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HomeMy WebLinkAbout03/20/2007 Blue Sheet Financial and Budgetary Policies and Guidelines TOWN COUNCIL MEETING INFORMATION TOWN OF MARANA MEETING DATE: March 20, 2007 AGENDA ITEM: J.7 TO: MAYOR AND COUNCIL FROM: Erik Montague, Finance Director AGENDA TITLE: Resolution 2007-44: Relating to Budget; adopting Financial and Budgetary Policies and Guidelines. DISCUSSION The establishment of sound financial and budgetary policies and guidelines is part of an effective internal control framework. Additionally, these policies and guidelines provide the conceptual framework necessary for the development of a sound budgetary document and overall financial plan. The Government Finance Officers Association (GFOA) recommends that, at a minimum, financial policies in the following areas be developed by professional staff and formally adopted by the jurisdiction's governing board. . Financial Planning Policies Revenue Policies Expenditure Policies . . These policies address both the need for a long-term view and the fundamental principle of a balanced budget in the following areas: 1. Revenues 2. Fund balance reserves 3. Capital planning 4. Debt management 5. Budget control ATTACHMENTS Financial and Budgetary Policies and Guidelines RECOMMENDATION Staff recommends approval ofthe Financial and Budgetary Policies and Guidelines. SUGGESTED MOTION I move to approve Resolution 2007-44. Budgetary Policies and Guidelines MARANA RESOLUTION NO. 2007-44 RELATING TO BUDGET; ADOPTING FINANCIAL AND BUDGETARY POLICIES AND GUIDELINES. WHEREAS, the establishment of sound financial and budgetary policies and guidelines provide the conceptual framework necessary for the development of a sound budgetary document and overall financial plan; and WHEREAS, these policies and guidelines are part of an effective internal control framework; and WHEREAS, the Government Finance Officers Association (GFOA) recommends that financial and budgetary policies be developed by the Town's professional staff and be formally adopted by the jurisdiction's governing board. NOW, THEREFORE, BE IT RESOLVED by the Mayor and Council of the Town of Marana, Arizona, that the financial and budgetary policies and guidelines attached as Exhibit A are hereby adopted by the Town Council. BE IT FURTHER RESOLVED that the Town's Manager and staff are hereby directed and authorized to undertake all other and further tasks required or beneficial to carry out the terms, obligations and objectives of the aforementioned policies and guidelines. PASSED AND ADOPTED by the Mayor and Council of the Town of Marana, Arizona, this 20th day of March, 2007. Mayor Ed Honea ATTEST: Jocelyn C. Bronson, Town Clerk APPROVED AS TO FORM: Frank Cassidy, Town Attorney ~~~. ~,~~ ~."".~ Financial and Budgetary Policies and Guidelines Sound financial, budgetary and economic principles are part of creating a solid financial plan. Marana's budget incorporates the following long-term and short-term financial policies and guidelines. Revenues . New ongoing operating costs will be funded with permanent, ongoing revenue sources; one-time operating costs are tied to one-time revenue sources to ensure fund balance integrity. . Evaluation of rates, fees and charges for appropriate recovery rates based on the purpose of the fee or charge will occur annually. . Enterprise fund revenues in total will provide for each enterprise to be financially self sustaining. . National and local economic indicators, such as population growth, personal income growth, inflation, business growth, and unemployment will be evaluated regularly. Reserve Policies . Fund balance reserves for the General Fund and Enterprise Funds shall be maintained at a minimum of 25% of the estimated revenues for the budget year. . Fund balance reserves in excess of 25%, if any, will be evaluated on an annual basis to provide a source of funding for major projects or acquisitions. . Appropriation of a minimum contingency/reserve will be included in the budget to provide for emergencies and potential economic downturns. Capital PlanninQ . A Capital Improvement Plan (CIP) shall be developed for a five-year period to allow for appropriate planning. . Capital improvements included in the CIP are those projects that; o Cost $100,000 or more and; o Have a projected minimum useful life of five years. . The CIP shall be reviewed and updated annually. 1 of 2 ~~'" MA~ANA ~"'^',,/ I '',. ~~~ Capital Plannina (concluded) . Capital projects should: o Support Town Council goals and objectives and be consistent with the Town of Marana's General Plan. o Prevent the deterioration of the Town's existing infrastructure and protect its investments in parks, streets, buildings and utilities. o Encourage and sustain economic development in Marana. o Respond to and anticipate future growth in the Town. o Increase the efficiency and productivity of Town operations. . When possible, capital projects constructed in response to residential or commercial development should be financed through growth in the tax base or development fees. . Where appropriate, capital projects should take maximum advantage of improvements and/or funding provided by other units of government. . The impact of capital projects on the operating budget always is an important consideration when evaluating projects for inclusion in the CIP. . The Capital Improvement Plan must satisfactorily address all legal and financial limitations and maintain the Town's favorable investment ratings. . Major changes to the CIP should be evaluated through the CIP process and approved by the Town Council. Debt Manaaement . Long term debt shall not be issued to finance operations. . Short term borrowing or lease purchase contacts should only be considered for financing major operating capital equipment when it is determined to be in the Town's best financial interest. Budaet Control . Estimated budgets for all departments, including contribution driven programs will be submitted by each department to ensure adequate appropriation each year. . Mid-year budget adjustments will be kept to a minimum to minimize the impact on future budgets. . All departments are responsible for ensuring that expenditures do not exceed their approved budget. . Transfer of general fund contingency appropriation requires Town Council approval. All other transfers of require Town Manager or designee approval in accordance with established policies. . If unexpected resources are secured after budget adoption, departments must check with Finance for direction prior to making any expenditure of the funds. 20f2