HomeMy WebLinkAboutAgenda_GGAF_07.06.2022Notice of Meeting for the
General Gov ernment and F inance Adv isory B oard
of the City of Georgetown
July 6, 2022 at 4:00 P M
at Georgetown City Hall Community Room, 808 Martin L uther K ing Jr. St.
T he C ity of G eorgetown is committed to compliance with the Americans with Disabilities Act (ADA). If you
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O ffic e, at leas t three (3) days prior to the sc heduled meeting date, at (512) 930-3652 or C ity Hall at 808 Martin
Luther King Jr. S treet, G eorgetown, T X 78626 for additional information; T T Y users route through R elay
Texas at 711.
Regular Session
(T his R egular S es s ion may, at any time, be rec es s ed to c onvene an Exec utive S es s ion for any purpose
authorized by the O pen Meetings Act, Texas G overnment C ode 551.)
A C ons ideration and possible action to approve the minutes from the March 23, 2022 G eneral G overnment
and F inanc e Advisory Board Meeting -S haron P arker, Board Liaison
B P resentation and dis cus s ion regarding acc ounting change under G AS B 34-modified approach to c ertain
infras tructure (S treets ) for F Y 2022. C hris ti R awls, As s t. C ontroller
C Disc ussion and possible action to recommend proposed changes to the F is cal and Budgetary P olicies as
part of the F Y2023 budget development process. – Leigh Wallace, F inanc e Direc tor
Adjournment
Ce rtificate of Posting
I, R obyn Densmore, C ity S ecretary for the C ity of G eorgetown, Texas, do hereby c ertify that this Notic e of
Meeting was posted at C ity Hall, 808 Martin Luther King Jr. S treet, G eorgetown, T X 78626, a plac e readily
acc es s ible to the general public as required by law, on the _____ day of _________________, 2022, at
__________, and remained s o posted for at leas t 72 c ontinuous hours prec eding the s cheduled time of said
meeting.
__________________________________
R obyn Dens more, C ity S ec retary
Page 1 of 105
City of Georgetown, Texas
Government and Finance Advisory Board
July 6, 2022
S UB J E C T:
C onsideration and pos s ible ac tion to approve the minutes from the Marc h 23, 2022 G eneral G overnment
and F inance Advis ory Board Meeting -S haron P arker, Board Liais on
IT E M S UMMARY:
F IN AN C IAL IMPAC T:
.
S UB MIT T E D B Y:
S haron P arker
AT TAC H ME N T S:
Description Type
Minutes Backup Material
Page 2 of 105
Minutes
General Government and Finance Advisory Board
City of Georgetown, Texas
Wednesday, March 23, 2022, at 4:30 PM
The General Government and Finance Advisory Board met on Wednesday, March 23, 2022, at 4:30 PM at City
Hall, 808 Martin Luther King Jr Street, Georgetown, Texas
Board Members Present: Board Members Absent:
Kevin Pitts, Chair John Price
Tommy Gonzales
Michael Charles
David Griffith
City Staff Present:
David Morgan, City Manager
Laurie Brewer, Assistant City Manager
Wayne Nero, Assistant City Manager
Elaine Wilson, Assistant Finance Director
Ed O’Neal, Support Services Manager
Clay Shell, Assistant Fire Chief
Sharon Parker, Board Liaison
Others present:
Regular Agenda:
Kevin Pitts Called the meeting to order at 4:32p.m.
A. Election of a Vice Chair and Secretary for the General Government and Finance Advisory Board – Kevin
Pitts, Board Chair
Motion to nominate David Griffith to Secretary and Michael Charles to Vice President Tommy
Gonzales , second by Kevin Pitts . Approved 4-0 John Price Absent
B. Review and Discuss General Government and Finance Board (GGAF) purpose and bylaws– Kevin Pitts,
Board Chair
All reviewed and no questions. No action needed.
C. Review and Discuss General Government and Finance Board (GGAF) purpose and bylaws– Kevin Pitts,
Board Chair
David talked about items that would come to the board and explained that they are reviewing all boards
and commissions within the City at this time. No action needed.
Page 3 of 105
Minutes
General Government and Finance Advisory Board
City of Georgetown, Texas
Wednesday, March 23, 2022, at 4:30 PM
D. Discuss dates/times for future General Government and Finance Board (GGAF) – Kevin Pitts, Board
Chair
Kevin proposed changing the meeting to the First Wednesday of the month and moving the meeting to
4:00 pm. The board requested Sharon contact Board member John Price to see if the new date and time
would work for him. The other board members were all okay with the new date and time. Sharon will
send notice to board members after she contacts Board member John Price.
E. Consideration and possible action to approve the minutes from the March 2, 2022, General
Government and Finance Advisory Board Meeting – Sharon Parker, Board Liaison.
Motion to approve the minutes as presented by Tommy Gonzales , second by Kevin Pitts
. Approved 4-0 John Price absent
Introduction of new Board members.
F. Review any items that bypassed a GGAF meeting due to timing and went to Council – Kevin Pitts,
Board Chair
Kevin proposed removing this item from future agendas, the purpose of this item was to keep the board
informed of items that may have bypassed GGAF and went directly to Council during Covid and when
meetings were having to be canceled.
All agreed, this item is no longer needed.
G. Consideration and possible action to approve the purchase of uniforms from GALLS Inc. using the Buy
Board Contract #587-19 at a total cost not to exceed $160,000.00 for the fiscal year 2021-2022 – Clay
Shell, Assistant Fire Chief
Chief shell discussed the uniforms to be purchases and explained nothing has changes just adding to
inventory for new employees and normal wear and tear. Ed explained what a Buy Board program is.
Motion to recommend to the City Council the approval of the purchase of uniforms from GALLS Inc as
presented by staff by Tommy Gonzales , second by Michael Charles .
Approved 4-0 John Price Absent
H. Consideration and possible action to approve the purchase of fire and rescue equipment from Metro
Fire Apparatus Specialist using the Buy Board Contract #603-20 at a total cost not to exceed
$90,000.00 for the fiscal year 2021-2022 – Clay Shell, Assistant Fire Chief
Page 4 of 105
Minutes
General Government and Finance Advisory Board
City of Georgetown, Texas
Wednesday, March 23, 2022, at 4:30 PM
Chief Shell presented the types of equipment they would be purchase and explained they will still be
within budget.
Motion to recommend to the City Council the approval of the purchase of Fire Apparatus Equipment from
Metro Fire Apparatus Specialist as presented by staff by Tommy Gonzales , second by Michael
Charles . Approved 4-0 John Price Absent
I. Consideration and possible action to approve the purchase of emergency medical supplies from
Bound Tree Medical LLC using the Buy Board Contract #610-20 at a total cost not to exceed
$140,000.00 for the fiscal year 2021-2022 – Clay Shell, Assistant Fire Chief
Chief Shell presented the types of supplies they would be purchase and explained they will still be within
budget.
Motion to recommend to the City Council the approval of the purchase of uniforms from GALLS Inc as
presented by staff by Michael Charles , second by David Griffith . Approved 4-0
John Price Absent
J. Consideration and possible action to approve the purchase of emergency medical supplies from Life
Assist Inc. using the Buy Board Contract #610-20 at a total cost not to exceed $90,000.00 for the fiscal
year 2021-2022 – Clay Shell, Assistant Fire Chief
Chief Shell presented the types of supplies they would be purchase and explained they will still be within
budget.
Motion to recommend to the City Council the approval of the purchase of uniforms from GALLS Inc as
presented by staff by David Griffith , second by Michael Charles . Approved 4-0 John Price
Absent
Motion to recommend to the City Council the acceptance of the Annual Comprehensive Financial Report
and the independent audit as presented by staff by Kevin Pitts second by Tommy
Gonzalez Approved 5-0
Meeting adjourned at 5:10 pm.
________________________________ ____________
Kevin Pitts Date
Board Chair
___ _______________________________ ____________
David Griffith Date
Board Secretary
Page 5 of 105
City of Georgetown, Texas
Government and Finance Advisory Board
July 6, 2022
S UB J E C T:
P res entation and disc ussion regarding ac counting c hange under G AS B 34-modified approac h to certain
infrastruc ture (S treets) for F Y 2022. C hristi R awls , Asst. C ontroller
IT E M S UMMARY:
T he C ity implemented G AS B 34 in 2003 and as part of the implementation decided to utilize the modified
approach for certain infrastruc ture (streets) which allowed the C ity to not depreciate such assets . O ne of
the requirements of using this approac h is that the as s ets must be as s es s ed at least once every three years
to ensure that they are being properly maintained. T he C ity has conduc ted a P avement C ondition S tudy in
the past to determine the assets P avement C ondition Index (P C I). T he C ouncil has placed a minimum
condition of 85 as “good”.
Due to the rapid growth of the C ity and the C O VI D pandemic , the C ity has not been able to maintain the
three year requirement in either of the las t two 3-year cycles. Additionally, the 3-year c yc le does not align
with the 4-year cycle of the Q uarter C ent S ales Tax elec tion for s treet maintenanc e. O perationally, this no
longer makes sens e due to the time and cost of bidding and performing the P avement C ondition S tudy and
then implementing maintenanc e work in a three year cycle.
Acc ounting is rec ommending that the C ity change ac counting method to the traditional approac h of
depreciating these as s ets over a 25 year period with street improvements to be c apitalized and depreciated
over a 10 year period. T he C ity will continue to utilize the P avement C ondition Index (P C I) and require
s tudies that are operationally logic al and feasible to perform adequate maintenance of the as s ets.
If the C ity does not make this Acc ounting C hange in F Y22, the C ity will be out of c omplianc e with G AS B
34 and will have an audit finding reflec ting this material weaknes s . T his c hange will not be retrospec tive,
however; all s treets c urrently on the fixed as s et s ystem will begin being deprec iated over their remaining
useful life (les s than 25 years).
F IN AN C IAL IMPAC T:
T his c hange will not affec t the fund financial s tatements and will only effect the government wide
s tatements in the Annual C omprehensive F inanc ial R eport.
T he estimated impact to deprec iation on the F Y22 government wide statements is an increase of
approximately $1,976,203.
S UB MIT T E D B Y:
S haron P arker
AT TAC H ME N T S:
Description Type
Page 6 of 105
Pres entation Pres entation
Page 7 of 105
Governmental
Accounting Standards
Board(GASB) 34
Modified Approach
Change in Accounting
July 2022
Page 8 of 105
22
•GASB 34 issued June 1999 (COG implemented in 2003)
•Established new financial reporting requirements for governments in an
attempt to make the annual reports more comprehensive and easier to
understand.
•Management Discussion and Analysis (MD&A), the Government-Wide financials
(GW), Fund financial statements, Notes to the Financials, and Required
Supplementary Information (RSI).
•The purpose of the Government-Wide financials is to see the City’s
financials like a business, allowing more users to understand.
•For the City this means taking our Fund financials and adding in assets, debt and any
other long-term liabilities.
Background
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GASB 34 Modified Approach
GASB 34.105
Page 10 of 105
4
•Infrastructure assets part of a
network not required to be
depreciated as long as 2
requirements are met.
•Requirement 1: Government
manages infrastructure using
an asset management system
•Requirement 2: Government
documents the eligible
infrastructure assets are being
preserved at or above a
condition level established by
the government.
Modified Approach to Infrastructure
Page 11 of 105
5
FY2021 Annual Comprehensive
Financial Report
Modified Approach for Streets Infrastructure Capital Assets
Page 12 of 105
66
•GASB 34.132
•The assessed condition, performed at least every three years, for at least
the three most recent condition assessments
•Not able to comply with requirement in FY2016 & FY2021
•The growth in operations, lane miles and COVID delays within the last few
years makes bidding and completing the Pavement Condition Index (PCI)
Study within the time frame not feasible.
•Change in accounting method would allow Systems Engineering to
choose the timing of PCI study, not accounting policies.
•Would bring us back into compliance with GASB 34 -no audit findings FY22
•Timing of PCI study can align with Streets Maintenance Sales Tax Election and
planning horizon (every 4 years)
Why change from Modified
Approach?
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7
What does this mean?
•The City would need to convert
the $301,232,915 in street
assets to depreciable.
•And would need to start
depreciating these assets over
the remaining useful life of the
assets.
•This would increase
depreciation on the GW
financials by $1,976,203.
