MINUTES FOR CITY COUNCIL STUDY SESSION
Monday, January 4, 2010
Mayor Stromberg called the meeting to order at 5:30 p.m.
Councilor Navickas, Chapman, Silbiger, Voisin, Jackson and Lemhouse were present.
1. Look Ahead Review
City Administrator Martha Bennett reviewed the items on the Council Look Ahead.
2. What changes should be considered for the Financial Policies used by the City?
Financial Director Lee Tuneberg provided the staff report and a presentation on City Financial Management policies and covered the following:
· Financial Management Policies and Accounting Methods
· Things that changed over time but were not updated: General Fund Restrictions (Parking, Forfeiture and Housing reserves), AFN Ending Fund Balance, AFN & Insurance Contingencies, Location of programs (Facilities, Airport CIP, AFN debt, Claims management) and an added Reserve Fund
Mr. Tuneberg explained not every fund required an Ending Fund Balance and provided examples. The percent of contingencies used yearly depended on the fund and requirement. He described what constituted a supplemental budget and how transfers from contingencies created a categorized appropriation that was previously uncategorized.
· Potential Discussion Groups
Council and Staff discussed the Capital Improvement Plan (CIP) process, the Budget Committee’s role with CIP and having staff prioritize the CIP list for Council’s initial review. Staff explained it would be two years before a comprehensive prioritized list would be available. The current CIP list showed a one-year project plan and a 6-year wish list. Developing the Master Plan would introduce phasing, lifecycles, maintaining the system in the most cost effective way and help determine priorities.
· Financial Policy objectives
· TOT Resolution, Projections & Granting Process for 2011
Staff and Council addressed the Budget Committee’s role in relation to the grant process and the need for Council to provide better direction to the Budget Committee regarding grants.
· Operating Budgetary Policy #1 of 6: The Budget Committee will be appointed in conformance with state statutes. The budget committee’s chief purpose is to review the City Administrator’s proposed budget and approve a budget and maximum tax levy for City Council consideration. The Budget Committee may consider and develop recommendations on other financial issues as delegated by the City Council.
Council agreed with the recommendation to revise the policy, clearly define roles, responsibilities and develop specific criteria that determines whether a budget is responsible.
· Operating Budgetary Policy #2 of 6: The City will finance all current expenditures with current revenues. The City will avoid budgetary practices that balance current expenditures through the obligation of future resources.
Staff clarified guidelines regarding borrowing and proposed a revision to include “current operating expenditures.”
· Operating Budgetary Policy #3 of 6: Policies addressing Fiscal Responsibility.
· Operating Budgetary Policy #4 of 6: Multi-year projections in the annual budget and managing each fund as an independent entity in accordance with applicable statutes and with generally accepted accounting principles.
· Operating Budgetary Policy #5 of 6: The City will allocate direct and administrative costs to each fund based upon the cost of providing these services. The City will recalculate the cost of administrative services each year to identify the impact of inflation and cost increases. Annual recalculation of these internal service charges may not be possible but should be reviewed annually and recalculated at least every three years.
· Operating Budgetary Policy #6 of 6: The City documentation annually to obtain the Award for Distinguished Budget Presentation from the Government Finance Officers Association.
· Ending Fund Balance (EFB) Policies
· Chart of EFB Longer-Term History (excludes APRC) Chart
Staff explained there are several budget documents used to recreate budget history. The EFB Longer-Term History Chart indicated financial activities that had occurred and were mostly capital improvements.
Mr. Tuneberg distributed additional presentations on the General Fund EFB and the Water Fund Contingency. He explained contingencies are related to activities and programs that need to be expenditure related. Traditionally departments used 95-97% of their budgets and the remainder acted as a contingency for unexpected events. With current budget cuts and decreases, departments are now using 98-99% of their budgets reducing the cushion used for soft contingencies. Increasing contingencies would cover unexpected events and avoid Oregon Budget violations.
Council agreed to consider updating the policies discussed at this Study Session prior to the start of the budget process and directed staff to add the AFN Ending Fund Balance as a topic for a future agenda.
Meeting adjourned at 7:11 p.m.
Assistant to the City Recorder