HomeMy WebLinkAboutBack-Up from Law DeptSec. 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.
lnterfund 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 (GAAF). 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.
(3)
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.
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
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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.
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 unassigned 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 unassigned fund balance reserve and be treated in accordance with subsection (5)b.
b. General fund unassigned fund balance reserves. The city shall retain unassigned fund
balance reserves equal to a threshold ten percent of the prior three years average of
general revenues (excluding transfers). Amounts designated as "contingency" reserve in
subsection 5a. shall be included in the calculation of meeting the ten percent of the prior
three years average of general revenues for the unassigned fund balance category. Such
reserves may only be used for offsetting an unexpected midyear 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 and the city manager shall present an oral
report at the second commission meeting of every month, except during the month of
September, regarding: i) the status of the current fiscal year budget and ii) the proposed
budget for the subsequent fiscal year. Such oral report shall appear on the city commission
agenda as a discussion item under the agenda category titled "Budget." 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. 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). 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
related to post -retirement benefits;
2. Self-insurance plan deficits (including workers compensation, liability claims and
health insurance);
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.
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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 50 percent of 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.
Multiyear 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.
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 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.
(7)
(9)
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
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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 external auditor shall prepare the city's comprehensive annual financial report (CAFR) by
March 31 of each year, The single audit and management letter of the city shall be prepared by
the external auditor by April 30 of each year. The external auditor shall present the findings and
recommendations of the audit, single audit and management letter, to the mayor and city
commission at a scheduled commission meeting prior to July 30 of each year.
Financial reports, offering statements and other financial related documents issued to the
public, shall provide full and complete disclosure of all material financial matters.
(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 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 finance committee, established pursuant to city
commission resolutions 98-631 and 98-767, shall review and provide recommendations to
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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,
(Ord. No. 11890, § 4, 2-10-00; Ord. No. 12113, § 1, 9-25-01; Ord. No, 12276, § 2, 9-11-02; Ord.
No. 12353, § 2, 4-10-03; Ord. No. 12427, § 2, 10-23-03; Ord. No. 12518, § 2, 3-25-04; Ord. No.
12727, § 2, 9-22-05; Ord. No. 13107, § 2, 10-8-09; Ord. No. 13212, § 2, 10-14-10; Ord, No,
13303, § 2, 1-12-12)
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