CML s 92 nd Annual Conference June 17 20, 2014 Breckenridge, Colorado

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CML s 92 nd Annual Conference June 17 20, 2014 Breckenridge, Colorado Preconference Session: Municipal Finance & Budgeting for Elected Officials June 17, 2014 2:30-4:30pm Presenter:

1 CML s 92 nd Annual Conference June 17 20, 2014 Breckenridge, Colorado Preconference Session: Municipal Finance & Budgeting for Elected Officials June 17, :30-4:30pm Presenter: Jeff Hansen Finance Director City of Golden Ø Keep you awake Today s Objectives Ø Make this interactive Ø Ask Questions!!! Ø Hopefully you learn something Ø Either from me or each other 1

2 Outline Ø Finance Ø Basics of Governmental Accounting Ø Budget Ø Budget Basics Ø Typical Budget Process Ø Budget Oversight Ø Other types of Budget Processes Basics of Governmental Accounting Ø Not-for-profit perspective Ø Accountable to citizens/bondholders Ø Rule Making/Oversight Ø GAAP Ø GASB Ø GFOA Ø State Statutes Ø City Charter/Municipal Code Fund - Defined A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Some funds are required to be established by State law and bond covenants, however, the Council/Board may establish other funds to help control and manage spendable resources for particular purposes (i.e. Recreation Center Fund). All of the municipality s funds can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. 2

Basics of Governmental Accounting Ø Fund Accounting Ø Separate Checkbooks Ø Fee/Cost of Service Relationships Ø Fund Types Ø Governmental Ø General, Special Revenue, Capital Projects, Permanent Ø

3 Basics of Governmental Accounting Ø Fund Accounting Ø Separate Checkbooks Ø Fee/Cost of Service Relationships Ø Fund Types Ø Governmental Ø General, Special Revenue, Capital Projects, Permanent Ø Proprietary Ø Enterprise, Internal Service Ø Fiduciary Ø Trust, Agency, Pension City of Golden Fund Structure Ø General Fund Ø Primary Revenues Ø Sales & Use Tax, Property Tax Ø Primary Functions Ø Public Safety (Police, Fire) Ø Public Works (Streets) Ø Parks & Rec (Outdoor Rec, Parks, Forestry, RV Park, Bldg Maintenance) Ø General Administration (Council, Manager, Clerk, Communications, Finance, HR, Court, Planning, Economic Development) City of Golden Fund Structure Ø Special Revenue Funds Ø Conservation Trust Fund Ø Lottery Funds Ø Development/Improvement of Parks, Open Space, Trails Ø GDGID Fund Ø Dedicated Property Tax Ø Purchase, construction and improvements of parking lots/garages 3

City of Golden Fund Structure Ø Capital Projects Funds Ø Sales & Use Tax Fund Ø Dedicated Sales & Use Tax (1%) Ø

Bridges Ø Public Art Program Ø Fire Trucks, Police & Fire Equipment Ø Community Center Equipment/Capital

) Ø Capital Programs Fund Ø State Highway Users Tax, Fund Transfers Ø Used for Street Improvements Ø Open Space

Enterprise Funds Ø Water Fund Ø Environmental Quality, Treatment, Maintenance, Water Rights, Storage, Capital,

4 City of Golden Fund Structure Ø Capital Projects Funds Ø Sales & Use Tax Fund Ø Dedicated Sales & Use Tax (1%) Ø Infrastructure, Facilities, Capital Equip Ø Curb, Gutter, Sidewalks Ø Traffic Calming, Major Street Projects, Bridges Ø Public Art Program Ø Fire Trucks, Police & Fire Equipment Ø Community Center Equipment/Capital Improvements Ø Capital Related Debt Service City of Golden Fund Structure Ø Capital Projects Funds (cont.) Ø Capital Programs Fund Ø State Highway Users Tax, Fund Transfers Ø Used for Street Improvements Ø Open Space Fund Ø County Open Space Tax Ø Open Space Purchases, Trail Development City of Golden Fund Structure Ø Enterprise Funds Ø Water Fund Ø Environmental Quality, Treatment, Maintenance, Water Rights, Storage, Capital, Debt Service Ø Wastewater Fund Ø Environmental Quality, Maintenance, Treatment, Capital Ø Drainage Fund Ø Maintenance, Capital, Debt Service 4

