11-781 Adopting City of Meridian Budget PolicyCITY OF MERIDIAN RESOLUTION NO. I 1 ~ ~g 1
BY THE CITY COUNCIL: BIRD, HOAGLUN, ROUNTREE, ZAREMBA
A RESOLUTION ADOPTING THE BUDGET POLICY FOR THE CITY OF
MERIDIAN; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, on April 12, 2011, the City Council of Meridian received a report from the
Finance Department regarding the draft City of Meridian Budget Policy; and
WHEREAS, after receiving said report, the City Council directed that the City of
Meridian Bud et Policy be brought forward in Resolution form to establish the Budget Policy for
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the City of Meridian.
NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY
COUNCIL OF THE CITY OF MERIDIAN CITY, IDAHO:
Section 1. That the City of Meridian Budget Policy be adopted, a copy of which is
attached to this Resolution and incorporated herein by this reference.
Section 2. That this Resolution shall be in full force and effect immediately upon its
adoption and approval.
Cit Council of Cit of Meridian Idaho this ~ ~ day of
ADOPTED by the y y
~- ' , 2011.
b the Ma or of the Cit of Meridian Idaho, this ~ day of
APPROVED y y y
~- ,2011.
APPROVED:
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~~. , TAMMY ~ WEERD MAYOR
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RESOLUTION FOR CITY OF MERIDIAN BUDGET POLICY -1 OF 1
City of Meridian Budget Policy
Adopted ~~) ~j ~~d l ~ Resolution# ~ 1 'fig' 1
1. Objective
The objective of the budget policy is to address and follow idelines for the
following elements;
The responsibilities of the Mayor, the Finance Department, the Cit Council and
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Department Directors in compiling and establishing the annual Cit bud et.
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The principals that will guide the City's budget process.
The principals that control and ensure adherence to the ado ted bud et.
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Compliance with the provisions of Idaho Code 50-1002 Annual Bud et and all code
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references within that section.
2. City Budget Purpose and Mission
The mission of the City of Meridian's budget is to hel decision makers make
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informed choices about the provision of services and capital assets and to romote
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stakeholder participation in the process.
The budget is a plan that tells how the City will use limited financial resources to best
provide for the needs of its citizens. The final plan is the res onsibilit of the Cit
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Council and the Mayor based on recommendations of the individual de artments
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within the City. The individual departments within the Cit are res onsible for
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erence to the plan.
The budget should be presented so that it is a document that can be used to inform
and educate the public and elected officials about the City's structure achievements
challenges, and direction. The budget documents should be a olic document an
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operations guide, a financial plan and a communication tool.
3. Budgeting Model
The City of Meridian uses a combination of incremental and ro am based
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budgeting. Incremental budgeting is generally applied to the develo ment of the base
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get. The base budget is considered to be personnel and operatin costs that
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remain consistent from year to year. Incremental budgeting means using the costs
from the prior year to develop the New Year's budget. The Cit modifies this
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approach by reviewing each base budget line to determine if the bud eted amount can
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be reduced, should be maintained or increased.
A program is a broad category of services (WHAT) for an identifiable group (WHO)
and for a specific purpose (WHY). A program has specified goals and objectives.
City of Meridian Budget Policy
City of Meridian Budget Policy
Adopted
The first step in the budget process is to identify the needs or problems that make the
program necessary.
Resolution#
Once the program need has been identified and the program goal established, the
program must be evaluated. This requires systematic review to determine if the
program is meeting its goals or moving in the right direction. From this
evaluation financial needs can be identified and financial expenditures tied to
results.
Examples of programs are Police and Fire services, Parks and Recreation, and
Water and Wastewater.
4. Definitions
Appropriation/Spend n~ Authority - A sum of money that has been set
aside for a specific use.
Amendment -The process of altering the current fiscal year budget.
Transfer - To move money from one fund to the other, to move budget
dollars from one department, general ledger line item, or project to
another.
Personnel -The expenses associated with salaries and wages to include
benefits and taxes.
Operatic -The expenses associated with running the daily business of
the City.
Capital Outlay -Tangible or intangible property that meets the current
City minimum dollar threshold and has a life of more than one year.
Fund -Self balancing set of accounts organized into types by major
service provided by the governmental unit.
Department - A division within the City that has its own specific purpose.
