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HomeMy WebLinkAboutApprove Mid Year Budget Adjustments for Fiscal Year 2004-200 Council/Agency Meeting Held: Deferred/Continued to: 1 (Approved ❑ Conditionally Approved ❑ Denied ty ler Sig ure Council Meeting Date: May 16, 2005 Departme Number: CITY OF HUNTINGTON BEACH REQUEST FOR CITY COUNCIL ACTION W i SUBMITTED TO: HONORABI_ MAYOR QTY C C MEMBERS SUBMITTED BY: PEI �OPEBRETH-G T, P , CI ADMINISTRATOR_ PREPARED BY: Dan Villella, CPA, Finance Officer SUBJECT: Mid Year Budget Adjustments 2004/2005 Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: (1) An existing financial policy requires that fifty percent (50%) of the general fund balance in excess of the seven percent (7%) reserve requirement be transferred to the Capital Improvement Project (CIP) Fund. (2) City Attorney's staffing level is unable to meet the increasing demands for legal advice and litigation. Funding Source: (1) Transfer $5.368 million from the General Fund undesignated fund balance. (2) Transfer $75,000 from the City Attorney's professional services operating account to the salaries account. Recommended Action: (1) Approve the transfer of $5.368 million from the General Fund undesignated fund balance to the CIP Fund. (2) Approve the transfer of existing professional services appropriations in the City Attorney's budget to Personnel Services for the hiring of 2 new Deputy City Attorneys. Alternative Action(s): (1) Do not approve the transfer of $5.368 million from the General Fund undesignated fund balance (100) to the CIP Fund (301), and revise the city's Financial Policies to remove the stipulation of undesignated fund balance transfer to the CIP fund. (3) Do not approve the transfer of existing professional services appropriations in the City Attorney's budget to Personnel Services for the hiring of 2 new Deputy City Attorneys. Continue to contract attorneys for professional services as needed by the department. f�� REQUEST FOR ACTION MEETING DATE: May 16, 2005 DEPARTMENT ID NUMBER: Analysis: (1) The City Council adopted a series of financial policies on May 3, 2004. One of these policies requires that 50% of the General Fund fund balance, in excess of 7% of the adopted budget designation be transferred to the CIP fund. The City's audited financial statements for September 30, 2004 shows that the amount in excess of the 7% designation equals $10.736 million. Therefore, the 50% transfer to the CIP fund would be $5.368 million. The financial policies are the City Council's policies and as such can be enhanced by the Council at any time. (2) The increasing volume of work generated at the City Attorney's office requires the recruitment of two additional Deputy City Attorneys. The City has previously retained the services of contracted attorneys to supplement the current staffing within this department. The City Attorney's office has experienced a significant increase in workload in both advisory and litigation. The requests for legal assistance have doubled in the last 12 months. In addition, this year, the City Attorney's office has successfully limited the referral of litigation to outside counsel. Also the City Attorney staff is increasing its role in the labor process. Current staffing is unable to meet the increasing demands for legal advice and litigation. It is anticipated a new deputy will be added to each of these functions. The transfer of appropriation for operating expenses to salaries will not increase total appropriations. Environmental Status: NIA Attachment(s): City Clerk's • . . - NumberDescription 1. Fiscal Impact Statement 2. Financial Policies G:IFINANCEIRCAIMid Year Budget Adjustments 5-16-05.doc-2- 5/3/2005 10:11 AM ATTACHMENT # 1 CITY OF HUNTINGTON BEACH 3 � INTERDEPARTMENTAL COMMUNICATION TO: PENELOPE CULBRETH-GRAFT, DPA, CITY ADMINISTRATOR FROM: DAN T.VILLELLA, CPA, FINANCE OFFICER SUBJECT: FIS 2005 —17: TRANSFER OF GENERAL FUND BALANCE TO THE CIP FUND IN ACCORDIANCE TO THE CITY'S FINANCIAL POLICIES DATE: MAY 3, 2005 As required by Resolution 4832, this Fiscal Impact Statement has been prepared for"Transfer of General Fund balance to the CIP Fund in accordance to the City's Financial Policies." If the City Council approves this action (total appropriation $5,368,000), the estimated unreserved General Fund balance at September 