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8
Example
Government Wide Statement of Net
Position under Modified Approach
Government Wide Statement of Net
Position –with Change
Page 15 of 105
9
Example continued…
FY2021 Government Wide Statement
of Net Position
FY2021 Government Wide Statement
of Net Position –with Change
Page 16 of 105
1010
Example continued
Street Expense will increase by
$1,976,203
Net position will
decrease by the
$1,976,203
Page 17 of 105
1111
•These changes only affect GW financials FY2022 and beyond
•GW Statement of Net Position (slide 8&9)
•Accumulated depreciation would increase
•Total asset would decrease
•Net Investment in Capital Assets will decrease
•Unrestricted Net Position will increase
•GW Statement of Changes in Net Position (slide 10)
•Street expenses are increased by the additional $1,976,203 depreciation
expense
•Net Position for Governmental Activities and Total Net Position will
decrease
•All other highlighted numbers will be affected by this change as well
GW Statement changes
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1212
•Draft Budget FY2023 General Fund Street Maintenance $628,300
•Draft Budget FY2023 Street Maintenance Tax Fund $6.5 million
•November 2022-Street Sales Tax Election required every 4 years
•Projected next PCI study –Contract to Council July 2022, issue
contract August 2022, study to be completed by August 2023
Street Maintenance Plan
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1313
•PCI Study will continue to be performed every 4 years to guide
street maintenance programming
•Depreciation of Streets is more common practice than the
modified approach for governments
•Have vetted these changes with our auditors
•No fiscal impact on budgetary fund schedules for depreciation
•Only affects the Government–wide reporting
•If we do not make this change in FY2022, we will be out of
compliance and will receive an audit finding
•Fiscal and Budgetary Policies will be updated to reflect change in
practice
Summary
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Questions?
Page 21 of 105
City of Georgetown, Texas
Government and Finance Advisory Board
July 6, 2022
S UB J E C T:
Dis cus s ion and pos s ible ac tion to rec ommend propos ed c hanges to the F isc al and Budgetary P olic ies as
part of the F Y2023 budget development proc es s . – Leigh Wallac e, F inance Director
IT E M S UMMARY:
T he purpos e of this item is to dis cus s and rec eive feedback on the propos ed c hanges to the F isc al and
Budgetary P olicy for the upcoming budget.
T he purpos e of the F isc al and Budgetary P olic y is to provide the framework for financial operations of the
C ity and to ens ure prudent s tewards hip, financ ial planning and acc ountability. T he bond rating agenc ies
and external auditors are the primary external parties that review the polic ies and c omplianc e.
Each year the P olicy is administratively amended to recognize date and amount changes within the text; and
to addres s any new financ ial or regulatory requirement that may need to be added. O ther amendments may
be rec ommended to clarify wording or to further define a particular polic y area.
P otential changes for cons ideration and disc ussion are noted in the overview pres entation. T he full vers ion
of the policies with trac ked changes is provided, as well as a clean c opy.
F IN AN C IAL IMPAC T:
.
S UB MIT T E D B Y:
S haron P arker
AT TAC H ME N T S:
Description Type
Pres entation Pres entation
Fiscal and Budgetary Policies tracked changes Backup Material
Fiscal and Budgetary Policies Clean Copy Backup Material
Page 22 of 105
1
Fiscal and Budgetary Policies
Update for FY2023 Budget
GGAF July 6, 2022
Page 23 of 105
22
Purpose
•Fiscal and budgetary policies guide:
•Budget development and monitoring process
•Revenue and Expense
•Capital asset replacement
•Debt philosophy and process
•Reserves and Financial Ratios
•Accounting and audit policies
•Goal: Find a balance between flexible and firm
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33
Audience
•Reviewed annually by GGAF and Council as part of budget
development process
•Internal staff
•External auditors
•Credit rating agencies
•Rate and fee consultants
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44
Administrative Changes
•Clarify existing wording and formatting
•Remove old language that no longer applies
•Update compliance for future fiscal year
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55
Substantive Changes
•Changing the meaning of the policy
•Calculation change
•Definition change
•Change in decision maker
•Adding new policies
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66
Examples of Past Updates
•Add new reserves
•Update policy to align with opportunities in new software system
•Clarify goals for rate-setting and revenue recovery
•Define appropriate uses of one-time savings
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7
New Updates Proposed for FY2023
Page 29 of 105
88
Budgetary Control Lean Process
Improvement
Section III, G. Operating Budget Control and Accountability
•Update language to match customer service and lean process
improvement effort
•Taking advantage of Workday software –allow departments to
start their own budget transfers in the system to match actual
spending
•Reduces process steps and redundancy
•Improves transparency
•Maintains internal controls –Finance still approves all transfers; Directors
and City Manager approve higher increments
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99
Appropriations for Emergencies
Page 31 of 105
1010
Appropriations for Emergencies
Section III, I. Contingency Appropriations
•After Action Report Item from Winter Storm Uri
•City has many healthy reserves for emergencies, but these are not
appropriated in the annual budget
•Staff needs immediate access to financial resources during an
emergency to procure goods and services, and cover overtime,
until a long-term solution is identified and discussed with Council
•In March, Council agreed to appropriate $300,000 in the General
Fund
•City Manager may approve use during a locally declared disaster
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1111
Parks/Rec Cost Recovery Updates
Section IV, Revenue Management
•Replace antiquated language on parks cost recovery goals with
reference to new, separate Parks and Recreation cost recovery
policy
•Council scheduled to adopt new policy on July 12
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1212
Water Utility Fund Updates
Multiple Sections in Revenue Management and Reserves
•Update financial policies to match recommendations from staff
and consultants during the recent cost of service study
•Improve financial sustainability balance between rates and risk
•Updates reviewed by Water Utility Board and Council in March and
June 2022
•Decrease fixed costs recovery in the base rate and include 1st tier
of volume
•Add range to the days cash on hand reserve
•Specify the non-operating reserve is for debt service
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1313
Employee Recruitment Flexibility
Section V, C3. Expenditure Management
•Position Control
•Be responsive to unprecedented hiring environment during period of
increased demand on City services
•Create a bank of “blank” positions in the control schedule for HR and
Finance to manage
•Allow City Manager to approve “over hire” for certain positions that are
difficult to fill
•Finance will work with departments on ongoing funding source as needed
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1414
Streets Asset Management
Page 36 of 105
1515
Streets Asset Management
Section XI, B. Modified Approach and Pavement Condition Index
•City has used the modified approach to valuing street assets for
approximately 20 years
•Using a pavement condition index, renewed every 3 years, to officially
record the “value/condition” of street assets
•Average PCI goal of 85
•The GASB requirement to conduct a PCI study every 3 years has
become challenging and does not align with planning timeline for
funding sources
Page 37 of 105
1616
Streets Asset Management
Section XI, B. Modified Approach and Pavement Condition Index
•Accounting team discussed options with External Auditor
•Recommendation to end Modified Approach and begin depreciating street
assets going forward (FY2022 year-end and future)
•Continue assessing pavement condition on a schedule better matched
with Streets Maintenance Quarter Cent Sales Tax Election (4 years) and
capital maintenance planning horizon
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1717
Parks Asset Management
Page 39 of 105
1818
Parks Asset Management
Section XI, D. Capital Maintenance and Replacement
•City has been transferring ~$300,000 annually from the General Fund
operating budget to the Parks Maintenance Special Revenue Fund to provide
for maintenance activities and capital equipment replacement
•State-imposed property tax revenue caps have put pressure on the General
Fund operating budget
•State law allows short-term debt funding instruments for capital equipment
•Staff and Financial Advisor recommend debt-funding capital equipment
replacement on a rolling 5 year schedule; and continue with annual $50,000
of operating dollars for maintenance
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1919
Other Changes Asset Management
Section XI
•Cemetery Maintenance –
•remove unrealistic perpetual reserve requirement
•$5 million reserve need to provide perpetual support from interest earnings
•Current reserve level is $722,000 and has not increased significantly in recent years
•maintain $75,000 annual operating support from General Fund
•Surplus Property –Council desires to streamline agendas;
recommend removing requirement for Council authority to
dispose of surplus equipment valued greater than $50K
Page 41 of 105
2020
Summary
•Several clarifications to the policies reflecting current
environment
•Water Utility service growth and long-term financial sustainability
•Asset replacement schedules and funding methods
•Additions to provide flexibility
•Contingency appropriations
•Employee recruitment
•Short-term debt
•City continues to be recognized by credit rating agencies for
strong fiscal policies that emphasize flexible liquidity
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2121
Next Steps
•Receive GGAF feedback and recommendation to Council
•Council update in July/August
•Adopt policies with budget in August/September
Page 43 of 105
FY20232 Annual Budget Fiscal and Budgetary Policy
Adopted: November September 139, 20221
I. PURPOSE
The City of Georgetown is committed to financial management through integrity, prudent stewardship, planning,
accountability, transparency and communication. The broad purpose of the Fiscal and Budgetary Policies is to
enable the City and its related component units, including the Georgetown Transportation Enhancement
Corporation (GTEC) and the Georgetown Economic Development Corporation (GEDCO), to achieve and maintain
a long-term stable and positive financial condition, and provide guidelines for the day-to-day planning and
operations of the City’s financial affairs.
Policy scope generally spans areas of accounting, operational and capital budgeting, revenue and expenditure
management, financial reporting, internal controls, investment and asset management, debt management and
forecasting. This is done in order to:
A. Demonstrate to the residents of Georgetown, the investment community, and the bond rating agencies that
the City is committed to a strong fiscal operation;
B. Provide precedents for future policy-makers and financial managers on common financial goals and
strategies;
C. Fairly present and fully disclose the financial position of the City in conformity to generally accepted
accounting principles (GAAP); and
D. Demonstrate compliance with finance-related legal and contractual issues in accordance with the Texas Local
Government Code and other legal mandates.
These policies will be reviewed and updated annually as part of the budget preparation process.
II. FUND STRUCTURE AND BASIS OF BUDGETING
The budgeted funds for the City of Georgetown include:
Governmental Funds: General Fund which accounts for all financial resources except those required
to be accounted for in another fund, and include basic governmental services,
such as Street Maintenance, Planning and Development, Police, Fire, Parks, as
well as Solid Waste Management.
Special Revenue Funds (SRF) account for specific revenues that are legally
restricted for specified purposes. Examples include Tourism, Parkland
Dedication, Library Donations, Animal Services Donations, and Street
Maintenance Sales Tax.
Debt Service Fund is used to account for the payment of general long-term debt
principal and interest.
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FY20232 Annual Budget
Capital Project Funds are used to account for the acquisition or construction of
major capital facilities other than those financed by enterprise activities.
Proprietary Funds: Internal Service Funds account for goods or services provided by one internal
department to another. The City uses this system to recognize cost for fleet
replacement and maintenance, facility maintenance, computer replacement
and maintenance and employee health insurance costs.
Enterprise Funds include the City’s business like activities including all the utility
funds and the airport.
Basis of Accounting and Basis of Budgeting
The City accounts and budgets for all Governmental Funds using the modified accrual basis of accounting.
This basis means that revenue is recognized in the accounting period in which it becomes available and
measurable, while expenditures are recognized in the accounting period in which the liabilities are incurred.
Because the appropriated budget is used as the basis for control and comparison of budgeted and actual
amounts, the basis for preparing the budget is the same as the basis of accounting. Exceptions to the
modified accrual basis of accounting include:
• Grants, which are considered revenue when awarded, not received
• Principal and interest on long-term debt, which are recognized when paid.
Proprietary Funds are accounted and budgeted using the full-accrual basis of accounting. Under this method,
revenues are recognized when they are earned and measurable, while expenses are recognized when they
are incurred regardless of timing or related cash flows. The basis for preparing the budget is the same as the
basis of accounting except for principal payments on long-term debt and capital outlay which are treated as
budgeted expenses. Exceptions include:
• Depreciation which is not budgeted
• Non-budgeted accruals such as compensated absences.
III. OPERATING BUDGET
Budgeting is an essential element of the financial planning, control and evaluation process of municipal
government. The operating budget is the City’s annual financial operating plan. The annual budget includes all
of the operating departments of the General Fund, proprietary funds, debt service funds, special revenue funds,
and capital improvement funds of the City.
A. Form of Government – The Charter (Section 1.03) established a Council-Manager Government wherein the
City vests power in the City Council to “enact legislation, adopt budgets, determine policies, and appoint the
City Manager who shall execute the laws and administer the government of the City.”
B. Comprehensive Plan – The Charter (Section 1.08) requires that the City Council “establish comprehensive
planning as a continuous and ongoing governmental function in order to promote and strengthen the existing
Page 45 of 105
FY20232 Annual Budget
role, processes and powers of the City of Georgetown.” The current comprehensive plan is the 2030 Plan
adopted in 2006 and updated in 2020.
C. Preparation – The Charter (Section 6.02) requires “a proposed budget prepared by the City Manager and
submitted to the City Council at least thirty days prior to the end of the fiscal year. The budget shall be
adopted not later than the twenty-seventh day of the last month of the fiscal year. No budget will be adopted
or appropriations made unless the total estimated revenues, income and funds available shall be equal to or
in excess of such budget or appropriations, except otherwise provided.”
1. Proposed Budget – A proposed budget shall be prepared by the City Manager with participation of
all of the City’s Directors within the provision of the Charter and the 2030 Plan.
a. The budget shall include four basic segments for review and evaluation:
• Revenue
• Personnel Costs
• Operations and Maintenance Costs
• Capital and other non-project Costs
b. The budget review process will include City Council participation in the development of each
segment and allow for resident participation in the process, and will allow for sufficient time to
address policy and fiscal issues by the City Council.
c. A copy of the proposed and approved budgets will be filed with the City Secretary when it is
submitted to the City Council and will be available on the City’s website.
2. Adoption – Upon finalization of the budget appropriations, the City Council will hold a public hearing,
and subsequently adopt by Ordinance the final budget as amended. The budget will be effective for
the fiscal year beginning October 1st.
