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HomeMy WebLinkAboutPre-LegislationJ-01-1047 9/3/02 7/22/03 SE ORDINANCE NO, 12276 AN ORDINANCE OF THE MIAMI CITY COMMISSION AMENDING CHAPTER 18, ARTICLE IX/DIVISION 2 ENTITLED "FINANCIAL POLICIES" TO CLARIFY AND EXPAND THE FINANCIAL INTEGRITY PRINCIPLES; CONTAINING A REPEALER PROVISION, A SEVERABILITY CLAUSE AND PROVIDING FOR AN IMMEDIATE EFFECTIVE DATE. WHEREAS, the 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, these principles are crucial to assuring potential investors that investments in the City are safe as the City plans to reenter the bond market; and 12276 WHEREAS, the City desires to clarify and expand the financial integrity principles it had adopted and implemented; NOW, THEREFORE, HE 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, Division 2, entitled "Financial Integrity Principles," is amended in the following particulars:1/ "Chapter 16 FINANCE ARTICLE IX. FINANCIAL POLICIES DIVISION 2. FINANCIAL INTEGRITY PRINCIPLES Sec, 18-541. Established; implementation, review; reports, Financial Integrity Principles and Policies to assure and maintain financial integrity in the City are hereby established and shall be implemented immediately upon adoption of this Ordinance. 11 Words and/or figures stricken through sha11 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. Page 2 of 14 122'6 The Financial Integrity Principles as set forth herein shall be reviewed and updated as necessary, at least every three years.. The City's Internal Auditor shall be responsible for preparation of a written report to be transmitted to the Mayor and the members of the City Commiaaion by July 1 of each year as to compliance with the principles and policies set forth in this Division. The report shall include recommendations for additional policies or actions, to be considered for action after reviewing the latest annual audit and management letter comments.The City's Finance Director shall prepare a report on the status of these Principles prior to the issuance of any bonded debt for the City of Miami. Sec. 18-542. The Financial Integrity Principles. The following Financial Integrity Principles are adopted; (1} Structurally Balanced Budget. The City shall maintain a structurally -balanced budget. Recurring revenues will fund recurring expenditures. Non rocurring rcvenucc and budget ourpluoca -hall eeplcnieh rcnorve lcvclo, auppe nti-leg liabilities sad -pay for non recurring expendieeeee, in eho order Dee forth heroin. (2) Estimating Conference Process, The City shall adopt budgets and develop its long and short-term financial and capital improvement plans containing estimates developed utilizing a professional estimating conference process. Conference principals shall include, but not be limited tot 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 tranefere to obtain cash from one fund type or reserve to fund activities of another fund type or reserve unless such use is deemed lawful, Page 3 of 14 12278 i and unless the Estimating Conference has determined that (a) the 'funds to be be awed 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 and noted- an part of tho annual budges —prose a in the annual financial statements to the extent allowed under Generally Accepted Accounting Principles. 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. 14) 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'a annual financial statements. City -Wide Deficit for any fiscal year in defined as the decrease in Unreserved General Fund Balance as reflected in the City's annual financial statements. Budget Surplus of any office, department or elected official is defined as the excess of budgeted expenses over actual expenses in any fiscal year. Page 4 of 14 12276 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 annual financial statements 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 added to the budget of such elected official for the following fiscal year. 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 apRropriation by the City Commission. c. Budgeted euxpluses 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 Page 5 of 14 12276 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, (45) 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 1,000,000.'0 $5,000,000 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. This rcoarve lcvc1 shall be vep-l=eniohcd at the boginning of cash fiseal year ao fo available on an on going baoie. The unused portion of the budgeted contingency reserve in any fiscal year shall be reflected as designated reserves until such time as the City has funded fifty percent (504) of the liabilities in its general long- term debt account group. Amounts not needed to satisfy the 50% requirement shall be considered General Fund Undesignated Reserve and be treated in Page 6 of 14 12276 accordance with paragraph S(b) of this section. (b) General Fund Undesignated Reserve. The City shall retain undesignated reserves equal to a threshold tight ten percent (810%) of the prior three years average of general revenues, 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. At Any eeeh time the these reserve funds are expendcd fall below the ten percent (10%) threshold, the City Commission shall adopt a *eaymcnt- achcdule providing for rcplcnifthment—e-f---thefte rcatrvoa elan to achieve the threshold within two fiscal years. Amounts in excess of the ten _percent (IOW) 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) Designated Reserves, The City shall retain reserves equal to eeveft ten percent (10%) of the prior three years average of general revenues. Such reserves shall be used for funding long-term liabilities and commitments of the City such eel i. uneCompensated absences and other employee benefit liabilitieBL including liabilities related to poet -retirement benefits, ii. self -Insurance Plan deficits (including workers compensation, Page 7 of 14 12276 liability claims and health insurance); iii. Infrastructure to be funded on a cash basis; iv. Strategic Initiatives (until completed); v. Blue Ribbon Commission Initiatives (until completed); vi. 