5 City of Golden Fund Structure Ø Enterprise Funds (cont.) Ø Community Center Fund Ø Splash Aquatic Park Fund Ø Fossil Trace Golf Course Fund Ø Cemetery Operations Fund Ø Rooney Rd Sports Complex Fund City of Golden Fund Structure Ø Internal Service Funds Ø Fleet Management Fund Ø Information Technology Fund Ø Insurance Fund Ø Medical Benefit Fund Ø Workers Comp & Unemployment Ins Fund Ø Fiduciary Funds Ø Volunteer FF 457 Ø Permanent Fund Ø Cemetery Perpetual Care Fund 5

6 Budget Basics Balanced Budget: Sources of Funds = Uses of Funds Sources: Beginning Projected Reserves plus Budgeted Revenues Uses: Budgeted Expenditures plus Ending Projected Reserves Ø Reserve Philosophy Budget Basics Ø Policy on Ending Reserves Ø How much Ø Course of action if over/under Ø Varies by Entity and Fund/Fund Type Budget Basics Ø Legal Level of Control Ø Fund, Department, or Line Item Ø Dictates amount of Council involvement 6

Typical Budget Process Ø Council Goals/Priorities Ø Revenue Projections Ø Operating Budget Ø Capital Planning & Budget Ø Council Review Ø Public Input (throughout the process) Ø

7 Typical Budget Process Ø Council Goals/Priorities Ø Revenue Projections Ø Operating Budget Ø Capital Planning & Budget Ø Council Review Ø Public Input (throughout the process) Ø Adoption Council Goals/Priorities Council Goals/Priorities Best and most important time for Council involvement and input Ø General goals/direction Ø Specific projects Ø Community needs 7

8 Revenue Projections Ø Needs to be a separate, independent part of the process Ø Initial draft early in the process Ø Adjust only if justified based on current year trends or proposed fee increase Ø DO NOT ARTIFICIALLY INCREASE REVENUE PROJECTIONS TO BALANCE THE BUDGET!!!!!!!!!! Revenue Projections Ø Current Year Projections Ø Budget Year Projections Ø Trends Ø Assumptions Ø Inflation Ø Rate/Fee increases? Ø One Time Revenues Ø Revenue Manual SALES TAX REVENUE Distribution: General Fund 66.7% Sales and Use Tax Capital Improvement (SUT) Fund 33.3% Source: Collection: Visitors, residents and employees in Golden. In 1979, the citizens of Golden voted to install a 2% sales and use tax. In 1991, the citizens voted to increase the sales and use tax rate to 3%, with the extra 1% to be earmarked for capital improvements. Sales tax is charged on certain services and all retail purchases including food. As a home rule city, Golden collects and administers its own sales and use tax. Businesses remit tax to Golden on a monthly, quarterly or annual basis. Taxes collected are due to the City by the 20th of the month following collection. The City has established a lockbox for the efficient and secure deposit of sales and use tax monies. Returns are mailed directly to the bank, eliminating processing float. The City utilizes a number of enforcement procedures to collect from delinquent accounts including taxpayer education, delinquency notices, personal phone contact and visits, audits, summons to municipal court and seizures. Five Year Trend: 15,000,000 10,000,000 5,000,000 General SUT Year Fund Fund Total ,240,442 3,677,791 10,918, ,766,876 3,389,235 10,156, ,106,720 3,552,527 10,659, ,235,703 3,616,842 10,852, ,600,000 3,800,000 11,400, Sales tax revenues have slowly rebounded from the economic recession that started late in 2008 and impacted the City more significantly in Limited new housing starts have impacted the amount of big ticket retail sales and deliveries since In 2012, revenues above budget by 8.83% through September sales. The City has not experienced major store closings or new openings in 2011 or Forecast: 2013 $11,685, $11,977,125 Rationale: As concerns about the speed and extent of an economic recovery persist, sales tax revenues are projected to increase slowly and gradually, 2012 notwithstanding. Forecast anticipates a 2.5% growth in Sales Tax for both 2013 and 2014, allowing for population increases, inflation, and some new commercial activity filling new store fronts in the downtown. 8