The Annual Budget document will be submitted annually to the Government Finance Officers
Association (GFOA) for evaluation and consideration for the Distinguished Budget Presentation
Award.
D. Balanced Budget – The goal of the City is to adopt and maintain a balanced operating budget using
sustainable funding sources that are expected to continue to be available in subsequent fiscal years. Excess
balances in operating funds from previous fiscal years shall remain in the fund in which they were
appropriated until either such excess balances are proposed and adopted pursuant to Section III. C.
Preparation of this policy; until they are used to reduce outstanding debt obligations of the City; or both.
The Charter (Section 6.04) requires that an operating deficit created in any fiscal year shall be paid off and
discharged during the following year. In practice, deficit has been interpreted to mean City funds as a whole.
The City Council may choose from time to time to allow individual funds to have a negative balance as long
as Operating Reserve requirements for the City as a whole are maintained.
E. Planning – The budget process will be coordinated so that major policy issues are identified prior to the
budget approval date. This will allow City Council adequate time for consideration of appropriate decisions
and analysis of financial impacts.
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FY20232 Annual Budget
F. Reporting – Summary financial reports will be presented to the City Council quarterly. These reports will be
in a format appropriate to enable the City Council to understand the overall budget and financial status.
G. Control and Accountability – Each Director, appointed by the City Manager, will be responsible for the
administration of his/her departmental budget. This includes accomplishing the Goals and Objectives
adopted as part of the budget and monitoring each department budget for revenue collections and
compliance with spending limitations. Directors may transfer funds up to $25,000 within the operations and
maintenance or capital line items within a departmental budget category with approval from Finance. Cost
Center Managers may transfer funds up to $5,000 within the operations and maintenance or capital line
items within a cost center with approval from Finance. All transfers from or to the Personnel line items
require approval of the Finance Director and City Manager. All other transfers of appropriation or budget
amendments require either City Council or City Manager approval as outlined in Section III.G Budget
Amendments and Section V.C.4 Use of Excess Salary Savings.
H. Budget Amendments – The Charter (Section 6.04) and the Local Government Code 102.009 and 102.010
provide a method to amend the budget for emergency appropriations and municipal purposes. The City
Council may authorize, with a majority plus one vote, an amendment to the original budget. This may be
done in cases of grave public necessity, or to meet an unusual and unforeseen condition that was not known
at the time the budget was adopted. The following criteria will be used in evaluation of budget amendments:
• Is the request necessary?
• Why was the item not budgeted in the normal budget process?
• Why can't a transfer be done within the Division to remedy the condition?
The Finance Director must certify availability of revenues or funding sources prior to adoption.
If needed, the City will amend the budget at year end for increased revenue and for expenditures that
exceeded budgeted amounts. The City may also amend the budget for any capital project timing adjustments
from prior year, as well as any other known adjustments needed and approved at that time.
I. Contingency Appropriations – The budget may include contingency appropriations within designated
operating department budgets. These funds are used to offset expenditures for unexpected maintenance
or other unanticipated expenses that might occur during the year. Currently, the City maintains contingency
appropriations for items such as insurance deductibles, unexpected legal expenses and equipment repairs.
The General Fund, General Government Contracts Cost Center, contains a $300,000 appropriation for
emergency circumstances. The purpose of this contingency is for use during locally declared disasters as a
short-term temporary measure to fund emergency supplies or services until a long-term solution is
developed. Since these funds are appropriated, the Council is authorizing the City Manager or Acting City
Manager, in partnership with the Finance Division, to approve use of these funds. Whenever possible, the
Mayor will be consulted prior to use. Council and the public will be informed of the purpose and
circumstances of use as soon as practically possible. When these funds are used, they should be restored as
soon as practically possible from grant reimbursements, additional revenues, one-time expense savings or
other appropriate sources.
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I.J. Use of Unanticipated and Unappropriated General Fund Balances – Within 90 days after fiscal year end, staff
will report the projected General Fund balance to Council. In the event that unexpected, unbudgeted
amounts are determined to be available in the General Fund after year end close, these funds may be used
for any of the following one-time purposes that mitigate increases in property taxes, as approved by the City
Council:
1. to fund capital projects;
2. to fund equipment purchases in lieu of issuing debt;
3. to reduce outstanding City debt, including bonded indebtedness and unfunded pension liabilities;
4. to fund contingent liabilities such as the benefit payout reserve, cemetery trust fund, and similar
obligations of the City;
5. to hold those funds in reserves for future commitments or contingencies that may be pending,
and/or;
6. to fund one-time start-up programs or one-time studies.
IV. REVENUE MANAGEMENT
A. Characteristics – The City will strive for the following optimum characteristics in its revenue system:
1. Simplicity – The City, where possible and without sacrificing accuracy, will strive to keep the revenue
system simple in order to reduce compliance costs for the taxpayer or service recipient.
2. Certainty – A knowledge and understanding of revenue sources increases the reliability of the
revenue system. The City will understand its revenue sources and enact consistent collection policies
to provide assurances that the revenue base will materialize according to budget.
3. Equity – The City shall make every effort to maintain equity in its revenue system; i.e., the City should
seek to minimize or eliminate all forms of subsidization between entities, funds, services, utilities,
and customer classes, and ensure an on-going return on investment for the City.
a. The City will make every effort to recognize the benefit that City tax payers contribute to City
programs and services.
b. The annual Recreation residential membership rates are established at 75% of non-residential
rates plus or minus 10% at the discretion of the Parks and Recreation Director in keeping with
the targeted market cost recovery. The Parks and Recreation Department maintains a separate
policy on cost recovery goals. This policy will be regularly reviewed and approved by the council.
4. Revenue Adequacy – The City should require there be a balance in the revenue system; i.e., the
revenue base will have the characteristics of fairness and neutrality as it applies to cost of service,
willingness to pay, and ability to pay.
Overall Operational Cost Recovery for Recreation is targeted to be between 50 – 60%, with some
variance in individual programs.
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5. Realistic and Conservative Estimates – Revenues will be estimated realistically, and conservatively,
taking into account the volatile nature of various revenue streams.
6. Administration – The benefits of a revenue source should exceed the cost of levying and collecting
that revenue.
7. Diversification and Stability – A diversified revenue system with a stable source of income shall be
maintained. This will help avoid instabilities in revenue sources due to factors such as fluctuations
in the economy and variations in the weather.
B. Other Considerations – The following considerations and issues will guide the City in its revenue policies
concerning specific sources of funds:
1. Cost/Benefit of Incentives for Economic Development – The City will use due caution in the analysis
of any incentives that are used to encourage development. A cost/benefit (fiscal impact) analysis
will be performed as part of the evaluation.
2. Non-Recurring Revenues – One-time or non-recurring revenues should not be used to finance
current ongoing operations.
3. Sustainable Revenues – Sustainable means revenue that is consistently available year after year, and
includes revenues realized subsequent to adopted projections.
4. Property Tax Revenues – Annually, the City will forecast property tax revenue as part of the budget
process. Certified Assessed Value Reports from the Williamson Central Appraisal District are used to
forecast property tax. The City will comply with State law regarding publication notices and Truth in
Taxation requirements.
5. Interest Income – Interest earned from investments will be distributed to the funds in accordance
with the average daily cash balance of the fund from which the monies were provided to be invested.
6. User-Based Fees and Service Charges – For services associated with a user fee or charge, the direct
or indirect costs of that service will be offset by a fee where possible. The City will review fees and
charges no less than once every five years on a rotating schedule to ensure that fees provide
adequate coverage for the cost of services. The City Council will determine how much of the cost of
a service should be recovered by fees and charges.
7. Enterprise Activity Rates – The City will review and adopt utility and airport rates as needed to
generate revenues required to fully cover operating expenses, meet the legal requirements of all
applicable bond covenants, and provide for an adequate level of working capital. Enterprise rates
will be reviewed annually as part of the budget process. A rate study will be conducted no less than
every 3 years to review rate methodology and ensure revenues will meet future needs. All enterprise
rates will be based on standardized cost of service methodologies and conservation goals.
a. Water Rates will recognize at least 765% of the identified fixed costs of service, including debt
payments and ROI Payment in Lieu of Taxes costs, within the monthly base charge determined
by meter size plus 90% with the first customer tier. Volumetric charge will recognize the balance
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FY20232 Annual Budget
of fixed costs not included in the base rate, plus all variable costs associated with procuring and
treating water.
.
b. Wastewater Rates are fixed for all residential customers based on the cost of providing services.
Commercial customer rates are fixed and volumetric depending on size and specifications of
each commercial customer.
c. Electric Rates include 100% of fixed costs within the base rate, and demand rates, with all
variable costs included in the kWh rate. The Power Cost Adjustment (PCA) Factor and
Transmission Cost Adjustment (TCA) Factor are determined by comparing forecasted costs
against actual costs in a budget year, and seek to recover/credit variances within 6 to 12 months.
For reference, see Code of Ordinances 13.04.075 and 13.04.080.
d. Stormwater Drainage Fees are based on a mathematical calculation using impervious cover and
applied in compliance with State Law.
e. Solid Waste and Environmental Services Rates are based on the wholesale cost of service and
retail incentives for conservation, the cost to renovate the transfer station, plus a return to the
General Fund for wear and tear of heavy trucks on City streets, a franchise fee, and an
administrative allocation for managing the solid waste contract and solid waste departmental
programing.
f. Airport Fuel and Lease Rates – fuel rates are based on the cost of the fuel plus a profit margin to
fund operations; lease rates are based on the appraisal of the land or facility plus an escalation
for consumer price index and used to fund operations, capital improvement, contingency, and
debt service requirements.
8. Internal Cost Recovery Fees – Additionally, enterprise activity rates will include transfers to and
receive credits from other funds as follows:
a. General and Administrative Charges – Administrative costs should be charged to all funds for
services of general overhead, such as administration, finance, customer billing, legal and other
costs as appropriate. These charges will be determined through an indirect cost allocation
following accepted practices and procedures and reviewed annually by the City’s external
auditors.
b. Payment for Franchise of Right of Way and Payment in Lieu of Taxes – The intent of these
transfers to the General Fund are to provide a benefit to the citizens for the ownership of the
various utility operations.
Water, Wastewater, Irrigation and Stormwater Drainage
• In-Lieu-of-Franchise-Fee. 3% of operating revenues from Charges, Connect Fees, Tap Fees,
Penalties and Late Fees.
• Payment in Lieu of Taxes (PILOT). The transfer is calculated at 7% of operating revenues
from Charges, Connect Fees, Tap Fees, Penalties and Late Fees.
Electric
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FY20232 Annual Budget
For customers inside the City, the franchise fee is $0.002947/kWh sold. The payment in lieu of
taxes for customers inside the City is 7% of gross revenue of the base monthly charge, and
$0.007253/kWh sold. For customers outside the City, there is no franchise fee to the City of
Georgetown; however, those customers may be subject to franchise fees in the jurisdiction in
which they reside. Outside the City customers are charged a payment in lieu of taxes equal to
7% of gross revenue of the base monthly charge, and $0.0102/kWh sold.
9. Revenue Monitoring – Received revenues will be regularly compared to budgeted revenues and
variances will be investigated, and any abnormalities will be included in the quarterly report to the
City Council.
10. Other Funding Alternatives
When at all possible, the City will research alternative funding opportunities prior to issuing debt or
increasing user-related fees.
a. Grants – All grant applications must be approved by the City Council prior to being submitted to
a granting agency. Prior to submittal to Council, departments will verify that the benefits of the
grant exceed the cost of grant administration and will also provide the required grant forms to
Finance for review in accordance with the Grant Acquisition, Management, and Compliance
Policy. Finance will review and sign the forms which provides detailed information including, but
not limited to, the term of the grant, any matching requirements, the resulting operational
requirements once the grant is discontinued, and a budget request detailing the line items to be
effected, all of which should be included in the Council agenda item packet requesting approval
to apply. The City Council must also authorize acceptance of any grant awards received.
b. Use of Reserve Funds – The City may authorize the use of reserve funds to potentially delay or
eliminate a proposed bond issue. This may occur due to higher than anticipated fund balances
in prior years, thus eliminating or reducing the need for debt proceeds, or postpone a bond issue
until market conditions are more beneficial or timing of the related capital improvements does
not correspond with the planned bond issue. Reserve funds used in this manner are replenished
upon issuance of the proposed debt.
c. Developer Contributions – The City will require developers who negatively impact the City's
utility capital plans offset those impacts. These policies are further defined within the City's
utility line extension policy and other development regulations.
d. Leases – The City may authorize the use of lease financing for certain operating equipment when
it is determined that the cost benefit of such an arrangement is advantageous to the City.
e. Impact Fees – The City will impose impact fees as allowable under state law for transportation,
water and wastewater services. These fees will be calculated in accordance with statute and
reviewed at least every three years. All fees collected will fund projects identified within the Fee
study and as required by state laws.
