HomeMy WebLinkAboutCouncil Resolution 1225RESOLUTION NO, ~~,5
A RESOLUTION ADOPTING THE FINANCIAL MANAGEMENT
POLICY FOR THE CITY OF CENTRAL POINT
THE CITY COUNCIL OF THE CITY OF CENTRAL POINT, OREGON, HEREBY
RESOLVES AS FOLLOWS:
WHEREAS, the Mayor and City Council are committed to high standards of financiaP
management; and
WHEREAS, adopting and periodically updating financial policies are important actions
that help to assure consistent and rational financial management; and
WHEREAS, the Mayor and City Council have reviewed the attached financial policies
and wish to clarify and place these financial guidelines to govern the operations of the
city;
NOW, THEREFORE, the Mayor and Council are authorized and do hereby adopt the
Financial Management Policy for the City of Central Point.
Passed by the Council and signed by me in authentication of its passage this _~~
the day of September, 2009.
~~~~~~_~
Hank Williams, Mayor
ATTE
Deanna Casey, City Recorde
Approved by me Phis ~ day of September, 2009.
Hank Williams, Mayor
City of Central Point
Financial Management Policy
Scope
This financial management policy applies to all fiscal activities ofthe City of Central Point.
Objectives
The objective ofthis financial policy is as follows:
• To ensure the legal use of all City funds through efficient systems of financial security
and internal control.
• To carry out the City Council's goals and policies through the budget process.
• To provide and maintain essential public programs, services, facilities, utilities,
infrastructure, and capital equipment.
• To employ revenue policies that prevent undue or unbalanced reliance on any one
source, distribute the cost of municipal services fairly, and provide adequate funds to
operate desired programs.
• To protect and enhance the City's credit rating.
Investments
• All City funds shall be invested to provide safety of principal, a sufficient level of
liquidity to meet cash flow needs, and to provide the maximum yield possible. Apart
from petty cash and allowance for normal movement and transfer of cash as needed,
one hundred percent of all idle cash will be invested.
Accounting
• The City will maintain an accounting and financial reporting system that conforms with
Generally Accepted Accounting Principles (GAAP) and Oregon Local Budget Law, and
will issue a Comprehensive Annual Financial Report (Audit report) each fiscal year. The
Comprehensive Annual Financial Report will show fund expenditures and revenues on ~
both a GAAP and budget basis for comparison purposes.
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• An independent annual audit will be performed by a certified public accounting firm
that will issue an official opinion on the annual financial statements and a management
letter detailing areas that need improvement.
• Full disclosure will be provided in financial statements and bond representations.
• The accounting system will be maintained to monitor expenditures and revenues on a
monthly basis with thorough analysis by the City Administrator and Finance Director.
Adjustments to the annual budget will be made when appropriate.
• The accounting system will provide monthly information about cash position and
investment performance.
• Annually, the City may submit documentation to obtain the Certificate of Achievement
for Excellence in financial reporting from the Government Finance Officers Association
(GFOA). (Determination to participate will be based on the cost not outweighing the
benefit.)
Operating Budgetary Policy
A Budget Committee will be appointed in conformance with state statutes. The Budget
Committee's chief purpose is to review the city's proposed budget and to approve a
budget and maximum tax IevyforCity Council consideration. The Budget Committee
may consider and develop recommendations onother financial issues as delegated by
the City Council.
• The City will finance current expenditures with current revenues; and will avoid
budgetary practices that obligate future resources to cover current expenditures.
• The City budget will support City Council goals and priorities and the long-range needs
ofthe community.
• In addition to a line-item budget that focuses on items to be purchased (such as
supplies and equipment), departments will provide the Budget Committee information
on programs being funded; what each program is committed to accomplish in long
term goals and inshort-term objectives, and provide performance measures that will
demonstrate the achievement of program objectives.
• To maintain fund integrity, the City will manage each fund as an independent entity in
accordance with applicable statutes and with generally accepted accounting principles.
• The City may allocate direct and administrative costs to each fund based upon the cost
of providing these services; and will recalculate the cost of these services at least bi-
annually to identify the impact of inflation and other cost increases.