9 Operating Budget Ø Current Year Projected Spending Ø Subsequent Year Requests Ø Additional Staff Ø New/Different Programs Ø Justifications GENERAL FUND FINANCE & ADMINISTRATIVE SERVICES Account Description Actual 2012 Actual 2013 Original Budget 2014 Actual Jan- Apr SALARIES & BENEFITS Salaries, Full- Time ,200 $ 622,940 $ 683,700 $ $ 193, Overtime 2,872 2,335 1, Employee Assistance Social Security - FICA 51,703 42,034 50,600 14, Health Insurance 75,056 66,393 73,300 18, Worker's Comp Retirement 33,986 31,612 34,200 10, (a) Match 18,546 16,515 18,600 5, Life, AD&D, LTD 5,309 5,517 8,400 2, Vantage Care 3,296 5,103 3,300 7, Employee Allowances 1, , Dental Insurance 2,963 2,632 4, Unemployment Comp 3,600 3,696 3,600 1,200 Projected Actual 2014 Proposed Budget 2015 Proposed Budget 2016 Subtotal - Salaries & Benefits 892, , , , SUPPLIES & SERVICES Repairs & Maintenance Office Supplies 5,688 5,683 7, Cash Over/Short - Bad Debt (5) Professional Services 170, , ,000 55, Training & Travel 8,956 15,373 10,000 6, Senior Tax Refunds 59,050 61,558 62,000 53, Dues & Subscriptions 3,074 2,664 3, Postage 17,747 18,456 19,500 6, Telephone Rentals & Leases 5,717 4,901 5,350 1, IT Lease 109, , ,660 35, Printing/Advertising 9,123 10,364 10,000 1,454 Subtotal - Supplies & Services 389, , , , CAPITAL Office Furniture/Equipment 1, TOTAL $ 1,283,065 $ 1,227,494 $ 1,281,820 $ 415,324 $ - $ - $ - Capital Budget Ø Should have a 5-year Capital Improvement Plan (CIP) at minimum Ø Need for future fee increases or debt issuances? Ø Identify impact on operating expenses 9

10 CITY OF GOLDEN CONSERVATION TRUST SPECIAL REVENUE FUND CAPITAL PROGRAMS (LOTTERY) 5/2/2014 TEN YEAR CAPITAL IMPROVEMENT PLAN ORIGINAL TOTAL ACTUAL ACTUAL BUDGET Projected Proposed 2013 DESCRIPTION TO 2022 REVENUES: Colorado State Lottery 159, , , , , , , , , , , , ,080 1,885, Grants/Donations 5, Interest 1,031 1,028 1,121 1,400 1, ,963 10,376 10,281 12,966 13,157 16,143 16,650 90,376 TOTAL REVENUES 166, , , , , , , , , , , , ,730 1,975,448 EXPENDITURES: White Water Course Repair and Maintenance ,000-50,000 25,000 40,000-40,000-40,000-40, ,000 White Ash Mine Basketball Court Improvements , , Park Development/Improvements/Playground Upgrades 44,153 74, , , , , , , , , , , , Trees 28,521 20,837 10,000 10,000 10, , Splash Repairs, Replacements and Maintenance 25,000 25, ,245 8, , , , , Community Center Replacement and Maintenance ,000 80,000 20, , , ,000 TOTAL 97, , , , ,000 25, , , , , , , ,000 1,890,692 (Use)/Accumulation of Surplus Funds 69,057 68,430 (242,444) (17,292) (224,000) 159,262 53,621 (2,110) 59,671 4,250 66,354 11,272 (26,270) ENDING FUND BALANCE 190, ,976 7, ,684 17, , , , , , , , , Grants and Donations include: Joint Venture Grant from Jeffco ($32,868) $5,825 from Jeffco for resurfacing splash pad at Splash. Council Review Ø Reviews at various stages in the process Ø Revenues, Rate & Fee increases, CIP, Operating Exp Ø Draft Budget should already be balanced Ø Staff s final recommendation Ø Discussions at Council Study Sessions Ø Any changes at this point still need to balance Public Input Ø Formal Public Hearings Ø Schedule at each major stage of the process Ø Don t expect much input Ø Informal Ø Boards and Commissions Ø One on one with Councilors 10