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FY20232 Annual Budget
V. EXPENDITURE MANAGEMENT
A. Appropriations – The point of budget control is at the department level budget for all funds. The Charter
(Section 6.03) provides that any transfer of appropriation between funds must be approved by the City
Council and that the City Manager, without City Council approval, is authorized to transfer appropriations
among departments, within the same operational division and fund.
B. Expenditure Monitoring – Expenditures and encumbrances will be regularly compared to budget, variances
will be investigated, and any abnormalities will be included in the quarterly report to the City Council.
Projected year-end expenditures will be reported in the annual budget.
C. Personnel Costs – Costs related to salaries and benefits are budgeted at 100% total costs, assuming open
positions are filled throughout the fiscal year. New positions that are added during the budget process may
have staggered hire dates with appropriate costs reflected in the budget.
1. Vacancy Factor – Major Funds with Personnel Budgets will include a vacancy factor of at least 1% of
total fund salaries and related benefits (retirement, FICA, Medicare) to offset salary savings within
the budget. The vacancy factor will be budgeted as a negative expense within the fund. This factor
will be reduced throughout the year as vacant positions are recognized within the department
budget.
Compliance Status – General Fund, Electric Fund, Water Fund and Joint Services Fund FY20232 in
compliance.
2. Benefit Payout Reserve – The City will establish a benefit payout reserve equal to 15% of the accrued
benefit liability for employees in the General and Joint Services Funds who are currently eligible to
retire. Only terminating employee benefit expenses may be paid from this reserve. This reserve shall
be funded as an offset to the vacancy factor.
Compliance Status – Benefit payout reserve FY20232 in compliance.
3. Position Control – The annual budget includes a set number of positions within departments when
approved and adopted by City Council. Additional positions cannot be added without approval of
the City Council. The City Manager may approve the transfer of authorized positions between
departments if funds are available within the department.
The City Manager may designate up to 10 placeholder positions in the position control schedule to
be available for use throughout the year to respond to service areas with pressure or unusual hiring
environment circumstances. The position control schedule and the expense budget will be amended
by Council to reflect mid-year changes as soon as practical.
3.4. Use of Excess Salary Savings – Departmental savings generated due to open positions or other salary
line item savings cannot be spent by the department unless previously approved by the City Manager
and validated by Finance as excess funds.
D. Special Purpose Funding – In order to support community assistance programs, the City designates specific
funding for special purposes, including Strategic Partnerships for Community Services, and Public Art. The
City reserves the ability to cap this special purpose funding when necessitated by budget contingency or
compliance issues, such as revenue shortfalls, or other reasons as determined by City Council.
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FY20232 Annual Budget
1. Strategic Partnerships for Community Services – The City of Georgetown values partnerships with
organizations that are committed to addressing our communities’ greatest public challenges and has
identified key priorities in the following areas:
a. Public Safety
b. Transportation
c. Housing
d. Parks & Recreation
e. Veteran Services
f. Safety Net
The City has targeted funding for these programs to be $5.00 per capita, which may be adjusted to
offset the effects of general inflation based upon Consumer Price Index. If previous funding levels
are higher than the targeted amount, and to avoid significant reductions in levels of funding, the City
Council shall seek to attain this target chiefly through population growth. These funds will be
allocated and paid according to the City Council’s guidelines for such programs.
Compliance Status – FY20232 in compliance.
2. Public Art Funding – The City will annually allocate $43,000 of funding for Public Art in the Tourism
Fund. Any unspent funds will accumulate and be reallocated in the following budget year.
Disbursement of these funds will be determined by the City’s Arts & Culture Advisory Board.
Compliance Status – FY20232 in compliance.
Every effort will be made to include public art funding in future City facilities whose primary purpose
is for public use. These projects will include a reasonable allowance for public art that fits the scope
and purpose of the building so long that it does not negatively impact the project cost beyond the
original budget. In the event there is cost savings in the construction of City Facilities, the City Council
may consider utilizing that savings on the purchase of public art for the facility.
E. Purchasing – The City will maintain and regularly review written Purchasing Policies. All City purchases of
goods or services will be made in accordance with the City’s Charter, current Purchasing Policy and with
State law.
The following table shows a summary of requirements for purchases of goods and services and does not
substitute the formal Purchasing Policies.
Dollar Limits: Procurements: Requirements:
$3,000 and less Under the small purchase
limit
No competitive bids and City credit
cards may be used.
$3,001 up to
$25,000
Within informal bid limit No competitive bids; Historically
Underutilized Business (HUB)
requirements apply in accordance with
state law.
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FY20232 Annual Budget
$25,001
up to
$50,000
Within informal bid limit A minimum of three informal
solicitation for bids required unless
exempted; Historically Underutilized
Business (HUB) requirements apply in
accordance with state law.
$50,001
and above
In excess of the informal bid
limit
Formal solicitations, which includes
public notices, required unless
exempted. Advisory board review and
recommendation may be
required. Council approval required.
Common exemptions to the formal solicitation process include the procurement of professional services, the
purchase of goods or services from a sole source provider, and purchases for public health emergencies
(Texas Local Government Code 252.022).
In addition to the above, all purchases must be approved according to signature authority limits.
F. Contracts, Change Orders and Amendments – Contracts and related change orders and amendments must
follow the City’s Purchasing Policies and State Law. Contract term lengths should balance the need for value
as well as the ability to respond to changing conditions.
G. Prompt Payment – In accordance with State Law, all invoices approved for payment by the proper City
authorities shall be paid within thirty (30) calendar days of receipt of goods or services or invoice date,
whichever is later in accordance with State law. The City will take advantage of all purchase discounts, when
possible.
H. Risk Management – The City will pursue every opportunity to provide for the Public’s and City employees’
safety and to manage its risks. The goal shall be to minimize the risk of loss of resources through liability
claims with an emphasis on safety programs.
I. Retirement Benefits – Proposals to revise benefits administered and provided by the Texas Municipal
Retirement System shall include a written description, and, detailed and summary numerical assessments of
the changes that would result from the proposed benefit revision.
1. The numerical assessments shall include the following:
a. The estimated change to the TMRS contribution rate that would result from the proposed
change in benefits, expressed as a percentage of employee pay and as an annual dollar amount
to the General Fund and to each City fund.
b. The estimated change to the City’s unfunded pension liability, expressed as a dollar amount.
c. The estimated change to the City’s actuarial funding ratio.
2. The description and numerical assessments must be provided to the City Council at least 72 hours
prior to consideration and approval, and must be read aloud to the Council prior to Council
consideration.
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FY20232 Annual Budget
3. The estimated changes to the City’s contribution rate and the unfunded pension liability presented
pursuant to the section must be based on information provided by the TMRS actuary or by a
professional actuary authorized by the TMRS to provide such information.
4. Proposals to revise TMRS benefits must be voted on individually as part of the City Council’s
legislative agenda.
5. The City will amortize any unfunded actuarial liability (UAAL) over a period not to exceed the
amortization period used by the TMRS actuary. The City may amortize its UAAL more quickly by
making contributions to TMRS in excess of the rate specified by TMRS.
6. The City may elect to pay a higher contribution rate than required by the TMRS, to reduce the City’s
unfunded pension liability. Such payment will be approved and authorized by the City Council as part
of the City's annual budget process.
J. Retirement Cost-of-Living Adjustment
1. Within 60 days of when the TMRS annual funding update becomes available each year, staff will
review and may prepare a summary of costs and options for potential cost-of-living adjustment
(COLA) for City of Georgetown retirees.
2. Consistent with state statutes governing the Texas Municipal Retirement System, the City may
provide an automatic COLA for members of the TMRS who are retired from the City of Georgetown
and receiving a monthly retirement benefit from the TMRS.
3. The City Council may adjust the COLA provided to city retirees based upon the funding level of the
City’s pension plan, as calculated by the TMRS, as follows:
When the funding level of the
City’s pension plan is
The COLA
should be
Less than 70.0%
Zero
70.0% to 79.9%
0.3% of CPI
80.0% to 89.9%
0.5% of CPI
90.0% and greater
0.7% of CPI
4. Adjustments made pursuant to Subsection J.3. should reflect the reciprocal effect of the prospective
change in the COLA on the funding level of the City’s pension plan.
K. Deferred Compensation Benefits – In addition to the retirement benefit administered by the TMRS, the City
will sponsor a Deferred Compensation 457 plan and ROTH plan, which are supplementary individual
retirement savings plans. The City will encourage employee participation in these plans.
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FY20232 Annual Budget
VI. STAFFING AND COMPENSATION
City Council and Management recognize the importance of attracting, hiring, developing, and retaining the best
people, and compensating them for the value they create. Our outstanding and innovative City employees work
diligently to bring the Vision of Council to life and deliver exceptional services to our customers while
exemplifying our Core Values. The following programs are subject to available funding in the annual operating
budget.
A. Adequate Staffing – Staffing levels will be adequate for the fiscal functions of the City to operate effectively.
Workload allocation alternatives will be explored before adding additional staff.
B. Competitive Compensation – In order to maintain a competitive pay scale, the City has implemented a
Competitive Employee Compensation Maintenance Program to address competitive market factors and other
issues impacting compensation. The program consists of:
1. Annual Pay Plan Review – To ensure the City’s pay system is accurate and competitive within the
market, the City will review its pay plans annually for any potential market adjustments necessary to
maintain the City’s competitive pay plans.
2. Pay for Performance – Each year the City will fund performance based pay adjustments for regular
non-public safety personnel. This merit-based program aids in retaining quality employees by
rewarding their performance. Pay for Performance adjustments are based on the employee’s most
recently completed performance evaluation.
3. Public Safety Steps – Each year the City will fund anniversary step increases for public safety sworn
personnel consistent with public safety pay scale design.
C. Self-Insurance Program – The City is committed to providing quality healthcare insurance that offers the
most flexibility in health benefits and options to its employees. In order to provide the most cost effective
solution, the City has determined that establishing a self-funded health insurance plan offers the greatest
opportunity to mitigate future cost increases while offering quality health care services to its employees. The
City has established a mechanism to manage the accounts and payments associated with this program. Per
GASB Statement No. 66, such funding should be accounted for as an Internal Service Fund (ISF).
1. Employee Health Insurance ISF – This fund contains premium contributions from employees and
budgeted health insurance contributions included in the City’s annual budget process. To maintain
stable revenue to this fund, and to clearly set expenditure expectations for departments, any
budgeted appropriations for employee health insurance that are unused at the end of each fiscal
year will be transferred back to the self-insurance fund.
2. Self-Insurance Reserves – Annually through the budget process, staff and the City’s Health Benefit
Consultant firm will evaluate and recommend to Council the appropriate funding levels for two
reserves.
a. Incurred but Not Reported (IBNR) Reserve: In the event the City stopped self-insuring for health
benefits and was required to pay incurred costs, the City will reserve 10 percent of the annual
costs of claims, benefit administration and stop loss coverage.
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FY20232 Annual Budget
Compliance Status – IBNR reserve FY20232 in compliance.
b. Rate Stabilization Reserve: To alleviate shocks to the City and employees due to sharp increases
in health insurance costs, the City will reserve between 10 and 20 percent of annual medical
claims, benefit administration and stop loss coverage. Staff and the benefits consultant will
consider a 3 year forecast on premiums when determining to utilize the funds or rebuild the
reserve.
Compliance Status – Rate stabilization reserve FY20232 in compliance.
3. Employee Premiums – Annual premiums will be recommended to City Council through a
collaborative process between the City’s Employee Benefit Committee and external Health Benefits
consulting firm using historical data, reserves history and other analytic analysis.
VII. FUND BALANCE POLICIES
The City’s Fund Balance is the accumulated difference between assets and liabilities within governmental funds,
and it allows the City to meet its contractual obligations, fund disaster or emergency costs, provide cash flow for
timing purposes and fund non-recurring expenses appropriated by City Council. This policy establishes limitations
on the purposes for which Fund Balances can be used in accordance with Governmental Accounting Standards
Board (GASB) Statement Number 54.
The City’s Fund Balance will report up to five components:
A. Non-spendable Fund Balance – includes inherently non-spendable assets that will never convert to cash, as
well as assets that will not convert to cash soon enough to affect the current financial period. Assets included
in this category are prepaid items, inventory and non-financial assets held for resale.
B. Restricted Fund Balance – represents the portion of fund balance that is subject to legal restrictions, such as
grants or hotel/motel tax and bond proceeds.
C. Committed Fund Balance – describes the portion of fund balance that is constrained by limitations that the
City Council has imposed upon itself, and remains binding unless the City Council removes the limitation.
D. Assigned Fund Balance – is that portion of fund balance that reflects the City’s intended use of the resource
and is established in a less formal method by the City for that designated purpose.
E. Unassigned Fund Balance – represents funds that cannot be properly classified in one of the other four
categories.
VIII. LONG-TERM LIABILITY RESERVES
The City of Georgetown recognizes certain long-term unfunded commitments and contingencies that will require
substantial funding at some point in the future. The City is committed to addressing these commitments in a
fiscally prudent method by acknowledging their future financial impacts and developing strategies and
designated reserve funds to mitigate those future impacts.
A. The Finance Director will maintain a list of unfunded liabilities. The list will be included in the quarterly
financial report to Council and considered during the annual budget process.