Carry Forward -Budget dollars not spent on capital projects during the
current fiscal year that will be spent in a future fiscal year on the same
project.
Budget Notice - A formal publication in the local paper following Idaho
code to notify the public of any budget hearing/workshop.
Budget Workshop - A meeting for the Council, Mayor and department
directors to discuss the current year budget.
Budget Hearing - A public hearing to allow public input with the formal
adoption of the final budget.
Chief Financial Officer -The executive who is responsible for the
financial planning and record-keeping for the City.
Fiscal Year -The 12-month period October 1 to September 30.
One time expenditure - An expense that will only occur during the current
fiscal year as opposed to continuing year to year.
City of Meridian Budget Policy
City of Meridian Budget Policy
Adopted,
Resolution#
Base Budget - On-going personnel and operating expense bud ets needed
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to operate the daily functions of the City and maintain current service
levels. The base budget does not include capital or other one time
expen itures.
Council Liaison - A Council member that is assi ed to a s ecific
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department.
Idaho State Statute -Idaho law established by an act of the le islature.
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Under the U.S. and state constitutions, statutes are considered the primar
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source of law in the U.S.
5. Appropriation Level
The City sets spending authority at the major program (function), major object,
and fund level. The fund is the highest level of appropriation. A fund
classification is based on the purpose of the fund's expenditures and the sources
of the revenues.
Program level is defined above as a category of services for an identifiable group
and for a specific purpose. One fund may have several programs. Some major
programs are a roll up of several smaller but related programs. For example
Police is a combination of traffic, community policing, criminal investigations
and code enforcement.
The object is the account code assigned to identify what the expenditure is for.
For example office supplies, personnel expense, or equipment. The major classes
of obj ects are;
Personnel
Operating
Capital
The project level is used to identify specific projects within an object code
generally within capital. The object capital -buildings within a fund may have
several project codes to identify different buildings.
Spending within the major classes personnel and operating is not controlled at the
line item object level. Additions of part or full time equivalent positions require
the approval of the Mayor and City Council.
Spending in excess of the original major class appropriation require a budget
amendment to be approved by the Major and City Council. The budget reports
are adjusted upon Council approval. The City accounting system tracks both the
original budget and the amended budget.
City of Meridian Budget Policy
City of Meridian Budget Policy
Adopted
Resolution#
The City legally appropriates all the amendments one time at the end of the fiscal
year through ordinance and public hearing.
Changes at the project level within appropriated capital do not re uire an
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amendment but require documented approval of the Mayor and Council.
6. Balanced Budget
The City will adopt and maintain a balanced annual budget. For each fund annual
expenditures cannot exceed annual revenues plus available fund balance. Each
fund must maintain a balance equal to four months operating reserve. The dollar
amount of the operating reserve is determined by the current year budget and is to
be recalculated on an annual basis.
The base operating budget of the City, those operating expenses necessary to
maintain the current level of City operations from year to year must not exceed
the current year revenues for each fund.
One-time revenues or use of fund balance will be permitted only for one-time
projects or items. On-going personnel or operating costs resulting from such
projects must be sustained by on-going and consistent revenue streams.
Expenses may be incurred only in terms of the approved annual budget or
amended approved annual budget.
General Fund requests for new or expanded programs will be considered during
the course of the regular budget process. Only in extreme circumstances will such
requests be considered during the course of the year.
7. Emergency Hold Back
At any time during the fiscal year subsequent to the adoption of the budget if the
Chief Financial Officer determines the current year revenues will not cover on-
going expenses he or she will report to Council and recommend a spending hold-
back. The Council will approve such spending hold-back up to the amount
necessary to ensure current revenue will cover on-going expenses.
City of Meridian Budget Policy
City of Meridian Budget Policy
Adopted
Resolution#
8. Budget Development
Revenue Manual - Subsequent to consideration of the bud et the Finance
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Department will prepare and distribute a revenue manual. The document
contains revenue projections for each source of revenue by fund for the
budget year under consideration as well as a forecast for at least three
years future anticipated revenue. The document will contain relevant ast
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tory for comparison purposes. The City's policy is to prepare revenue
forecasts in a conservative manner.
Departments are responsible for notifying the Finance Department about
any changes to contracts or fees that will impact annual revenues.