30, 2005 will be reduced to $13,426,000. Dan T. Villella Finance Officer ATTACHMENT #2 CITY OF HUNTINGTON BEACH FINANCIAL POLICIES FINANCIAL REPORTING AND ACCOUNTING STANDARDS ❑ The City's accounting system will be maintained in accordance with generally accepted accounting practices and the standards of the Government Accounting Standards Board and the Government Finance Officers Association. ❑ The annual financial report will be prepared within six months of the close of the previous fiscal year. The City will use generally accepted accounting principles in preparing the annual financial statements and will attempt to qualify for the Government Finance Officers Association's Excellence in Financial Reporting Program. ❑ The City will strive for an unqualified audit opinion. An unqualified opinion is rendered without reservation by the independent auditor that financial statements are fairly presented. ❑ The City will contract for an annual audit by a qualified independent certified public accounting firm. The independent audit firm will be selected through a competitive process at least once every five years. The contract period will be for an initial period of three years, with two one-year options. BUDGETING ❑ Biannually, the City Administrator will prepare a two-year budget, with the first year submitted to the City Council for legal adoption, and the second year presented as a planning document. ❑ The budget will be prepared consistent with the standards developed by the Government Finance Officers Association and California Society of Municipal Finance Officers. In addition, a summary version will be provided to the public in a user-friendly format. ❑ The City will maintain a balanced operating budget for all funds with estimated revenues being equal to, or greater than, estimated expenditures, and with periodic City Council reviews and necessary adjustments to maintain balance. ❑ On-going revenues will support on-going expenditures. Revenues from one-time or limited duration sources will not be used to balance the annual operating budget_ ❑ Support function appropriations will be placed in the department in which they are managed. GENERAL FUND BALANCE ❑ The General Fund reserve will be a minimum of seven percent (7%) of the annual General Fund budget at adoption. Subsequent appropriations causing this minimum to be reduced will be reviewed by the City Council on a quarterly basis. C] Allocation of prior year-end General Fund balance in excess of the minimum reserve will be allocated as follows: ■ 50 percent for capital projects (transferred to the Capital Projects Fund) ■ 50 percent for future expenditures (combined with the General Fund Reserve) ❑ All supplemental appropriations from the General Fund minimum reserve that cannot otherwise be funded during the current fiscal year operating budget must meet one of the three following criteria: ■ It is an unanticipated emergency. • It is required to implement a Memorandum of Understanding (MOU) or a mandate. • It is a new expense that is offset by related revenues. ❑ Any unanticipated and unrestricted revenues received during the fiscal year will be added to the General Fund fund balance. Page 1 of 3 Updated 5/3104 CITY OF HUNTINGTON BEACH FINANCIAL POLICIES APPROPRIATION AUTHORITY ❑ The City Council is the appropriation authority for the City Budget. As required by state law, appropriations expire at the end of each fiscal year. NON-DEPARTMENTAL BUDGET ❑ The City shall maintain a non-departmental budget that is used for expenditures that do not apply to a specific department, are Citywide in nature, or shared by several departments. The Administrative Services Director and City Administrator shall be responsible for administration of this budget. OPERATION OF THE CAPITAL PROJECTS FUND ❑ The Capital Projects Fund will only be used to budget for, and construct, capital improvement projects identified in the City's five year Capital Improvement Plan. ❑ Savings from completed capital improvement projects will be retained for use on other infrastructure projects. ❑ Interest earned on idle funds in the Capital Projects Fund will be retained for use on other infrastructure projects. ENTERPRISE FUNDS ❑ An Enterprise Fund is a type of proprietary fund used to report an activity for which a fee is charged to external users