IX. BUDGET CONTINGENCY PLAN
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FY20232 Annual Budget
This policy is designed to establish general guidelines for managing revenue shortfalls resulting from local and
national economic downturns that adversely affect the City's revenue streams.
A. Immediate Action – Once a budgetary shortfall is projected, the City Manager will take the necessary actions
to offset any revenue shortfall with a reduction in current expenses. The City Manager may:
1. Freeze all new hire and vacant positions except those deemed to be a necessity.
2. Review all planned capital expenditures.
3. Delay all "non-essential" spending or equipment replacement purchases.
The City Manager shall report in a timely manner to the City Council the projected shortfall and the actions
taken to resolve it.
B. Further Action – If the actions identified in subsection A are insufficient to offset the projected revenue deficit
for the current fiscal year, the City Council may approve the following actions, in the order listed:
1. Apply unspent, unobligated surplus funds from prior fiscal years to fund one-time costs in the current
fiscal year budget.
2. Authorize the use of the General Fund Economic Stability Reserve , contingency reserves, capital
reserves or any other reserves appropriate as outlined in the sections XII. CAPITAL MAINTENANCE
AND REPLACEMENT and XV. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS
3. Direct other reductions in services, including workforce reductions.
4. Authorize a temporary reduction in one or more fund’s contingency reserves from 90 days to 75
days.
C. Replenish Fund Balance – Generally, if any existing reserve is used as described above in the budget
contingency plan, the reserve should be restored in the next fiscal year. If the restoration within one year is
impractical or places an undo strain of City services, staff shall recommend to Council an alternative timeline
that is subject to Council approval.
X. CAPITAL IMPROVEMENT PROGRAM (CIP) BUDGET
The City’s goal is to maintain City facilities and infrastructure in order to provide excellent services to the
customers within the community, meet growth related needs, and comply with all state and federal regulations.
A. Preparation – The City annually updates and adopts a five-year Capital Improvement Program (CIP) schedule
as part of the operating budget adoption process. The plan is reviewed and adjusted annually as needed, and
year one is adopted as the current year capital budget. The capital budget will include all capital projects,
capital resources, and estimated operational impacts.
1. Needed capital improvements are identified through system models, repair and maintenance
records and growth demands.
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FY20232 Annual Budget
2. A team approach will be used to prioritize CIP projects, whereby City staff from all operational areas
provide input and ideas relating to each project and its effect on operations.
3. Citizen involvement and participation will be solicited in formulating the capital budget through
master planning processes, board meetings, public hearings and other forums.
4. Capital infrastructure necessary to meet the requirements of the City’s Annexation Plan will be
identified separately within the CIP plan, so that funding alternatives can be developed if needed.
Prior to Council approval, the following Advisory Boards will review the Capital Projects budget and
contracts for expenditures:
Electric Utility
Board
Water
Utility
Board
Georgetown
Transportation
Advisory Board
(GTAB)
General
Government
and Finance
Advisory Board
(GGAF)
Parks
Advisory
Board
Georgetown
Transportation
Enhancement
Corporation
(GTEC)
Electric
Water
Wastewater
Streets
Stormwater
Drainage
Airport
Facilities, Fleet,
IT and
Other General
Government
Capital Projects
Parks and
Recreation
Transportation
projects
related to
economic
development
B. Control – All capital project expenditures must be appropriated in the capital budget.
C. Financing Programs – Where applicable, assessments, impact fees, pro rata charges, or other fees should be
used to fund capital projects which have a primary benefit to specific identifiable property owners. Debt
financing is referenced in Section XIV. Debt Management of this document.
XI. CAPITAL MAINTENANCE AND REPLACEMENT
The City recognizes that deferred maintenance increases future capital costs. Therefore, a portion of all
individual funds with infrastructure should be budgeted each year to maintain the quality within each system.
A. Infrastructure Maintenance — On-going maintenance and major repair costs are included as expense within
the departmental operating budgets. These costs are generally considered system repairs and are not
capitalized for accounting purposes. They include such items as park and recreation facility repairs, street
repair, water line repairs and other general system maintenance.
B. Modified Approach — Pavement Condition Index (PCI) — Governmental Accounting Standards Board
Statement # 34 provides for an alternative approach to depreciation for measuring the value of infrastructure
assets and the related costs incurred to maintain their service life at a locally established minimum standard.
The City has elected to implement this modified approach in maintaining its non-enterprise fund
infrastructure assets. In order to adopt this alternative method, the City has implemented an asset
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management system that determines if the minimum standards are being maintained. This measurement
system will be updated at least every 3 years.
The City uses a Pavement Management Information System to track the condition levels of each of the street
sections. The condition of the pavement is based on the following factors:
• Type of Distress
• Amount of Distress
• Severity of Distress
• Deduct Values (function of first three)
The Pavement Condition Index (PCI) is a measurement scale is based upon a condition index ranging from
zero for a failed pavement to 100 for pavement with perfect condition. The condition index is used to
classify pavement in the following conditions:
The City’s administrative policy is to achieve an average PCI level of 85. An 85 PCI is considered maintaining
the streets in a “good” condition. Staff will prepare a street maintenance budget that meets this target for
Council’s consideration during the budget process. The PCI level as of 2018 was 85.5.
Upon implementation of GASB 34 in 2003, the City elected to use the modified approach in maintaining and
recording its non-enterprise fund infrastructure assets. In order to adopt this alternative method, the City
implemented an asset management system that determines if the minimum standards are being maintained.
This measurement system was updated at least every 3 years in accordance with GASB 34 requirements until
2016.
Due to strong growth since 2016, the City has not been able to maintain the requirement of updating the PCI
every 3 years. From an operational standpoint, this requirement has become challenging because it does not
align with resource planning from the Streets Sales Tax Election. Therefore, in FY 2022, the City is changing
its accounting method for streets and street improvements from the modified approach to the traditional
depreciation of such assets. The City will begin capitalizing all new streets and street improvements as well
as begin depreciating existing street assets until their remaining useful life.
While the accounting method is changing for these assets, operationally, the City will continue to utilize the
Pavement Condition Index (PCI) and require studies that are operationally logical and feasible to perform
adequate maintenance of the assets.
C. Internal Service Funds Capital Maintenance & Replacement – The City currently utilizes internal service funds
to maintain and replace existing assets. Assessments are made to other funds for the use of existing
equipment and to purchase new equipment. In this way, suitable funds are available for the purchase of
operational assets without the issuance of debt.
1. Fleet Maintenance and Replacement – The City has a major investment in its fleet of cars, trucks,
tractors, and other equipment. The City will anticipate replacing existing equipment, as necessary
PCI Rating
100 – 85 Good
85 – 45 Fair
45 – 0 Poor
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and will establish charges that are assigned to the using departments to account for the cost of that
replacement. Vehicle maintenance is also allocated in this manner. The targeted asset replacement
reserve amount is the average (1/5th) of the next five years on the replacement schedule for cash-
funded vehicles.
Compliance Status – Fleet replacement reserve FY20232 in compliance.
It is the general policy of the City not to hold back vehicles or equipment from replacement or
disposition. Departmental requests to hold back units must be approved by the Fleet Manager and
the City Manager.
2. Technology – It is the policy of the City to plan and fund the maintenance and replacement of its
computer network and other technology systems. A reserve will be established within the ISF for
replacement of major systems and will be funded over time through excess revenues within the
Fund. The targeted amount is the average (1/5th) of the next five years on the replacement schedule.
While cash funding is preferred, major IT systems and projects may require debt that is amortized
over a shorter useful life appropriate for the software or hardware.
Compliance Status – IT replacement reserve FY20232 in partial compliance. The IT Fund will need to
increase recovery rates in future years to cover the purchase of the fiber asset from the Electric Fund
and restore the capital reserve.
3. Facilities Maintenance – The City has established an on-going maintenance program, which includes
major repairs, equipment, as well as contracts for maintaining City facilities. The City has anticipated
a useful life of such equipment and established a means of charging those costs to the various
departments in order to recognize the City’s continuing costs of maintaining its facilities.
Determination for facility repairs is based on useful life of the various elements of each facility. A
proportional cost for each element is expensed within the budget for capital replacement. The
targeted replacement reserve amount is the average (1/5th) of the next five years on the replacement
schedule.
Compliance Status – Facilities replacement reserve FY20232 partial compliance. It is estimated to
take 2 additional years to build the replacement reserve.
D. Departmental Capital Maintenance & Replacement – The City also utilizes department capital maintenance
and replacement schedules for specialized assets and equipment necessary to provide services.
1. Parks and Recreation – As part of the City’s on-going maintenance program, the City also recognizes
the need to regularly maintain and replace playgrounds, equipment and facilities that are part of the
City’s Parks and Recreation system. Separate replacement and maintenance schedules will be
maintained for these items including, but not limited to, playground equipment, buildings, sport
courts, trees and grounds, and restroom facilities. The City’s goal is to provide level on-going funding
to ensure safe, well-maintained facilities for its citizens. The current funding level for maintenance
activities is an annual $29750,000 transfer from budget in the General Fund. The capital equipment
replacement schedule will be funded with short-term property-tax backed debt instrument, with
term length consistent with useful life of the assets or shorter.
Compliance Status – Parks maintenance replacement FY20232 in compliance.
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2. Cemetery Maintenance - The General Fund makes an annual transfer of $75,000 to the cemetery
fund to assist with general operations and maintenance activity not covered through cemetery
revenuesis fund.
2.3. Public Safety Equipment – As part of the City’s on-going maintenance program, the City also
recognizes the need to regularly maintain and replace specialized equipment in Police and Fire.
Separate replacement and maintenance schedules will be maintained for these items including but
not limited to for Fire: SCBA’s and other firefighting equipment and protective gear; and for Police:
bullet proof vests, armaments and other tactical equipment. The City’s goal is to provide level on-
going funding to ensure proper protection for employees and residents. The current funding level is
an annual appropriation in the General Fund of $80,000 for Fire and $88,000 for Police.
Compliance Status – Public safety equipment replacement FY20231 in compliance.
E. Surplus Property
1. From time to time it is necessary to dispose of certain vehicles or equipment that have been procured
with City funds and used in City services. Individual surplus property items with expected sales value
in excess of $50,000 must be approved by the City Council prior to disposition.
City staff will maintain reports and records of all surplus property dispositions in accordance with
good internal controls.
XII. ACCOUNTING, AUDITING, AND FINANCIAL REPORTING
A. Accounting – The City is solely responsible for the recording and reporting of its financial affairs, both
internally and externally. The Finance Director is responsible for establishing the structure for the City’s
Chart of Accounts and for assuring that procedures are in place to properly record financial transactions and
report the City’s financial position.
B. General Government and Finance Advisory Board (GGAF)Audit and Finance Sub-Committee – The City may
establish a subcommittee consisting of at least 32 City Council members and not more than 3 citizens that
may meet quarterlymonthly to provide additional strategic oversight to the City’s Finance operations. This
subcommittee will also review general government items that are not reviewed by another City advisory
board before being presented to City Council. The City’s Finance Director will be the liaison for this
subcommittee.
C. Audit of Accounts – In accordance with the Charter, an independent audit of the City accounts will be
performed every year. The auditor is retained by and is accountable directly to the City Council. The auditing
firm will serve for up to 5 years, at which time, the City will re-bid these services and change firms if deemed
necessary by Audit and Finance Sub-Committee GGAF and City Council.
D. External Reporting – Upon completion and acceptance of the annual audit by the City’s auditors, the City
shall prepare a written Annual Financial Report which shall be presented to the City Council within 180
calendar days of the City’s fiscal year end. The report shall be prepared in accordance with Generally
Accepted Accounting Principles (GAAP) and shall be presented annually to the Government Finance Officer
Association (GFOA) for evaluation and consideration for the Certificate of Achievement in Financial
Reporting.
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XIII. ASSET MANAGEMENT
A. Cash Management and Investments – The City Council has formally approved a separate Investment Policy
for the City of Georgetown that meets the requirements of the Public Funds Investment Act (PFIA), Section
2256 and 2257 of the Texas Local Government Code. This policy is reviewed annually by the City Council and
applies to all financial assets held by the City and applies to all entities (component units) included in the
City’s Annual Financial Report and/or managed by the City. Refer to the separate policy for details regarding:
1. Statement of Cash Management Philosophy
2. Objectives
3. Safekeeping and Custody
4. Standard of Care and Reporting
5. Investment Strategies
6. Authorized Investments and Approved Broker/Dealer List.
B. Fixed Assets – These assets will be reasonably safeguarded and properly accounted for, and prudently
insured.
1. Capitalization Criteria – For purposes of budgeting and accounting classification, the following
criteria must be met in order to be capitalized:
a. The asset owned by the City
b. The expected useful life of the asset must be longer than one year, or extend the life of an
identifiable existing asset by more than one year
c. The original cost of the asset must be at least $5,000
d. The asset must be tangible, or uniquely intangible like a trademark.
On-going repairs and general maintenance are not capitalized. Public Education and Government
(PEG) Funds will capitalize assets in aggregate over $1,000 on an annual basis.