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• Annually, the City may submit documentation to obtain the Award for Distinguished
Budget Presentation from the Government Finance OfFcers Association. (GFOA)
(Determination to participate will be based on the cost not outweighing the benefit.)
Fund Structure and Fund Balance
General Fund
The General Fund will be used to account for all financial resources and expenditures except
those to be accounted for in anotherfund. Resources include working capital, carryover, taxes,
licenses and permits, intergovernmental revenue, fines and forfeitures, charges for services,
miscellaneous revenues, and inter-fund transfers. Expenditures are for Administration, Mayor
and Council, Finance, Parks and Recreation, Community Development, Police, and
Interdepartmental departments. The General Fund uses the modified accrual method of
accounting.
Minimum Fund Balance
The General Fund will maintain an unrestricted and undesignated balance of annual
revenue of at least ao percent oftotal revenues. This is the minimum determined to be
needed to maintain the City's credit worthiness and to adequately provide for economic
uncertainties and cash flow needs.
• The General Fund balance does not retain restricted funds for use on special projects
other than grants or donations.
• The City will budget a contingency appropriation to provide for unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. The
minimum contingency will be maintained at not less than Z percent of annual revenues
less budgeted prioryearcarryover.
Street Fund
The Street Fund revenues are from state and local fuel tax, grants, franchise fees, charges for
services and miscellaneous sources. Expenditures are for the maintenance, repair, surfacing
and construction of city streets and associated infrastructure.
The Street Fund will maintain an unrestricted and undesignated balance of annual
revenue of at least 35 percent oftotal revenues. This is the minimum determined to be
needed to maintain the City's credit worthiness and to adequately provide for economic
uncertainties and cash flow needs.
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• System development charges fortransportation are included in the Street Fund
balance. This portion ofthe fund balance is restricted and shall not be used in
determining the minimum fund balance.
• The City will budget a contingency appropriation to provide for unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. The
minimum contingency will be maintained at not less than 5 percent of annual revenues
less budgeted prior year carryover.
Housing Fund
The Housing Fund revenues are from the repayment of interest free loans. The initial loans
were from Community Development Block Grant funds used for home weatherization and
wood stove replacement programs. Expenditures can only be used as described in the initial
grant program. Current expenditures are for administrative costs.
• The purpose ofthe Housing Fund is to account for funds from a grant program. There is
no minimum fund balance.
The City may budget a contingency appropriation to provide for unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. There is no
required minimum contingency forthis fund.
Capital Improvement Fund
The Capital Improvement Fund was established to account for resources used for the
acquisition or construction of major capital projects. This fund uses the modified accrual
method of accounting.
This fund accounts for revenues from unbonded assessment payments, construction grants,
parks system development fees, and other resources. Expenditures are for construction,
property and equipment acquisition and replacement, improvements and related purposes, and
the repayment of shortterm debt principal and interest incurred in financing improvements.
The purpose of the Capital Improvement Fund is to accumulate funds prior to a large
construction project; therefore, there is no set minimum fund balance.
• System Development Charges (SDCs) for parks are included in this fund balance. This
portion of the fund balance is legally restricted and shall be accounted for separately
from the unrestricted portion of the fund balance.
The City may budget a contingency appropriation to provide for unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. There is no
required minimum contingency forthis fund.
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Debt Service Fund
The Debt Service Fund accounts for the accumulation of resources for the payment of general
long-term debt principal and interest. Expenditures and revenues are accounted for on the
modified accrual method of accounting.
• All of the monies within the Debt Service Fund are restricted for debt service until the
specific debt is repaid in full. Oregon State Statutes prohibit cities from using this
money forany otherpurpose.
• The Debt Service Fund will maintain an unrestricted and undesignated balance of
annual revenue as required by the specific debt instrument. This is the minimum
needed to maintain the City's credit worthiness and to adequately provide for economic
uncertainties and cash flow needs.
• No contingency is required for this fund.