for goods or services. The City will set users fees for each enterprise fund at a rate that fully recovers the direct and indirect costs of providing service. ❑ The City will adjust user fees as necessary to ensure that enterprise funds do not collect revenues at a rate in excess of the fund's operating, capital, and reserve requirements. ❑ Enterprise funds will be supported by their own rates and not subsidized by the General Fund. ❑ Enterprise funds will pay their share of overhead services provided by the General Fund. SPECIAL REVENUE FUNDS ❑ A Special Revenue Fund is used to account for the proceeds of specific revenue sources that are restricted to expenditure for specified purposes. ❑ The City Council will establish which revenues require placement into a special revenue fund. ❑ The City Council will establish which expenditures will be expensed to each special revenue fund. DEBT ISSUANCE & MANAGEMENT ❑ The City will not use long-term debt to pay for current operations. ❑ The City will strive to construct capital and infrastructure improvements without incurring debt. Debt financing will be considered for capital and infrastructure improvements when one or more of the following circumstances exist: • When the term of the debt does not extend beyond the useful life of the improvements; • When project revenues or specific resources will be sufficient to service the long-term debt; • When the cost of debt is less than the impact of the cost caused by delaying the project. CHARGES & USER FEES ❑ "User Fees" are fees for services that are exclusively provided by the City and cannot legally exceed the cost of the service provided nor the statutory limit (if lower). User Fees will be reviewed and/or revised periodically by the City Council. User Fees that do not recover all direct and indirect casts of service will be clearly identified and must be approved by the City Council. Page 2 of 3 Updated 513104 CITY OF HUNTINGTON BEACH FINANCIAL POLICIES ❑ "Charges" are fees that have no statutory limit and typically are set at"market rates" since the public can choose to obtain these services from other sources. Charges will be reviewed and/or revised periodically by the City Council. Charges that do not recover all direct and indirect costs of service will be clearly identified and must be approved by the City Council. ❑ The City Council will be presented annually with a list of all User Fees and Charges indicating when they were last changed. Li Fees for infrastructure improvements required by new development will be reviewed annually to ensure that the fees recover development related expenditures. CAPITAL MANAGEMENT ❑ The City will prepare a five year Capital Improvement Plan. The plan will be developed biannually and updated annually. The Capital Improvement Plan will include current operating maintenance expenditures, funding to support repair and rehabilitation of deteriorating infrastructure, and the construction of new infrastructure projects. ❑ Prior to planning the construction of new infrastructure, the improvement's future operating, maintenance, and replacement costs will be forecast and matched to available revenue sources in the operating budget. Page 3 of 3 Updated 513/04 RCA ROUTING SHEET INITIATING DEPARTMENT: FINANCE SUBJECT: MID YEAR BUDGET ADJUSTMENTS COUNCIL MEETING DATE: May 16, 2005 RCA ATTACHMENTS STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable Contract/Agreement (wlexhibits if applicable) Attached ❑Nat Applicable (Signed in full by the City Attorney) Subleases, Third Party Agreements, etc. Attached El Nat Applicable (Approved as to form by City Attome ) Certificates of Insurance (Approved b the City Attome Attached ❑ ( pp Y Y Y} Not Applicable Fiscal Impact Statement (Unbudget, over $5,000) AttachedNot Applicable ❑ Bonds (If applicable) Attached ElNot Applicable Attached ❑ Staff Report (If applicable) Not Applicable Commission, Board or Committee Re ort If applicable Attached p ( pp ) Not Applicable Findings/Conditions for Approval and/or Denial Attached El pp Not Applicable EXPLANATION FOR MISSING ATTACHMENTS REVIEWED RETURNED FOR R ED Administrative Staff ) Assistant City Administrator Initial ( ) City Administrator (Initial) City Clerk EXPLANATION FOR RETURN OF ITEM': Only)(Below Space For City Clerk's Use RCA Author Dan Villella, ext. 5225