2. New Purchases – All costs associated with bringing the asset into working order will be capitalized
as part of the asset cost. This will include startup costs, engineering or consultant type fees as part
of the asset cost once the decision or commitment to purchase the asset is made. The cost of land
acquired should include all related costs associated with its purchase. Appropriate personnel and
overhead costs are capitalized in the Electric fund.
3. Improvements and Replacement – Improvements will be capitalized when they extend the original
life of an asset or when they make the asset more valuable than it was originally. The replacement
of assets components will normally be expensed unless they are a significant nature and meet all the
capitalization criteria.
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4. Contributed Capital – Infrastructure assets received from developers or as a result of annexation will
be recorded as equity contributions when they are received.
5. Distributions Systems – All costs associated with public domain assets, such as streets and utility
distribution systems, will be capitalized in accordance with the capitalization policy. Costs should
include engineering, construction and other related costs including right of way acquisition. For the
Electric Distribution system, all component parts associated with a capital project shall be accounted
for and capitalized in accordance with the Federal Energy Regulatory Commission (FERC) guidelines.
These are an exception to the capitalization criteria above.
6. Reporting and Inventory – The Finance Division will maintain the permanent records of the City’s
fixed assets, including description, cost, department of responsibility, date of acquisition,
depreciation and expected useful life. Periodically, random sampling at the department level will be
performed to inventory fixed assets assigned to that department. Responsibility for safeguarding
the City’s fixed assets lies with the department supervisor or manager whose department has been
assigned the asset.
XIV. DEBT MANAGEMENT
The City of Georgetown recognizes the primary purpose of capital facilities is to provide services to the
community. Using debt financing to meet the capital needs of the community must be evaluated according to
efficiency and equity. Efficiency must be evaluated to determine the highest rate of return for a given investment
of resources. Equity is resolved by determining who should pay for the cost of capital improvements. In meeting
demand for additional services, the City will strive to balance the needs between debt financing and “pay as you
go” methods. The City realizes that failure to meet the demands of growth may inhibit its continued economic
viability, but also realizes that too much debt may have detrimental effects on the City’s long-range financial
condition.
The City will issue debt only for the purpose of acquiring or constructing capital assets for the general benefit of
its citizens and to allow it to fulfill its various purposes as a city. The City will seek input on major projects funded
with debt via bond elections, master planning exercises, board meetings, budget workshops, and other methods
as needed.
A Debt Condition Update report will be provided annually.
A. Usage of Debt – Long-term debt financing will be considered for non-continuous capital improvements of
which future citizens will benefit. Alternatives for financing will be explored prior to debt issuance and
include, but not limited to:
• Grants
• Use of Reserve Funds
• Use of Current Revenues
• Contributions from developers and others
• Leases
• Impact Fees
When the City utilizes long-term financing, it will ensure that the debt is soundly financed by conservatively
projecting revenue sources that will be used to pay the debt. It will not finance the improvement over a
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period greater than the useful life of the improvement and it will determine that the cost benefit of the
improvement, including interest costs, is positive to the community.
The City may utilize the benefits of short-term debt financing to purchase operating equipment provided the
debt doesn’t extend past the useful life of the asset and the potential impact to the tax rate is within policy
guidelines.
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B. Types of Debt
1. General Obligation Bonds (GO’s) – General obligation bonds must be authorized by a vote of the
citizens of Georgetown. They are used only to fund capital assets of the general government and
are not to be used to fund operating needs of the City. The City’s ad valorem taxing authority backs
general obligation bonds. Conditions for issuance of general obligation debt include:
a. When the project will have a significant impact on the tax rate;
b. When the project may be controversial even though it is routine in nature; or
c. When the project falls outside the normal bounds of projects the City has typically done.
For debt programs that include multiple projects that will be issued over multiple years at the
discretion of the City Council, the City may present approve an Agreement with the Voters to manage
future property tax rate impacts. The Agreement with the Voters will be included in educational
information for all applicable GO Bond elections, and will include a maximum annual tax rate increase
and a cumulative total per bond authorization maximum tax rate increase. The City will include these
impacts in its annual Debt Condition report.
The City Council will carefully manage the unissued GO Bond authorization through annual review of
related projects to ensure full disclosure on future timing of projects included in the bond package.
Timing of authorized projects and related bond issuance will be included in the Annual Budget and
published on the City’s website. Any changes to this schedule require specific Council authorization.
2. Revenue Bonds – Revenue bonds will be issued to provide for the capital needs of any activities
where the capital requirements are necessary for the continuation or expansion of a service. The
improved activity shall produce a revenue stream to fund the debt service requirements of the
necessary improvement to provide service expansion. The average life of the obligation should not
exceed the useful life of the asset(s) to be funded by the bond issue, and will generally be limited to
no more than twenty (20) years. An exception can be made for plant expansions or related system
expansions whose useful life is in excess of 30 years. A cost benefit analysis will be done to fully
disclose the impacts of extending debt beyond 20 years.
3. Certificates of Obligation, Contract Obligations (CO’s) – Certificates of obligation or contract
obligations may be used to fund capital requirements that are not otherwise funded by general
obligation or revenue bonds, as allowed by state law. Debt service for CO’s may be either from
general revenues (tax-supported) or supported by a specific revenue stream(s) or a combination of
both. Typically, the City may issue CO’s when the following conditions are met:
a. When the proposed debt will have minimal impact on future effective property tax rates;
b. When the projects to be funded are within the normal bounds of City capital requirements, such
as for roads, parks, various infrastructure and City facilities and equipment; and
c. When the average life of the obligation does not exceed the useful life of the asset(s) to be
funded by the issue.
Certificates of obligation will be the least preferred method of financing and will be used with
prudent care and judgment by the City Council during the budget development process.
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4. Self-supporting Certificates of Obligation Debt – Refers to certificates of obligation issued for a
specific purpose and repaid through dedicated revenues other than ad valorem taxes. The annual
debt requirements are not included in the property tax calculation. Both the Airport and Stormwater
Drainage funds will issue this type of debt. In addition, the Electric and Water Services Funds can
utilize this method of funding non-system capital assets. The City also issues debt on behalf of the
Georgetown Transportation Enhancement Corporation (GTEC) and the Georgetown Economic
Development Corporation (GEDCO) whom then pledge 4A and 4B sales tax revenue for the
repayment of that debt. Tax Increment Reinvestment Zones also may issue self-supporting debt.
5. Internal borrowing between City Funds – The City Council can authorize use of existing long-term
reserves as formal loans between funds. The Council will consider the following circumstances:
1. The emergency or other circumstances and why an internal loan is the best viable
option;
2. The dollar amount of the loan will be within the core balance reserves of the lending
fund and will otherwise not be restricted by local or state regulation;
3. The borrowing fund will repay the loan at a rate consistent with current market
conditions. The loan will be considered an investment of working capital reserves by the
lending fund. The interest rate will be comparable to prevailing investment rates for
public funds at the time the loan is made; and a fixed, variable or other rate structure
will be defined at the time the loan is approved;
4. The maximum maturity will be three (3) years.
5. A reimbursement resolution may be used to reimburse a short-term loan (up to 1 year
maturity) with long-term debt proceeds;
6. Formal loans will be appropriately recorded and reported.
6. Refundings – The City Council may refinance debt to achieve interest cost savings as market
conditions change, or to remove restrictive covenants, or to further other City goals as expressed by
Council. The City’s Financial Advisor will prepare refunding analysis for consideration and
demonstrate that the savings of the refinancing are greater than the costs to refinance, with a target
minimum net present value savings of 3-5%.
7. Other Short-term Borrowing – The City may authorize the issuance of Public Property Finance
Contractual Obligations (PPFCO) which is short-term obligations for the acquisition of personal public
property, such as equipment. PPFCOs are payable from either ad valorem taxes or another dedicated
revenue stream. Each issuance will be assessed to ensure cost effectiveness and the repayment
schedule will not exceed the useful life of the asset. Multiple equipment acquisitions can be grouped
in a single PPFCO issue in order to develop economies of scale.
In FY2021, the City issued a $48 million PPFCO for the energy costs of Winter Storm Uri. The Council
approved a 9.5 year term with a 5 year call option. Because energy costs are an ongoing operating
expense, it is the intent of the City to review all options to pay off this debt issue as soon as possible,
balanced against rate competitiveness, Electric fund liquidity, and other practical factors.
The City may authorize the issuance of Limited Tax Notes for tax-supported obligations whose
issuance timeframe occurs outside of the City’s normal bond issuance schedule or for other
emergency needs. The Limited Tax Notes must have a maximum maturity of seven years. They may
be sold either as public, rated offerings in a competitive or negotiated sale, or they may be privately
placed depending on the financing goals of the City and market conditions at the time of sale.
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C. Method of Sale – The City will use a competitive bidding process in the sale of bonds unless conditions in the
bond market or the nature of the issue warrant a negotiated bid, private placement or other method. In
such situations, the City will publicly present the reasons for the other method. The City will rely on the
recommendation of the financial advisor in the selection of the underwriter or direct purchaser. The financial
advisor must meet all licensing requirements and comply with all Municipal Securities Rulemaking Board
(MSRB) regulations. The City’s financial advisor will not act as the underwriter on any City bond issue.
D. Disclosure – Full disclosure of operating costs along with capital costs will be made to the bond rating
agencies and other users of financial information. The City staff, with assistance of the financial advisor and
bond counsel, will prepare the necessary materials for presentation to the rating agencies and will aid in the
production of the Preliminary Official Statements. The City will take responsibility for the accuracy of all
financial information released.
E. Federal Requirements – The City will maintain written procedures to follow post issuance compliance rules,
arbitrage rebate and other Federal requirements.
1. Post issuance tax compliance rules will include records retention, arbitrage rebate, use of proceeds,
and
2. Continuing disclosure requirements under SEC Rule 15c2-12, MSRB standards, or as may be required
by bond covenants or related agreements.
F. Debt Structuring – The City prefers to issue bonds with a term of twenty (20) years or less, not to exceed the
useful life of the asset acquired. The structure should approximate level debt service unless operational
matters dictate otherwise. Market factors, such as the effects of tax-exempt designations, the cost of early
redemption options and the like, will be given consideration during the structuring of long term debt
instruments. Exceptions to the 20 year term include debt issues for major system expansions, such as water,
sewer or electric plants, in which case the City may issue debt greater than 20 years since the useful life of
the asset exceeds 30 years. A cost benefit analysis indicating the impacts of extending debt beyond 20 years
will be completed.
Fixed interest rate basis will be preferred because it aids in predictable budget and multi-year forecasting for
the issuing funds. Variable rate debt can sometimes allow early repayment with no penalty. Variable rate
debt may be considered by the Council as a tool to provide flexibility in setting the tax rate and determine
use of one-time available fund balances. The City’s Financial Advisor will provide an analysis of the benefits
of a variable rate structure versus interest rate risk, remarketing risk, and liquidity risk. Because variable rate
debt introduces risk and administrative burden on staff and advisors, the amount of allowed variable rate
debt will be limited to no more than ten percent (10%) of the City’s outstanding debt principal per system
(tax-supported, utility supported).
G. Utility and Self-Supporting Debt Coverage Ratio – Refers to the number of times all utility supported debt
service requirements or payments would be covered by the current operating revenues net of on-going
operating expenses of the City’s combined utilities (Electric, Water, and Wastewater).
The City will maintain a minimum debt service coverage ratio of 1.5 times for the utilities as a whole. The
bond ordinances allow the City to forego a debt reserve fund for its utility debt if the coverage is maintained
at 1.35 times or better. A coverage ratio of 1.05 times will also be required for all funds issuing self-supporting
debt (Airport, Stormwater, GTEC, GEDCO, PID and TIRZ).
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Compliance Status – Debt coverage ratio FY20232 in compliance.
H. Bond Reimbursement Resolutions – The City may utilize bond reimbursements as a tool to manage its debt
issues, due to arbitrage requirements and project timing. In so doing, the City uses its capital reserve cash
to delay bond issues until such time when issuance is favorable and beneficial to the City.
The City Council may authorize a bond reimbursement resolution for General Capital projects that have a
direct impact on the City's ad valorem tax rate when the bonds will be issued within the term of the existing
City Council. In the event of unexpected circumstances that delay the timing of projects, or market
conditions that prohibit financially sound debt issuance, the approved project can be postponed and
considered by a future council until circumstantial issues can be resolved.
The City Council may also authorize revenue bond reimbursements for approved utility and other self-
supporting capital projects within legislative limits. Currently revenue bonds must be issued within 18
months after an eligible bond funded project is begun.
The total outstanding bond reimbursements may not exceed the total amount of the City’s reserve funds.
XV. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS
The City of Georgetown will maintain budgeted minimum reserves in the ending working capital/fund balances
to provide a secure, healthy financial base for the City in the event of a natural disaster or other emergency,
allow stability of City operations should revenues fall short of budgeted projections and provide available
resources to implement budgeted expenditures without regard to actual timing of cash flows into the City.
Generally, if any existing reserve is used to cover expenses as described, the reserve should be restored in the
next fiscal year. If the restoration within one year is impractical or places and undo strain of City services, staff
shall recommend to Council an alternative timeline that is subject to Council approval.
