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HomeMy WebLinkAboutBack-Up from Law DeptARTICLE IX. - FINANCIAL POLICIES DIVISION 1. - ANTI -DEFICIENCY ACTU Footnotes: MGM Note— See the editor's note to Ch. 2, Art. XII. Sec. 18-500. - Established. Regulations, to be known as the Anti -Deficiency Act, are hereby established to provide mandatory procedures to be used by department directors, the city manager, city attorney, city clerk, mayor, commissioners, and executive directors of agencies, authorities, trusts, boards, or commissions funded in whole or in part by the city, with authority to direct obligation or disbursement of city funds. However, the herein regulations shall not apply to the three City of Miami Retirement Trusts which are the City of Miami Firefighters' and Police Officers' Retirement Trust, the City of Miami General Employees' and Sanitation Employees' Retirement Trust, and the City of Miami Elected Officers' Retirement Trust. (Ord. No. 11727, § 2, 11-17-98; Ord. No. 11890, § 2, 2-10-00; Ord. No. 12026, § 2, 2-22-01) Sec. 18-501. - Definitions. As used in this article: Agency or agencies shall mean, including, but not limited to, any agency(s), authority(s), trust(s), board(s), or commission(s) funded in whole or in part by the city, except the City of Miami Firefighters' and Police Officers' Retirement Trust, the City of Miami General Employees' and Sanitation Employees' Retirement Trust, and the City of Miami Elected Officers' Retirement Trust. Authority to direct obligation or disbursement shall mean any permission, approval, consent, or signature from a department director or executive director of an agency, authority, trust, board, or commission funded in whole or in part by the city, except for the City of Miami Firefighters' and Police Officers' Retirement Trust, the City of Miami General Employees' and Sanitation Employees' Retirement Trust, and the City of Miami Elected Officers' Retirement Trust (the "Retirement Trusts"), or a single individual, specifically designated in writing by a department director or executive director of an agency, authority, trust, board, or commission funded in whole or in part by the city, except for the Retirement Trusts, and acknowledged and accepted in writing by the designee, and kept on file within the department, agency, authority, trust, board, or commission funded in whole or in part by the city, except for the Retirement Trusts, regardless of form, which permits or authorizes expenditure of funds, excluding documents or forms which process such authority. Department directors shall mean directors of all departments of the city including heads of offices and shall include persons responsible for individual budgets as set forth in the annual appropriations ordinance. Notwithstanding any delegation of authority for the act of budget oversight, heads of departments or offices shall not be relieved of responsibility related to this act. Executive director shall mean the executive directors of all agencies, authorities, trusts, boards, or commissions, including heads of offices, funded in whole or in part by the city, and shall include persons responsible for the individual annual budgets for each agency, authority, trust, board or commission approved by the city commission, except for the City of Miami Firefighters' and Police Officers' Retirement Page 1 Trust, the City of Miami General Employees' and Sanitation Employees' Retirement Trust, and the City of Miami Elected Officers' Retirement Trust. Notwithstanding any delegation of authority for the act of budget oversight, the executive director shall not be relieved of responsibility related to this Act. Obligational authority shall mean any document, ordinance, resolution or paper, regardless of form, which grants permission for an expenditure. (Ord. No. 11727, § 2, 11-17-98; Ord. No. 11890, § 2, 2-10-00; Ord. No. 12026, § 2, 2-22-01) Sec. 18-502. - Procedures and implementation. The procedures set forth herein apply where a continuing ordinance or resolution of the city commission which specifically directs an expenditure of funds, and identifies a source of funds to increase the obligation/expenditure authority has not been enacted, extended, or renewed by the city commission to provide temporary obligational authority. Notwithstanding the adoption of an ordinance or resolution by the city commission expending funds, any ordinance or resolution which exceeds an approved departmental or agency budget may be considered voidable and shall be placed on the next regular city commission agenda by the city manager or executive director for budget approval and adjustments as deemed appropriate. Nor may any individual in authority instruct an employee of the city to exceed, without legal authority, the annual budget appropriation for any department or agency. This following Anti -deficiency Act is hereby enacted and regulations set forth as follows: (1) This section applies to all obligations chargeable to annual appropriations, and prior year billing, or multiple -year appropriations which have expired, and for which the obligational authority has not been extended. This section shall additionally apply to the city manager, department directors, and executive directors with authority to approve overtime budgets. (2) The city manager, assistant city managers, department directors, and executive directors with authority to direct obligation or disbursement of city funds may not enter into contracts or any other agreements for the future payment of money in excess of those funds approved in the current year budget by ordinance or resolution. However, the terms and conditions set forth in the document related to debt issuance and long-term capital improvement projects and other approved multi-year agreements shall be controlling. (3) Any obligation incurred in excess of an annual departmental or agency appropriation represents a violation of the Anti -Deficiency Act. No such obligation shall be incurred unless the city commission or city manager through emergency powers, has enacted legislation or exercised authority extending a department's or agency's obligational authority of a department or agency. However, should an emergency, defined under state law as any occurrence, or threat thereof, whether natural, technological, or manmade, in war or in peace, which results or may result in substantial injury or harm to the population or substantial damage to or loss of property, occur and temporary obligation authority is authorized, said obligations and authority shall require an ordinance or resolution for the ratification, approval and confirmation of said action together with such other necessary actions to ensure a balanced year-end budget by an affirmative majority vote of the members of the city commission at the next immediate regularly scheduled meeting of the city commission or special meeting called for that purpose. (4) The prohibitions contained herein are applicable to the city manager, department directors, or executive directors with the authority to verify and/or approve the availability of funds, disburse or obligate funds for the city. The provisions contained herein apply to the offices of the mayor, city clerk, city attorney, city commission, the city manager, all departments and agencies budgets which incorporate overtime budgets and prior year billings, and funds, including but not limited to non -departmental accounts and the capital improvements program. (5) The city manager shall promulgate policies which instruct department directors with authority to direct obligation or disbursement of city