Enterprise Funds
Enterprise funds account for operations: (a) that are financed and operated in a manner similar
to private business enterprise, where costs (expenses, including depreciation) of providing
goods and services are financed primarily through user charges; or (b) where the governing
body has determined that periodic determination of revenues earned, expenses incurred,
and/or net income is appropriated for capital maintenance, public policy, management control,
accountability, orother purposes.
Enterprise funds use full accrual basis of accounting for annual financial statement purposes.
However, the enterprise activities use a modified accrual basis of accounting for budgetary
purposes. This assures budgetary compliance with such expenditures as capital construction
and acquisition, as well as debt principal transactions.
Buildinst Fund
The Building Fund accounts for building safety operations. Revenues are from the issuances of
building permits. Expenditures are forthe operations ofthe building division. The city provides
structural, plumbing, electrical and mechanical inspections.
• The Building Fund will maintain an unrestricted and undesignated balance of annual
revenue of at least 35 percent of total revenues. This is the minimum determined to be
needed to maintain the City's credit worthiness and to adequately provide for economic
uncertainties and cash flow needs.
• The City will budget a contingency appropriation to provide for unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. The ~
minimum contingency will be maintained at not less than z percent of annual revenues ~
less budgeted prior year carryover. nt0.
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Water Fund
The Water Fund accounts for water distribution operations. Revenues are from sales of water,
charges for services, and miscellaneous sources. Expenditures are for operations, capital
construction, and retirement of debt.
The Water Fund will maintain an unrestricted and undesignated balance of annual
revenue of at least 35 percent of total revenues. This is the minimum determined to be
needed to maintain the City's credit worthiness and to adequately provide for economic
uncertainties and cash flow needs.
System Development Charges are included in the Water fund balance. This portion of
the fund balance is restricted and shall not be used in determining the minimum fund
balance.
• The City will budget a contingency appropriation to provide for unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. The
minimum contingency will be maintained at not less than 5 percent of annual revenues
less budgeted prior year carryover.
Stormwater Fund
The Stormwater Fund accounts for storm drain maintenance operations. Revenues are from
charges for services. Expenditures are for operations, capital construction, and retirement of
debt.
The Stormwater Fund will maintain an unrestricted and undesignated balance of
annual revenue of at least z5 percent of total revenues. This is the minimum
determined to be needed to maintain the City's credit worthiness and to adequately
provide for economic uncertainties and cash flow needs.
System Development Charges are included in the Stormwaterfund balance. This
portion of the fund balance is restricted and shall not be used in determining the
minimum fund balance.
• The City will budget a contingency appropriation to provide for unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. The
minimum contingency will be maintained at not less than 5 percent of annual revenues
less budgeted prior year carryover.
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Public Works Services Fund
The Public Works Services fund is an internal service fund used for the accounting of goods or
services provided to other internal departments and supported on a cost reimbursement basis.
Internal service funds use full accrual accounting methods for annual financial statement
purposes. However, the Public Works Service s Fund uses a modified accrual basis of
accounting for budgetary purposes. This assures budgetary compliance with such expenditures
as capital construction and acquisition as well as debt principal transactions.
The fund is divided into Facilities Maintenance, Administration, and Fleet Maintenance
divisions. Expenditures are for personnel, materials and services and capital outlay. These
functions are supported by charges for services to other direct service departments and
divisions throughout the city.
The Public Works Services Fund will maintain an unrestricted and undesignated balance
of annual revenue of at least zo percent of total revenues. This is the minimum
determined to be needed to maintain the City's credit worthiness and to adequately
provide for economic uncertainties and cash flow needs.
• The City will budget a contingency appropriation to provide far unanticipated
expenditures of anon-recurring nature or shortfalls in projected revenues. The
minimum contingency will be maintained at not less than i percent of annual revenues
less budgeted prior year carryover.
Revenues
• The City will estimate its annual revenues by an objective, analytical process. Because
most revenues are sensitive to conditions outside the City's control, estimates will be
conservative.
• The City will make every effort to maintain a diversified and stable revenue base to
protect its operations from short-term fluctuations in any one revenue source.