11 Ø Interim Reports Budget Oversight Ø At least quarterly Ø Review revenues and expenditures Ø Compare to budget Ø Compare to prior year CITY OF GOLDEN Revenues and Expenditures Budget to Actual - 1st Quarter 2014 Cash Basis, Interim & Unaudited Diff. Current % Change Prior Year Prior YTD Current Year Current YTD % of to Prior Current Budget Actual Budget Actual Budget Actual to Prior Description WASTEWATER FUND REVENUES: 1,928, ,502 Wastewater Charges 2,200, ,625 9% 52,123 35% 120,000 0 Wastewater Development Fees 150, ,448 70% 104,448 #DIV/0! 9,000 2,705 Miscellaneous 9,000 2,315 26% (390) -14% 46, Interest 16,200 1,173 7% % 2,103, ,536 Total Wastewater Fund Revenues 2,375, ,561 13% 157, % WASTEWATER FUND EXPENSES: OPERATIONS: 280,930 62,232 Environmental Quality 274,759 61,041 22% (1,191) -2% 875, ,410 Wastewater Administration 908, ,759 14% 23,349 23% 458,247 85,490 Collection & Maintenance 475,856 78,769 17% (6,721) -8% 1,614, ,132 Total Wastewater Operations Expenses 1,658, ,569 16% 15,437 6% CAPITAL: 439,898 5,090 Utility Line Replacement 461,893 8,019 2% 2,929 58% 439,898 5,090 Total Wastewater Capital Expenses 461,893 8,019 2% 2,929 58% 2,054, ,222 Total Wastewater Fund Expenses 2,120, ,588 13% 18,366 7% Budget Oversight Ø Budget Sub-Committees Ø Councilors Ø Citizen group Ø Combination Ø Budget Amendments Ø Why? Ø When? 11

12 Budget Amendments Budget Amendments (Take 2) Types of Budget Processes Ø Annual vs Biennial Ø Zero Based Ø Incremental Ø Priority Driven Ø Outcome Based 12

13 Annual vs Biennial Budgets Ø Annual Entire process every year Ø Time consuming and labor intensive Ø Biennial majority of process every other year Ø Adopt budget for both years Ø Likelihood of formal budget amendments in year 2 Ø Adopt budget for current year only Ø Year 2 adjustments for significant changes Zero Base Budgeting Ø Start from scratch each year Ø Justify your entire existence Ø Pros includes prepared alternative levels of service/funding Ø Cons labor intensive and time consuming process, information overload, not amenable to fixed mandates, encourages dog & pony shows who wins/loses? Incremental Budgeting Ø Start with prior year budget Ø Allowance for $ or % increases without justification Ø Add new staff, capital and/or programs as funds allow 13

14 Incremental Budgeting Ø Pros efficient use of time, not labor intensive, easy to calculate new budget, avoid conflict/competition between departments Ø Cons allocates budget where it may not be needed, takes budget away from other areas of need, doesn t always work well with changing Council goals/priorities, may promote use it or lose it mentality Priority Driven Budgeting Ø Focus on programs and services, not departments Ø Public Process Ø Community priorities Ø Competitive process Priority Driven Budgeting Ø Prioritize Services Police Public Works Patrol Snow Plowing Traffic Enforcement Street Sweeping School Resource Traffic/Street Signs SWAT Street Maintenance Drug Task Force Street Lights 14

15 Priority Driven Budgeting Ø Pros Effective in flat/declining revenues, true cost of doing business, transparency, accountability Ø Cons Mandates may not be community priorities, subsequent years, changing priorities, uncertainty in workforce, support services Outcome Based Budgeting Ø Desired Outcomes identified Ø Costs provided to achieve outcomes Ø Pros allows for private sector to bid on certain outcomes, works well with sufficient revenues Ø Cons line item detail not provided, costs could be inflated So, what s the best method of budgeting??? 15

16 Jeff Hansen Finance Director City of Golden Questions???

82. TREASURY B-185. Total Appropriation, Support to Independent Institutions... 19,628

82. TREASURY B-185. Total Appropriation, Support to Independent Institutions... 19,628 30. EDUCATIONAL, CULTURAL, AND INTELLECTUAL DEVELOPMENT 36. HIGHER EDUCATIONAL SERVICES 2155. HIGHER EDUCATION ADMINISTRATION 47. SUPPORT TO INDEPENDENT INSTITUTIONS NJCFS Account No. IPB Account No. Grants