A. Operational Coverage – The City’s goal is to maintain operations coverage of 1.0 (one), such that operating
revenues will at least equal or exceed current operating expenditures. Deferrals, short-term loans, or one-
time sources will be avoided as budget balancing techniques. Reserves will be used only for emergencies or
non-recurring expenditures, except when balances can be reduced because their levels exceed guideline
minimums as stated below.
1. Operating Reserves – The City will maintain reserves at a minimum of seventy-five (75) days (20.83%)
of net budgeted citywide operating expenditures. Net budgeted operating expenditure is defined
as total budgeted expenditures less interfund transfers and charges, capital improvements, direct
cost for purchased power, debt service, non-operating special revenue funds and payments to third
party grant agents. The amount of these funds are allocated within the following operating funds
and using the following guidelines to maintain the fund balance, working capital and retained
earnings (reserves) of the various operating funds at levels sufficient to protect the City’s
creditworthiness, as well as, its financial position from unforeseeable emergencies. For asset
replacement reserves, see Section XI. Capital Maintenance and Replacement.
Compliance Status – 75 day citywide reserves FY20232 in compliance.
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2. General Fund – General Fund reserves will be assigned on the balance sheet. Reserves are allocated
as follows:
a. Base Level Reserve – will equal ninety (90) days, or 25%, of current year budgeted operating
expenditures designated for emergency use only.
Compliance Status – General Fund 90 day Reserve FY20232 in compliance.
b. Economic Stability Reserve – will equal up to 106% of current year budgeted operating
expenditures. The reserve will be designated to temporarily offset a decline in any General Fund
revenue source during the current fiscal year or in planning the future budget year. The reserve
may be used when growth in any General Fund revenue source from one fiscal year to the next
is below zero. The reserve will be available to support only existing programs approved in a prior
fiscal year.
Compliance Status – General Fund Stability Reserve FY20232 at 82%.
3. Tourism Fund – A minimum ninety (90) days of operating expenditures will be reserved within the
fund balance. These funds are designated to be used to offset any potential revenue shortfall that
occurs during the fiscal year.
Compliance Status – Tourism Fund Reserve FY20232 in compliance.
4. Joint Services Fund – A minimum ninety (90) days of operating expenses will be reserved for
unexpected delays in revenue or emergency expenses.
Compliance Status – Joint Services Fund Reserve FY20232 partial in compliance. It is estimated to
take approximately 3 years to build the reserve to 90 days.
5. Fleet Fund – A minimum ninety (90) days of operating expenses will be reserved for unexpected
delays in revenue or emergency expenses.
Compliance Status – Fleet Fund Reserve FY20232 in compliance.
6. Facilities Fund - A minimum ninety (90) days of operating expenses will be reserved for unexpected
delays in revenue or emergency expenses.
Compliance Status – Facilities Fund Reserve FY20232 in compliance.
7. Information Technology Fund - A minimum ninety (90) days of operating expenses will be reserved
for unexpected delays in revenue or emergency expenses.
Compliance Status – IT Fund Reserve FY20232 in compliance.
8. Water Services Fund – The Water Fund will maintain the following reserves and assign them on the
balance sheet. These reserves are designated to be used to offset potential revenue shortfalls or
fund unexpected or emergency expenses that occur during the fiscal year.
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a. Operations Contingency Reserve – A minimum ninety (90) days or 25% of operating expenses,
including wholesale water contracts and net of transfers, designated for unexpected or
emergency use during the fiscal year. The targeted reserve amount is 120 days, and the
maximum amount is 365 days.
Compliance Status – Operating Water Fund Reserve FY20232 in compliance.
b. Non-Operating Contingency Reserve – to maintain continuity of debt payments, capital projects
and to begin recovering from a natural disaster during the lag time of revenue recovery. This
reserve will be evaluated annually as part of the budget process, considering the 5 year CIP and
future debt requirements.a minimum of 50% of the average annual debt service over the
forecasted 5 years.
Compliance Status – Non-operating Water Fund Reserve FY20232 in compliance.
9. Stormwater Drainage Fund – The Stormwater Fund will maintain the following reserves and assign
them on the balance sheet:
a. A minimum ninety (90) days or 25% of operating expenses, will be reserved in fund balance.
These funds are designated to be used to offset any potential revenue shortfall that occurs
during the fiscal year.
Compliance Status – Contingency Reserve FY20232 in compliance.
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY20232 in compliance.
10. Electric Fund – The Electric Fund will maintain the following reserves and assign them on the balance
sheet:
a. Operations Contingency Reserve – A minimum ninety (90) days or 25% of operating expenses,
net of transfers and purchased power, designated for unexpected or emergency use during the
fiscal year.
Compliance Status – Operating Contingency reserve FY20232 in compliance.
b. Rate Stabilization Reserve – Up to 3 months of purchased power costs will be reserved to protect
against energy market exposure and to maintain wholesale power contracts and stability until
expenses are recovered through revenue generated in the Power Cost Adjustment Factor.
Compliance Status – Rate stabilization reserve FY20232 in compliance.
c. Non-Operating Contingency Reserve – to maintain continuity and begin recovery process from
a natural disaster during the lag time of revenue recovery:
• 1% of historical rate base (total assets plus accumulated depreciation)
• 1/5th of the average cash funded portion of the 5 year CIP
• At least 50% of annual debt service payment
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Compliance Status – Non-operating reserve FY20232 in compliance.
d. Uses of Unanticipated and Unappropriated Electric Fund Balances – In the event that fund
balance in the Electric Fund exceeds recommended minimum cash as enumerated in the above
reserves, the funds may be used for the following purposes as approved by the City Council:
• Reduce the Power Cost Adjustment
• Reduce outstanding utility debt
• Fund capital projects
• Fund other one-time projects or equipment
11. Airport Fund – The Airport Fund will maintain the following reserves and assign them on the balance
sheet;
a. A contingency reserve of ninety (90) days of operating expenses will be maintained in the fund for
unforeseen or emergency expenditures. The reserve will represent all operating expenses minus
fuel costs and any transfers.
Compliance Status – Contingency Reserve FY2022 FY2023 in compliance.
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY20232 in compliance.
12. GEDCO Fund –
a. A contingency reserve equal to 25% of budgeted sales tax revenue.
Compliance Status – Contingency Reserve FY20232 in compliance.
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY20232 in compliance.
13. GTEC Fund –
a. A contingency reserve equal to 25% of budgeted sales tax revenue.
Compliance Status – Contingency Reserve FY20232 in compliance.
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY20232 in compliance.
14. Rivery TIRZ Fund – A debt service reserve equal to 1x the upcoming debt service payment for existing
debt (example - FY2020 reserve = FY2021 debt payment before new sale).
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Compliance Status – Debt Service Reserve FY20232 in compliance.
15. Cemetery Fund – A perpetual reserve should build over time so that interest earnings can offset
annual operational costs. The General Fund makes an annual transfer of $75,000 to this fund.
Compliance Status – In FY2022 in compliance. The reserve has $722,000. Annual operational costs
are $100,000. With an interest rate of 2%, the reserve needs a balance of $5 million to support
operations. This fund is not likely to build this level of reserve without a significant change in revenue.
For all other funds, the fund balance is an indication of the balance of each particular fund at a specific time.
The ultimate goal of each such fund is to have expended the fund balance at the conclusion of the activity
for which the fund was established.
Reserve requirements will be calculated as part of the annual budget process and any additional required
funds to be added to the reserve balances will be appropriated within the budget.
Funds in excess of the minimum reserves within each fund may be expended for City purposes at the will of
the City Council once it has been determined that use of the excess will not endanger reserve requirements
in future years. This action requires an amendment to the City’s Annual Budget and is outlined in Section III.
J. Use of Unanticipated and Unappropriated General Fund Balances.
B. Liabilities and Receivables – Procedures will be followed to maximize discounts and reduce penalties offered
by creditors. Current liabilities will be paid within 30 days of receiving the invoice. Accounts Receivable
procedures will target collection for a maximum of 60 days of service. The Finance Director is authorized to
write-off non-collectible, non-utility accounts that are delinquent for more than 180 days, and utility
accounts delinquent more than 180 days, provided proper delinquency procedures have been followed, and
include this information in the Annual Financial Report to the City Council.
C. Capital Project Funds – Every effort will be made for all monies within the Capital Project Funds to be
expended in a timely manner preferably within thirty-six (36) months of receipt. Due to the long timeline of
some projects, unused cash or bond proceeds will be reserved on the fund schedule and appropriated when
needed. The fund balance will be invested, and income generated will offset increases in construction costs
or other costs associated with the project. Capital project funds are intended to be expended totally, with
any unexpected excess to be approved for use according to the bond covenant and opinion of bond counsel.
D. General Debt Service Funds – Revenues within this fund are stable, based on property tax revenues. Balances
are maintained to meet contingencies and to make certain that the next year’s debt service payments may
be met in a timely manner. Fund balance should not fall below 45 days annual debt service requirements, in
accordance with IRS guidelines.
Compliance Status – Debt Fund Reserve FY20232 in compliance.
E. Investment of Reserve Funds – The reserve funds will be invested in accordance with the City’s investment
policy.
F. Ratios/Trend Analysis – Ratios and significant balances will be incorporated into the annual bond rating
bookquarterly financial reports to the City Council for the Electric, Water and General Debt Service Funds.
This information will provide users with meaningful data to identify major trends of the City's financial
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condition through analytical procedures. The following ratios/balances will be used as key financial
indicators:
• Debt Ratio: Current liabilities plus long-term liabilities divided by total
assets
CL +LTL/TA AL < 0.5
• Times Coverage Ratio: Operating revenue less operating expense divided by
annual debt service
(OR-OE)/DSV AL > 1.5
The City will develop minimum/maximum levels for the above ratios/balances through analyzing of City
historical trends and future projections.
XVI. RISK MANAGEMENT AND INTERNAL CONTROLS
A. Written Procedures – Wherever possible, written procedures will be established and maintained by the
Finance Director for all functions involving cash handling and/or accounting throughout the City. These
procedures will embrace the general concepts of fiscal responsibility set forth in this policy statement.
B. Internal Audit Program – An internal audit program will be maintained by the Finance Director to ensure
compliance with City policies and procedures and to prevent the potential for fraud.
1. Departmental Audits – departmental processes will be reviewed to ensure dual control of City assets
and identify the opportunity for fraud potential, as well as, to ensure that departmental internal
procedures are documented and updated as needed.
2. Employees or Transaction Review – Programs to be audited include Petty Cash, City Credit Card
accounts, time entry, and travel. All discrepancies will be identified, and the employee’s Director
will be notified. The City Manager will also be notified depending on the seriousness of the
infraction.
3. Fraud Awareness and Reporting – The City will maintain its personnel policy regarding fraud. They
will maintain an arrangement with a third party for anonymous reporting of fraud, waste, or abuse
of City resources. The City will provide training to all City employees on recognizing and reporting
fraud.
4. The Finance Director and City Manager will present an annual audit plan to the General Government
and Finance boardAudit and Finance Sub-Committee. Results of all internal audits will be provided
to the GGAF Sub-Committee and City Council at year-end.
C. Directors Responsibility – Each Director is responsible for ensuring that good internal controls are followed
throughout their department, that all Finance Division directives are implemented and that all independent
auditor internal control recommendations are addressed. Departments will develop and periodically update
written internal control procedures.
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D. Cybersecurity – The Information Technology department shall regularly assess new forms of security risk and
maintain multiple layers of protections and controls to thwart cyber attacks. The City will provide regular
cybersecurity awareness training for all employees.
E. Electric Utility Risk – Chapter 13.38 of the City’s Code of Ordinances establishes Council’s authority to oversee
all risk of the Electric utility including Congestion Revenue Rights auctions, wholesale power agreements,
futures contracts, and other transactions that expose the City to significant risk.
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FY2023 Annual Budget Fiscal and Budgetary Policy
Adopted: September 13, 2022
I. PURPOSE
The City of Georgetown is committed to financial management through integrity, prudent stewardship, planning,
accountability, transparency and communication. The broad purpose of the Fiscal and Budgetary Policies is to
enable the City and its related component units, including the Georgetown Transportation Enhancement
Corporation (GTEC) and the Georgetown Economic Development Corporation (GEDCO), to achieve and maintain
a long-term stable and positive financial condition, and provide guidelines for the day-to-day planning and
operations of the City’s financial affairs.
Policy scope generally spans areas of accounting, operational and capital budgeting, revenue and expenditure
management, financial reporting, internal controls, investment and asset management, debt management and
forecasting. This is done in order to:
A. Demonstrate to the residents of Georgetown, the investment community, and the bond rating agencies that
the City is committed to a strong fiscal operation;
B. Provide precedents for future policy-makers and financial managers on common financial goals and
strategies;
C. Fairly present and fully disclose the financial position of the City in conformity to generally accepted
accounting principles (GAAP); and
D. Demonstrate compliance with finance-related legal and contractual issues in accordance with the Texas Local
Government Code and other legal mandates.