funds to assure compliance with this act. Page 2 (6) The city commission shall promulgate policies which instruct executive directors with authority to direct obligation or disbursement of city funds to assure compliance with this act. (7) The official or employee verifying the availability of funds, and/or approving budget authority and/or certifying a voucher, purchase order or any other paper indicating availability of funds is responsible for ensuring that the expenditure will not exceed the department's or agency's current year budget appropriations for that line item. (8) Any employee of the city who has knowledge or a reasonably based belief that a budget of the city may be in violation of this act shall have the right to be heard under the provisions for a monthly status of the city budget set forth below. Any such person shall not be penalized in any manner for actions taken to report violation of this act. (9) A department director or executive director with obligation or disbursement authority shall be in violation of this act if he/she willfully withholds invoices, payments, settlement, or any other instrument of city debt which were incurred and due in the current fiscal year in an effort to avoid exceeding the approved current year budget. (10) The city manager shall have the authority to adjust line items in an amount not to exceed ten percent of a department's budget so long as the total annual projected expenditures of a department do not exceed the department's current budget, and said adjustment is verified by the department of management and budget. Additionally, all proposed budget adjustments between departments, including capital improvements projects shall require approval by city commission ordinance or resolution. During the fourth quarter of the fiscal year, any changes or deviations in excess of $5,000.00 per transaction from the current approved budget for those departments under the authority of the city manager shall require city manager approval, with the advice and written concurrence of the member of the city commission designated as the presiding officer, a copy of which shall be provided to the city clerk. (11) The executive director shall have the authority to adjust line items in an amount not to exceed ten percent of an agency's budget so long as the total annual projected expenditures of the agency does not exceed the agency's current budget, and said adjustment is verified in a manner using acceptable accounting principles. During the fourth quarter of the fiscal year, any changes or deviations in excess of $5,000.00 per transaction from the current approved budget for those agencies shall require written concurrence of the member of the city commission designated as the presiding officer, a copy of which shall be provided to the city clerk. (12) Notification of possible deficiency. Any department director, executive director or individual with authority to verify the availability of funds, or direct obligation or disbursement of city funds who anticipates or has reason to believe that the annual budget of a department or agency may exceed the sum appropriated in the approved budget ordinance or resolution (a "deficiency") shall immediately provide written notification to the mayor, the city commission, city manager, city attorney, city clerk, and the director of the department of management and budget. Said notification shall include the cause of the deficiency, the amount of the deficiency and the recommended remedial action to cure the deficiency. (13) The city manager shall present monthly, except during the month of September, a written report on the status of the city budget at a city commission meeting. The executive directors of all agencies shall each present quarterly, except during the month of September, a written report on the status of the individual agency's budget at a city commission meeting. At a minimum, this report should generally include, but not be limited to, the following information in a form acceptable to the city commission: fund summary, revenues by category and expenditures by major object, revenues by category and expenditure by department, or revenues by minor object- recurring/non-recurring, expenditures by minor object-recurring/non-recurring, revenues by minor object -recurring, revenues by minor object -non-recurring, expenditures by minor object -recurring, expenditures by minor object -non-recurring, bank reconciliation memo, cash positions for all funds, investments outstanding as of the preceding month, cash received year to date, cash received for the current month or preceding month, human resource personnel reports, including computation which details sworn or unsworn personnel. The city external auditor shall present Page 3 the comprehensive annual financial report or status thereof no later than the end of the second quarter of each fiscal year. The external auditors engaged by the individual agencies shall each present the agencies' comprehensive annual financial reports or status thereof no later than the end of the second quarter of each fiscal year. (Ord. No. 11727, § 2, 11-17-98; Ord. No. 11890, § 2, 2-10-00; Ord. No. 12026, § 2, 2-22-01) Sec. 18-503. - Violations of act; penalties. (1) A duly adopted ordinance or resolution shall provide obligational authority and if enacted will not constitute a violation of this act. (2) No provision contained in this section shall be construed to violate fair labor laws or any provision of the current, approved union contracts, or any other legally binding issues which have been the subject of collective bargaining. (3) Effective January 1, 2000, the violation of any provisions of this act shall constitute a civil offense and be punishable by civil penalty in an amount not to exceed $500.00, in a court of competent jurisdiction. Without regard to culpability, violation of this law may serve as one element of a basis for employment termination. (Ord. No. 11727, § 2, 11-17-98; Ord. No. 11890, § 2, 2-10-00) Secs. 18-504-18-540. - Reserved. 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 division. The financial integrity principles as set forth herein shall be reviewed and updated as necessary, at least every three years. The city's auditor general shall be responsible for preparation of a written report to be transmitted to the mayor and the members of the city commission 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 comprehensive annual financial report (CAFR). Single audit report, and management letter comments. (Ord. No. 11890, § 4, 2-10-00; Ord. No. 12276, § 2, 9-11-02; Ord. No. 12727, § 2, 9-22-05) 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. Page 4 (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. 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. Page 5 (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 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 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 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. 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. (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 Page 6 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: 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 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. Page 7 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. 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. 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. 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 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) Secs. 18-543-18-555. - Reserved. Page 8