It is the policy of the City to charge fees for services when it is allowable
by state statute and the benefit from the service can be traced directly to a
particular and individual customer.
Budget Calendar -The Finance Department is responsible for preparing an
annual budget calendar showing key dates in the budget process and
ensuring that statutorily required budget dates are satisfied.
Bud et Development Manual -the Finance Department will prepare an
annual budget development manual for City Departments with forms and
instructions and the budget development manual. This manual will be
available to the public via the City website.
Base Bud eg_t -The Finance Department is responsible for developing the
base budget, those personnel and operating expenses necessary to maintain
the current level of operations. The Finance Department will remove all
one-time and capital expenses and make slight adjustments to line items if
warranted.
The Finance Department and the City Departments will review all line
items to determine if reductions are possible or if changing conditions
necessitate an increase.
Pr gram Enhancement Request - A major component of the budget
process is the department budget enhancement request. Budget
enhancements identify an opportunity or problem, a course of action to
address the problem, and the financial impact of the course of action.
City of Meridian Budget Policy
City of Meridian Budget Policy
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Resolution#
A request for additional personnel, operating expense, or ca ital outla to
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perform a new service, solve a problem or provide the same service to an
increased population requires a budget enhancement re uest. The bud et
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enhancements will tie to the strategic plan. Departments will demonstrate
what issue or challenge, long term program goal and measurable ob'ective
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their strategic plan the budget enhancement will address.
There can be cases wherein an item is requested that has multi le ear
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costs and those costs are not all requested in the current year budget. If
this happens the future costs and any prior costs relevant to the particular
project will be detailed on the enhancement request form.
Program enhancements are listed in priority order by department.
Department Directors review budget enhancements with the Mayor and
their Council liaison.
Compensation Changes -All compensation changes will be communicated
to Finance for inclusion in the draft budget through the Human Resources
Department. Compensation changes include merit, reclassifications,
equity adjustments, across the board increases, cost of living increases,
and Fire union changes.
Reclassifications approved by the Human Resources Director are included
in the base budget. Merit increases, across the board increases, cost of
living increases, and union contract compensation clauses are approved by
the Human Resources Director and the City Council.
If a new job classification is created the job description must be submitted
to the Human Resources Director for approval and salary classification.
Budget Positions -all City positions must be budgeted as full or partial
full time equivalents.
Executive Budget - The Mayor will review the budget materials and
upon approval the Finance will submit the following information to the
City Council;
Enhancement requests
Wage and Salary Report
Base Budget by line item and total
Capital Replacements
City of Meridian Budget Policy
City of Meridian Budget Policy
Adopted
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9, Capital Policy
Capital outlay is defined as meeting the minimum dollar threshold in the
current capital outlay policy and having a life of more than one ear.
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Capital assets may be tangible such as equipment, land and land
improvements, and buildings or they maybe intan ible such as com uter
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software, water rights and easements.
All capital enhancement requests for equipment or construction must
consider and include the estimated operating cost estimates includin
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maintenance, other operating cost, and any associated personnel cost.
All capital enhancement requests must consider and include the total cost
of the project even if the project will be appropriated and spent over
several fiscal years. Each new year request for an existing project will
include the prior budget and actual amounts.
Replacement Capital Outlay -Capital items may be replaced if they are
worn out or obsolete.
Leased Equipment - A lease that meets one or more of the following
criteria must be accounted for as a capital lease and requested as capital in
the budget.
• The lease term is greater than 75% of the property's estimated
economic life.
• The lease contains an option to purchase the property for less than fair
market value.
• Ownership of the property is transferred to the lessee at the end of the
lease term.
• The present value of the lease payments plus an interest factor exceeds
90% of all the fair market value of the property.
Capital Improvement Plan - On annual basis the City will prepare a five
year City-wide capital improvement plan as detailed in # 14 below.
City of Meridian Budget Policy
City of Meridian Budget Policy
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Carr, forward -Capital projects that are not completed in the fiscal ear
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of initial appropriation may be re- appropriated to the next fiscal ear.
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The City only considers re-appropriation for operatin ex enses that are
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one-time enhancements for significant projects that cannot reasonabl be
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completed within a one year time frame. Department Directors are
responsible for notifying the Finance Department which projects will need
to be carried forward. This notification must be in accordance with the
dates set forth in the City budget calendar. The Finance De artment will
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adjust the carry forward at the start of the new fiscal ear to remove
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budget amounts spent between the date of notification and the end of the
fiscal year.