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 tioec vpcci£ic purpoaca 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 (504) if such the liabilities that -advcrocly- nffcot the Q-i-t-y-Le--b are Full} 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 costa to provide the service are fully funded from the charges for the service. S7, Multi -Year Financial and—Gap4*a4 Plan. The City Commission shall annually adopt a Five Year Financial Plan by Eegtember---3-8 March 31 of each year, budget, which contain° fi-'rc ycaro of i-t�atre al foraoost• reflecting as the base year, the current year's budget. Such plan will include cost eatimates of all current city operations and pension obligations, peeps d sag ea3 eu-say c pcndiceree—€-r�ee Page a of 14 12276 the Capital I-mpram ("CIF"), 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. 48. gmhe Multi -Year eCapital Improvement eemponcnt of the Plan T The City Commission shall annually adopt a Capital Improvement Plan ("CIP') by March 31 of each year. The CIF shall eevew address cost estimates for all necessary infrastructure improvements needed to support City services, including information technology., with an adequate repair and replacement ("Raw') 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 Plan 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 Page 9 of 14 12276 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: (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 (5%) and the net direct and overlapping general obligation debt shall not exceed ten percent (10%) of the taxable assessed valuation of property in the City. (c) The weighted average general obligation bond maturity shall be maintained at fifteen (15) years or lees, (d) Special obligation debt service shall not exceed twenty percent (20%) 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. b10. 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 thirty (30) days after the close of each month. Page 10 of 14 12276 The annual external audit of the City shall be prepared and presented to the Mayor and City Commission within 120 days of the close of each fiscal year. The City Commission ehall convene a workshop meeting with the external auditors to review the findings and recommendations of the audit. The City shall prepare an annual report to provide information to bondholders and the secondary marketplace. Financial reports, offering statements and other financial related documents issued to the public, shall provide full and complete disclosure of all material financial matters. 411. Basic Financial Policies. The City shall endeavor to maintain formal policies, which reflect 'beat practices', in the areas of; 4-rj j Debt. Such policy shall address affordability, capacity, and strategies for re-entering the bond market in the future, debt issuance and management. 4-1122. cash Management and Investments. Such policy ahall require twenty-four {24) month gross and net cash -flow projections by fund and address adequacy, risk, liquidity and asset allocation issues. 4ti.jj Budget Development and Adjustments. Such policy shall establish proper budgetary preparation procedures and guidelines, calendar of events, planning modele 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 Page 11 of 14 12276 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 thirty (30) days of such adoption. IsurilL 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. v-r11L 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. 412. Evaluation Committees. Such committees shall be created, to the extent feasible, and contain a majority of citizen and/or business appointees from outeide City employment to review City eolicitations (bids, "requests for proposals", etc.), contracts or contract amendments over S10,000 a d all collective bargaining contract issues. The recommendations of the evaluation committee shall be provided to the Mayor and City Commission on all such contracts prior to presentation for official action. 413. 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. k-814. Promoting Operating Efficiencies. The City shall develop programs and incentives to encourage operating efficiencies through the use of technology, outsourcing, or any other curriculum, Page 12 of 14 12276 Section S. All ordinances or parts of ordinances insofar as they are inconsistent or in conflict with the provisions of this Ordinance are repealed. Section 6. 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 7. This Ordinance shall become effective IMMEDIATELY after final reading and adoption thereof.2/ PASSED ON FIRST READING BY TITLE ONLY this _25t1h day of Jul , 2002. 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 vetoer this ordinance, it shall become effective immediately upon override of the veto by the City Commission or upon the effective data stated herein, whichever ie later. Page 13 of 14 12276 4-. PASSED AND ADOPTED ON SECOND AND FINAL READING BY TITLE ONLY Chia iJF.h day of $eptember 2002. ATTEST 1 ;/)�;"2..Z,; • PRISCILLA A. THOMPSON CITY CLERK APPROVED O •`• AND CORRECTNESSV O V •ELLO TTORNEY W1179SE:BSS Page 14 of 14 UEL A. DIAZ, MAYO 12278