will not be needed during the lending period, and (b) the funds for repayment will be available within a two-year period. Any actions taken to borrow funds under these conditions must be separately presented to and approved by the city commission and the term of such borrowing shall not extend beyond the last day of the subsequent fiscal year. Recognizing that some programs are funded by grants or other entities on a reimbursement basis, the city shall apply for such reimbursements on a timely basis to minimize the period that city funds are used as float. In the event loans/float for these reimbursements extend beyond the end of a fiscal year, such reimbursements shall be reflected as receivables in the comprehensive annual financial statements report (CAFR) to the extent allowed under accounting principles generally accepted in the United States of America (GAAP). The department of finance shall make a quarterly determination of the amount of expenses incurred which may not be reimbursable under these programs. A quarterly report of expenses incurred but not reimbursable shall be presented to the city commission, together with the actions needed to avoid project deficits. (4) For purposes of this section, city-wide surplus for any fiscal year is defined as the increase in unreserved general fund balance as reflected in the city's comprehensive annual financial report (CAFR). City-wide deficit for any fiscal year is defined as the decrease in unreserved general fund balance as reflected in the city's comprehensive annual financial report (CAFR). Budget surplus of any office, department or elected official is defined as the excess of budgeted expenses over actual expenses in any fiscal year. Notwithstanding anything to the contrary in this section, the total amount of budget surplus to be added to designated reserves and special revenue funds pursuant to this section (together, the "rollover amounts") is limited to city-wide surplus for any fiscal year. In the event the rollover amounts would result in a city-wide deficit, then each budget surplus within the rollover amounts shall be reduced proportionately so the city's comprehensive annual financial report (CAFR) will reflect no change in undesignated, unreserved general fund balance. In the event that a city-wide deficit would result before effecting the rollover amounts in any fiscal year, then no rollover amounts shall be available. a. Budget surpluses in an elected official's budget in any fiscal year shall be reflected as designated reserves at the end of the fiscal year in which such surplus arose and be appropriated for discretionary use of such elected official for the following fiscal year. City of Miami Page 2 of 7 File Id. 10-00989 (Version: 1) Printed Orr. 812712010 File Number: 90-00989 b. Budget surpluses of the parks and recreation department shall be allocated, as of the end of the fiscal year in which such surplus arose, to a parks special revenue fund. Allowed expenditures from the parks special revenue fund shall be limited to the purchase of parks recreational and maintenance equipment and the direct operations of recreational programs in and for the city's parks, subject to appropriation by the city commission. c. Budgeted surpluses of the department of conferences, conventions and public facilities shall be allocated, as of the end of the fiscal year in which such surplus arose, to a public facilities special revenue fund. Allowed expenditures of the public facilities special revenue fund shall be limited to capital improvements for the city's public facilities, subject to appropriation by the city commission. d. Budgeted surpluses of the department of information technology shall be allocated, as of the end of the fiscal year in which such surplus arose, to an IT strategic plan special revenue fund. Allowed expenditures of the IT strategic plan special revenue fund shall be limited to expenditures, excluding those related to permanent city staff, necessary for the implementation of the city's information technology strategic plan, subject to appropriation by the city commission. (5)Reserve policies, The following three reserve policies categories are established for the general operating fund of the city: a. Current fiscal year contingency. A "contingency" reserve level of $5,000,000.00 shall be budgeted annually. Such contingency reserve shall be available for use, with city commission approval, during the fiscal year, to fund unanticipated budget issues which arise or potential expenditure overruns which cannot be offset through other sources or actions. The unused portion of the budgeted contingency reserve in any fiscal year shall be reflected as designated " owes assigned fund balance reserves until such time as the city has funded 50 percent of the liabilities of the long-term liabilities (excluding bonds, loans, and capital lease payables) as reflected in the city's comprehensive annual financial report (CAFR). Amounts not needed to satisfy the 50 percent requirement shall be considered general fund WRGIeGigRated .oro^,e_ unassigned fund balance reserve and be treated in accordance with subsection (5)b. b. General fund undesignated r-osewe unassigned fund balance reserves. The city shall retain undesignated reserves unassigned fund balance reserves equal to a threshold ten percent of the prior three years average of general revenues (excluding transfers), Such reserves may only be used for offsetting an unexpected mid -year revenue shortfall or for funding an emergency such as a natural or man-made disaster, which threatens the health, safety and welfare of the city's residents, businesses or visitors. Any