10. Budget Adoption
Budget Workshop
The City Council, Mayor and City Directors will hold n annual bud et
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workshop to discuss department enhancement requests. At the conclusion
of the workshop the Council will approve a draft budget.
Per Idaho statute 50-1002 and 50-1003 the authority and responsible for
setting the budget rests with the City Council.
Notice and Publication Requirements
The City Clerk will publish in the local paper all applicable notices
pertaining to the annual budget process per Idaho Statutes 50-1002 and
50-1003.
Public Hearin
The City is required by Idaho statute to hold a public budget hearing. The
City Finance Department will prepare a presentation highlighting the
budget enhancements and items of interest to the public. The public are
encouraged to attend and submit comments related to the draft budget. At
the conclusion of the public hearing the City Council formally adopts the
budget.
City of Meridian Budget Policy
City of Meridian Budget Policy
Adopted
Resolution#
11. Budget Amendments
Additional spending authority may be requested outside of the annual
appropriation process for an emergenc or unex ected situation
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receive authority to spend an unplanned source of revenue. All effort
should be made to enhance programs or add or change the bud et throu
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the regular budget process.
All amendment requests will initially be reviewed by the Finance
Department to determine availability of revenues and impact on future
years. Amendments must provide the same level of detail required for
budget enhancements. Upon approval by the CFO amendments will be
forwarded to the Mayor and Council for review and approval.
The Mayor and City Council approve amendments during the year at
regular Council meetings while in accordance with state statute legally
amend the budget during the approval process for the next fiscal budget.
12. Monitoring the Budget
Financial Reporting -the Chief Financial Officer (CFO) is responsible for
monitoring adherence to the budget and the financial condition of the City.
The CFO is responsible for providing the City Council, Mayor, and City
management with monthly statements of revenue and ex enses and
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comparison of actual to budget as well as updates on the financial
conditions of the City.
Public Reporting and Transparency -The Chief Financial Officer is
responsible for ensuring the City's budget, financial results, and financial
transactions are available to the public. The Finance Department will also
make available the budget calendar, revenue manual, budget development
manual, capital improvement plan, and the annual audit report and audited
financial statements.
Director and Executive Branch Budget ResponsibilitX -The City Council
is responsible for establishing the spending authority in the budget. The
Mayor and Department Directors are responsible for adhering to the
established budget and establishing and monitoring performance measures
and strategic goals to optimize the level of service provided with available
resources.
City of Meridian Budget Policy
City of Meridian Budget Policy
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13. Performance Reporting and Monitoring
The Mayor and City management are responsible for monitorin tha
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departments are meeting strategic goals and erformance measurements
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and evaluating reasons for variances.
14. Capital Improvement Budget
Content - On an annual basis each program in the Cit will re are and
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update a five year capital improvement plan. The individual ca ital
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improvement plans will be rolled together to create aCity-wide plan. The
capital improvement plan will contain construction projects and si ificant
equipment purchases or replacements such as fire engines.
The capital improvement plan will include operating and ersonnel costs
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and numbers of additional employees associated with construction
projects. The plan will include actual to budget comparison histor for at
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least the three fiscal years proceeding the current year.
The plan will include estimated funding sources for each year of the lan.
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The plan will prioritize projects for each program and for each fund.
The plan will provide detail on the entire cost and construction timelines
for multi-year projects.
Process -The plan will be reviewed and approved by the Mayor and Cit
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Council on an annual basis. Projects to be started in the upcomin ear
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will be formally appropriated during the regular budget process. The
Finance Department is responsible for preparing an annual bud et
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endar showing key dates in the capital improvement plan develo ment
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process.
During the annual review it is expected the plan may be modified as
service needs and/or funding sources change. If the City Council
approves an amendment or budget enhancement that differs from the
existing capital improvement plan the plan will be modified to reflect the
change.
City of Meridian Budget Policy
City of Meridian Budget Policy
Adopted
Resolution#
Re ortin - On an annual basis each program will re are a re ort on th
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completion or percentage of completion on reviousl a ro riate
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projects, any change in scope and any concerns on com letion of the
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project on time and within budget.
City of Meridian Budget Policy