• The City will establish charges for enterprise funds that fully support the total cast of
the enterprise. Utility rates will be reviewed bi-annually and will be adjusted as needed
to account for major changes in consumption and cost increases.
• The City will charge userfees to the direct beneficiaries of city services in an attempt to
recover all or part of the cost of providing that service. Userfees will be reviewed bi-
annually toinsure that direct and overhead costs are being recovered.
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• To the extent practicable, new development shall pay necessary fees to meet all
identified costs associated with that development.
The City will aggressively pursue collection of all delinquent accounts receivable. When
necessary, collection procedures will include termination of service, submission to
collection agencies, foreclosure, and other available legal remedies.
Expenditures
• The City will provide employee compensation in accordance with collective bargaining
agreements, approved compensation strategies, and applicable state and federal law.
• Estimated wage increases and changes in employee benefits will be included in the
proposed budget under Personnel Services.
• The City is committed to maintaining and improving the productivity of its staff by
providing a properworking environment, adequate equipment and supplies, and
appropriate training and supervision.
• A "social service" appropriation will be included in the proposed budget; and will
increase or decrease relative to the overall revenues available.
• A "tourism promotion" appropriation will be included in the proposed budget. This
appropriation will increase or decrease relative to the overall available hotel tax
revenues.
Purchasin4
• The City will purchase materials, supplies, and equipment through a competitive
process that provides the best productfor the least cost.
The City will implement, maintain and abide by an approved purchasing policy. The
policy shall clearly state approved purchasing limits for all staff members; and the
process and method by which purchases will be made.
Caaltal
• The City will provide for adequate maintenance of equipment and capital assets by
making available contributions forfuture capital improvements to ensure that monies
will be available to replace City vehicles and facilities.
• The City will update its five-year capital improvements program bi-annually; identifying
capital needs and potential capital funding sources. The capital improvements
program will reflect the priorities of the City Council and the long-range needs of the ~
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• The City will determine and use the most appropriate method forfinancing all new
capital projects.
• Special accounts dedicated for capital improvements will be segregated in the
accounting system and used only forthe intended capital purposes.
Debt
• The City shall not use long-term borrowing to finance current operations.
• Capital projects financed through bond proceeds will be financed for a period not to
exceed the useful life ofthe project.
• Whenever possible, enterprise debt will be self-supporting. Regardless ofthe type of
debt issued, the City will establish aone-year reserve for all self-supporting debt.
• The City will seek to maintain and improve its bond rating to minimize borrowing costs
and to ensure access to credit markets.
• The City will keep the final maturity of general obligation bonds at or below zo years,
with the exception of water supply and land acquisition which will be limited to 30
years.
• The City will maintain good communications with band rating agencies about its
financial condition.
Risk Manasaement
• The City will provide an active risk management program that protects City assets
through loss prevention as well as appropriate levels of insurance.
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Glossary of Terms
Capital Expenditure
A capital expenditure is an item which generally has a useful life of one or more years, such as
machinery, land, furniture, equipment or buildings, and is valued at more than $5,000.
Capital Project
A capital project is a major construction or purchase which often requires either an outside
revenue source such as a grant, bond, loan or other source of funding.
Depreciation
Depreciation is a system of accounting which distributes the cost of a capital asset over the
useful life of the asset. In accordance with Oregon Local Budget Law, depreciation is not
budgeted by the City.
Expenditure
An expenditure is a term for money spent by the City forthe programs and projects included
within the annual budget.
Fund
A fund is an accounting based division within the budgetfor independent fiscal and accounting
requirements.
Infrastructure
Infrastructure refers to the large-scale system and services that are necessary for economic
activity; such as the City's streets, water lines, storm drains, etc.
Modified Accrual Accountine
Revenues are recorded within the accounting period in which they become available and
measurable; and expenditures are recorded in the accounting period in which the liability is
incurred.
Revenue
Revenues are monies received by the City from both tax and non-tax sources.
Svstem Development Charles t=
System Development Charges are fees assessed on new construction to cover the demands ~-{
placed on city services; and typically cover water, streets, storm drains and park costs.
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