time these reserve funds fall below the ten percent threshold, the city commission shall adopt a plan to achieve the threshold within two fiscal years. Amounts in excess of the ten percent threshold may be used for capital improvements, unanticipated expenditures necessary to assure compliance with legal commitments, and for expenditures that will result in the reduction of recurring costs or the increase in recurring revenues of the city. C. ID86igRat9d reserves General Fund assigned fund balance reserves. The city shall retain assigned fund balance reserves equal to ten percent of the prior three years average of general revenues (excluding transfers). Amounts designated as "contingency" reserve in 5(a) shall be included in the calculation of meeting the ten percent of the prior three years average of general revenues for the assigned fund balance category_ Such reserves shall be used for funding long-term liabilities and commitments of the city such as: 1. Compensated absences and other employee benefit liabilities, including liabilities City of Miami Page 3 of 7 File M: 10-00989 (Version: 1) Printed On: 812 712 010 File Number: 10-00989 related to post-retirement benefits; 2. Self-insurance plan deficits (including workers compensation, liability claims and health insurance); 3StFategiG initiatives ( 1 4i1 nmmPloted , /1 Blue Robb9R GGMMiccinn lRIt;atIVGG ( Rtil nmmPletGd); , 5-.3 Anticipated adjustments in pension plan payments resulting from market losses in plan assets and other unanticipated payments necessary to maintain compliance with contractual obligations. Payment for compensated absences and other employee benefit liabilities and self-insurance plan deficits may be drawn from this reserve during the fiscal year and shall be replenished each year until fifty percent (50%) if such the liabilities are funded. Other designated reserves may be drawn upon without the need for replenishment. (6) Proprietary funds. The city shall establish proprietary funds only if the costs to provide the service are fully funded from the charges for the service. (7) Multi-year financial plan. The city commission shall annually adopt a five year financial plan by September 30 of each year, reflecting as the base year, the current year's budget. For fiscal year 2004 the multi-year financial plan will be adopted no later than 30 days after the completion of labor negotiations. Such plan will include cost estimates of all current city operations and pension obligations, anticipated increases in operations, debt service payments, reserves to maintain the city's officially adopted levels and estimated recurring and non-recurring revenues. This plan will be prepared by fund and reflect forecasted surpluses or deficits and potential budget balancing initiatives, where appropriate. (8) Multi-year capital improvement plan. The city commission shall annually adopt a capital improvements plan ("CIP") by November 30th of each year. The CIP shall address cost estimates for all necessary infrastructure improvements needed to support city services, including information technology, with an adequate repair and replacement ("R&R") component. Funded, partially funded and unfunded projects shall be clearly delineated The CIP shall be detailed for the current fiscal year and for five additional years and, if practicable, additional required improvements aggregated for two additional five year periods. To the extent feasible, department heads shall be required to submit independent needs assessments for their departments for use in preparing the CIP. The CIP will be detailed by fund, include recommended project prioritization rankings, identified revenue sources, planned financing options and unfunded projects. The CIP shall include estimates of the operational impacts produced for the operation of the capital improvements upon their completion. The CIP shall include a component reflecting all on-going approved capital projects of the city, the date funded, amount budgeted, amount spent since the start date, remaining budget, fiscal impact of known changes to financial assumptions underlying the project, estimated expenditures by fiscal year for the project and estimated completion date. Approved projects, with circumstances that arise which change the funding requirements of the project, shall be addressed in the CIP annually. (9) Debt management. The city shall manage its debt in a manner consistent with the following principles: City of Miami Page 4 of 7 File Id. 10-00989 (Version: 1) Printed On: 812712010 File Number: 10-00989 a. Capital projects financed through the issuance of bonded debt shall be financed for a period not to exceed the estimated useful life of the project. b. The net direct general obligation debt shall not exceed five percent and the net direct and overlapping general obligation debt shall not exceed ten percent of the taxable assessed valuation of property in the city. c. The weighted average general obligation bond maturity shall be maintained at 15 years or less. d. Special obligation debt service shall not exceed 20 percent of non -ad valorem general fund revenue. e. Revenue based debt shall only be issued if the revenue so pledged will fully fund the debt service after operational costs plus a margin based on the volatility of the revenues pledged. (10) Financial oversight and reporting. The city shall provide for the on-going generation and utilization of financial reports on all funds comparing budgeted revenue and expenditure information to actual on a monthly and year-to-date basis. The finance department shall be responsible for issuing the monthly reports to departments, the mayor and city commission, and provide any information regarding any potentially adverse trends or conditions. These reports should be issued within 30 days after the close of each month. The aRRual City's w+ornnl ,,Wi+ reperts comprehensive annual financial report (CAFR), ciRgle audit, rnaRagemeRt leer) of the ni+,i shall be prepared by the external auditor and presented to the mayor and city commission by March 31 of each year. The single audit and management letter of the city shall be prepared by the external auditor and be presented to the mayor and city commission by April 30 of each year.The external auditor shall with the extem.1 nudi+ers; +„ review the findings and recommendations of the audit, single audit and management letter, with the mayor and city commission prior to July 30 of each year . (11) Basic financial policies. The city shall endeavor to maintain formal policies, which reflect "best practices" in the areas of: a. Debt: Such policy shall address affordability, capacity, debt issuance and management. b. Cash management and investments: Such policy shall require 24 -month gross and net cash-flow projections by fund and address adequacy, risk, liquidity and asset allocation issues. c. Budget development and adjustments: Such policy shall establish proper budgetary preparation procedures and guidelines, calendar of events, planning models by fund, budget adjustment procedures, establishment of rates and fees, indirect costs/interest income and the estimating conference process. The proposed budget should be scheduled to allow sufficient review by the mayor and city commission while allowing for sufficient citizen input. The city budget document reflecting all final actions as adopted by the city commission on or before September 30 of each year, shall be printed and made available within 30 days of such adoption. d. Revenue collection: Such policy shall provide for maximum collection and enforcement of existing revenues, monitoring procedures, and the adequacy level of subsidy for user fees. e. Purchasing policy: Such policy shall establish departmental policies and procedures and provide appropriate checks and balances to ensure the city departments adhere to the city's purchasing policies. f. Collective bargaining management practices: Such policy shall require that all memorandums of understanding (M.O.U.$) entered into between the city and any collective bargaining unit that amends, alters, or modifies any existing collective bargaining agreement and that may have a City of Miand Page 5 of 7 File 1d: 10-00989 (Version: 1) Printed On: 812712010 File Number: 10-00989 fiscal impact of $40,000.00 or more be reviewed by the budget director, reviewed by the finance committee with recommendations to the city manager. The finance committee shall provide its recommendations regarding such M.O.U.s to the city manager not less than 14 days prior to consideration by the city commission of any said M.O.U. for ratification. In the event that the finance committee is unable to meet within the timeframes provided herein, then the city manager may proceed to the city commission for ratification. (12) Evaluation committees. a. Solicitations. An evaluation committee, consisting of a majority of citizen and/or business appointees from outside city employment, shall be created, to the extent feasible, to review city solicitations ("requests for proposals," "requests for qualifications," etc.). The recommendation(s) of the evaluation committee shall be provided to the mayor and city commission on all such solicitations prior to presentation to the city commission for official action. b. Collective bargaining agreements. The. City of Miami Finance Committee, established pursuant to city commission resolutions 98-631 and 98-767, shall review and provide recommendations to the city manager regarding all collective bargaining agreements. The finance committee shall provide its recommendations regarding such collective bargaining agreements to the city manager not less than 14 days prior to consideration by the city commission of any said collective bargaining agreement for ratification. In the event that the finance committee is unable to meet within the timeframes provided herein, then the city manager shall proceed to the city commission for ratification. (13) Full cost of service. The city shall define its core services and develop financial systems that will determine on an annual basis the full cost of delivering those services. This information shall be presented as part of the annual budget and financial plan. *I. Section 3. If any section, part of section, paragraph, clause, phrase or word of this Ordinance is declared invalid, the remaining provisions of this Ordinance shall not be affected. Section 4. This ordinance shall become effective immediately after final reading and adoption thereof.{2} APPROVED AS TO FORM AND CORRECTNESS'S JULIE O. B CITY ATTORNEY Footnotes: City of Miami Page 6 of 7 File Id: 10-00989 (lYersion: 1) Printed Ori: 8/27/2010 File Number: 10-00989 {1} Words/and or figures stricken through shall be deleted. Underscored words and/or figures shall be added. The remaining provisions are now in effect and remain unchanged. Asterisks indicate omitted and unchanged material. {2} This Ordinance shall become effective as specified herein unless vetoed by the Mayor within ten days from the date it was passed and adopted. If the Mayor vetoes this Ordinance, it shall become effective immediately upon override of the veto by the City Commission or upon the effective date stated herein, whichever is later. City of Mia mi Page 7 of 7 File Id: 10-00989 (Version: 1) Printed On: 8/27/2010