These policies will be reviewed and updated annually as part of the budget preparation process.
II. FUND STRUCTURE AND BASIS OF BUDGETING
The budgeted funds for the City of Georgetown include:
Governmental Funds: General Fund which accounts for all financial resources except those required
to be accounted for in another fund, and include basic governmental services,
such as Street Maintenance, Planning and Development, Police, Fire, Parks, as
well as Solid Waste Management.
Special Revenue Funds (SRF) account for specific revenues that are legally
restricted for specified purposes. Examples include Tourism, Parkland
Dedication, Library Donations, Animal Services Donations, and Street
Maintenance Sales Tax.
Debt Service Fund is used to account for the payment of general long-term debt
principal and interest.
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Capital Project Funds are used to account for the acquisition or construction of
major capital facilities other than those financed by enterprise activities.
Proprietary Funds: Internal Service Funds account for goods or services provided by one internal
department to another. The City uses this system to recognize cost for fleet
replacement and maintenance, facility maintenance, computer replacement
and maintenance and employee health insurance costs.
Enterprise Funds include the City’s business like activities including all the utility
funds and the airport.
Basis of Accounting and Basis of Budgeting
The City accounts and budgets for all Governmental Funds using the modified accrual basis of accounting.
This basis means that revenue is recognized in the accounting period in which it becomes available and
measurable, while expenditures are recognized in the accounting period in which the liabilities are incurred.
Because the appropriated budget is used as the basis for control and comparison of budgeted and actual
amounts, the basis for preparing the budget is the same as the basis of accounting. Exceptions to the
modified accrual basis of accounting include:
• Grants, which are considered revenue when awarded, not received
• Principal and interest on long-term debt, which are recognized when paid.
Proprietary Funds are accounted and budgeted using the full-accrual basis of accounting. Under this method,
revenues are recognized when they are earned and measurable, while expenses are recognized when they
are incurred regardless of timing or related cash flows. The basis for preparing the budget is the same as the
basis of accounting except for principal payments on long-term debt and capital outlay which are treated as
budgeted expenses. Exceptions include:
• Depreciation which is not budgeted
• Non-budgeted accruals such as compensated absences.
III. OPERATING BUDGET
Budgeting is an essential element of the financial planning, control and evaluation process of municipal
government. The operating budget is the City’s annual financial operating plan. The annual budget includes all
of the operating departments of the General Fund, proprietary funds, debt service funds, special revenue funds,
and capital improvement funds of the City.
A. Form of Government – The Charter (Section 1.03) established a Council-Manager Government wherein the
City vests power in the City Council to “enact legislation, adopt budgets, determine policies, and appoint the
City Manager who shall execute the laws and administer the government of the City.”
B. Comprehensive Plan – The Charter (Section 1.08) requires that the City Council “establish comprehensive
planning as a continuous and ongoing governmental function in order to promote and strengthen the existing
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role, processes and powers of the City of Georgetown.” The current comprehensive plan is the 2030 Plan
adopted in 2006 and updated in 2020.
C. Preparation – The Charter (Section 6.02) requires “a proposed budget prepared by the City Manager and
submitted to the City Council at least thirty days prior to the end of the fiscal year. The budget shall be
adopted not later than the twenty-seventh day of the last month of the fiscal year. No budget will be adopted
or appropriations made unless the total estimated revenues, income and funds available shall be equal to or
in excess of such budget or appropriations, except otherwise provided.”
1. Proposed Budget – A proposed budget shall be prepared by the City Manager with participation of
all of the City’s Directors within the provision of the Charter and the 2030 Plan.
a. The budget shall include four basic segments for review and evaluation:
• Revenue
• Personnel Costs
• Operations and Maintenance Costs
• Capital and other non-project Costs
b. The budget review process will include City Council participation in the development of each
segment and allow for resident participation in the process, and will allow for sufficient time to
address policy and fiscal issues by the City Council.
c. A copy of the proposed and approved budgets will be filed with the City Secretary when it is
submitted to the City Council and will be available on the City’s website.
2. Adoption – Upon finalization of the budget appropriations, the City Council will hold a public hearing,
and subsequently adopt by Ordinance the final budget as amended. The budget will be effective for
the fiscal year beginning October 1st.
The Annual Budget document will be submitted annually to the Government Finance Officers
Association (GFOA) for evaluation and consideration for the Distinguished Budget Presentation
Award.
D. Balanced Budget – The goal of the City is to adopt and maintain a balanced operating budget using
sustainable funding sources that are expected to continue to be available in subsequent fiscal years. Excess
balances in operating funds from previous fiscal years shall remain in the fund in which they were
appropriated until either such excess balances are proposed and adopted pursuant to Section III. C.
Preparation of this policy; until they are used to reduce outstanding debt obligations of the City; or both.
The Charter (Section 6.04) requires that an operating deficit created in any fiscal year shall be paid off and
discharged during the following year. In practice, deficit has been interpreted to mean City funds as a whole.
The City Council may choose from time to time to allow individual funds to have a negative balance as long
as Operating Reserve requirements for the City as a whole are maintained.
E. Planning – The budget process will be coordinated so that major policy issues are identified prior to the
budget approval date. This will allow City Council adequate time for consideration of appropriate decisions
and analysis of financial impacts.
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FY2023 Annual Budget
F. Reporting – Summary financial reports will be presented to the City Council quarterly. These reports will be
in a format appropriate to enable the City Council to understand the overall budget and financial status.
G. Control and Accountability – Each Director, appointed by the City Manager, will be responsible for the
administration of his/her departmental budget. This includes accomplishing the Goals and Objectives
adopted as part of the budget and monitoring each department budget for revenue collections and
compliance with spending limitations. Directors may transfer funds up to $25,000 within the operations and
maintenance or capital line items within a departmental budget category with approval from Finance. Cost
Center Managers may transfer funds up to $5,000 within the operations and maintenance or capital line
items within a cost center with approval from Finance. All transfers from or to the Personnel line items
require approval of the Finance Director and City Manager. All other transfers of appropriation or budget
amendments require either City Council or City Manager approval as outlined in Section III.G Budget
Amendments and Section V.C.4 Use of Excess Salary Savings.
H. Budget Amendments – The Charter (Section 6.04) and the Local Government Code 102.009 and 102.010
provide a method to amend the budget for emergency appropriations and municipal purposes. The City
Council may authorize, with a majority plus one vote, an amendment to the original budget. This may be
done in cases of grave public necessity, or to meet an unusual and unforeseen condition that was not known
at the time the budget was adopted. The following criteria will be used in evaluation of budget amendments:
• Is the request necessary?
• Why was the item not budgeted in the normal budget process?
• Why can't a transfer be done within the Division to remedy the condition?
The Finance Director must certify availability of revenues or funding sources prior to adoption.
If needed, the City will amend the budget at year end for increased revenue and for expenditures that
exceeded budgeted amounts. The City may also amend the budget for any capital project timing adjustments
from prior year, as well as any other known adjustments needed and approved at that time.
I. Contingency Appropriations – The budget may include contingency appropriations within designated
operating department budgets. These funds are used to offset expenditures for unexpected maintenance
or other unanticipated expenses that might occur during the year. Currently, the City maintains contingency
appropriations for items such as insurance deductibles, unexpected legal expenses and equipment repairs.
The General Fund, General Government Contracts Cost Center, contains a $300,000 appropriation for
emergency circumstances. The purpose of this contingency is for use during locally declared disasters as a
short-term temporary measure to fund emergency supplies or services until a long-term solution is
developed. Since these funds are appropriated, the Council is authorizing the City Manager or Acting City
Manager, in partnership with the Finance Division, to approve use of these funds. Whenever possible, the
Mayor will be consulted prior to use. Council and the public will be informed of the purpose and
circumstances of use as soon as practically possible. When these funds are used, they should be restored as
soon as practically possible from grant reimbursements, additional revenues, one-time expense savings or
other appropriate sources.
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J. Use of Unanticipated and Unappropriated General Fund Balances – Within 90 days after fiscal year end, staff
will report the projected General Fund balance to Council. In the event that unexpected, unbudgeted
amounts are determined to be available in the General Fund after year end close, these funds may be used
for any of the following one-time purposes that mitigate increases in property taxes, as approved by the City
Council:
1. to fund capital projects;
2. to fund equipment purchases in lieu of issuing debt;
3. to reduce outstanding City debt, including bonded indebtedness and unfunded pension liabilities;
4. to fund contingent liabilities such as the benefit payout reserve, and similar obligations of the City;
5. to hold those funds in reserves for future commitments or contingencies that may be pending,
and/or;
6. to fund one-time start-up programs or one-time studies.
IV. REVENUE MANAGEMENT
A. Characteristics – The City will strive for the following optimum characteristics in its revenue system:
1. Simplicity – The City, where possible and without sacrificing accuracy, will strive to keep the revenue
system simple in order to reduce compliance costs for the taxpayer or service recipient.
2. Certainty – A knowledge and understanding of revenue sources increases the reliability of the
revenue system. The City will understand its revenue sources and enact consistent collection policies
to provide assurances that the revenue base will materialize according to budget.
3. Equity – The City shall make every effort to maintain equity in its revenue system; i.e., the City should
seek to minimize or eliminate all forms of subsidization between entities, funds, services, utilities,
and customer classes, and ensure an on-going return on investment for the City.
a. The City will make every effort to recognize the benefit that City tax payers contribute to City
programs and services.
The Parks and Recreation Department maintains a separate policy on cost recovery goals. This policy will
be regularly reviewed and approved by the council.
4. Revenue Adequacy – The City should require there be a balance in the revenue system; i.e., the
revenue base will have the characteristics of fairness and neutrality as it applies to cost of service,
willingness to pay, and ability to pay.
5. Realistic and Conservative Estimates – Revenues will be estimated realistically, and conservatively,
taking into account the volatile nature of various revenue streams.
6. Administration – The benefits of a revenue source should exceed the cost of levying and collecting
that revenue.
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FY2023 Annual Budget
7. Diversification and Stability – A diversified revenue system with a stable source of income shall be
maintained. This will help avoid instabilities in revenue sources due to factors such as fluctuations
in the economy and variations in the weather.
B. Other Considerations – The following considerations and issues will guide the City in its revenue policies
concerning specific sources of funds:
1. Cost/Benefit of Incentives for Economic Development – The City will use due caution in the analysis
of any incentives that are used to encourage development. A cost/benefit (fiscal impact) analysis
will be performed as part of the evaluation.
2. Non-Recurring Revenues – One-time or non-recurring revenues should not be used to finance
current ongoing operations.
3. Sustainable Revenues – Sustainable means revenue that is consistently available year after year, and
includes revenues realized subsequent to adopted projections.
4. Property Tax Revenues – Annually, the City will forecast property tax revenue as part of the budget
process. Certified Assessed Value Reports from the Williamson Central Appraisal District are used to
forecast property tax. The City will comply with State law regarding publication notices and Truth in
Taxation requirements.
5. Interest Income – Interest earned from investments will be distributed to the funds in accordance
with the average daily cash balance of the fund from which the monies were provided to be invested.
6. User-Based Fees and Service Charges – For services associated with a user fee or charge, the direct
or indirect costs of that service will be offset by a fee where possible. The City will review fees and
charges no less than once every five years on a rotating schedule to ensure that fees provide
adequate coverage for the cost of services. The City Council will determine how much of the cost of
a service should be recovered by fees and charges.
7. Enterprise Activity Rates – The City will review and adopt utility and airport rates as needed to
generate revenues required to fully cover operating expenses, meet the legal requirements of all
applicable bond covenants, and provide for an adequate level of working capital. Enterprise rates
will be reviewed annually as part of the budget process. A rate study will be conducted no less than
every 3 years to review rate methodology and ensure revenues will meet future needs. All enterprise
rates will be based on standardized cost of service methodologies and conservation goals.
a. Water Rates will recognize at least 65% of the identified fixed costs of service, including debt
payments and Payment in Lieu of Taxes costs, within the monthly base charge determined by
meter size plus 90% with the first customer tier. Volumetric charge will recognize the balance
of fixed costs not included in the base rate, plus all variable costs associated with procuring and
treating water.
.
b. Wastewater Rates are fixed for all residential customers based on the cost of providing services.
Commercial customer rates are fixed and volumetric depending on size and specifications of
each commercial customer.
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c. Electric Rates include 100% of fixed costs within the base rate, and demand rates, with all
variable costs included in the kWh rate. The Power Cost Adjustment (PCA) Factor and
Transmission Cost Adjustment (TCA) Factor are determined by comparing forecasted costs
against actual costs in a budget year, and seek to recover/credit variances within 6 to 12 months.
For reference, see Code of Ordinances 13.04.075 and 13.04.080.
d. Stormwater Drainage Fees are based on a mathematical calculation using impervious cover and
applied in compliance with State Law.
e. Solid Waste and Environmental Services Rates are based on the wholesale cost of service and
retail incentives for conservation, the cost to renovate the transfer station, plus a return to the
General Fund for wear and tear of heavy trucks on City streets, a franchise fee, and an
administrative allocation for managing the solid waste contract and solid waste departmental
programing.
f. Airport Fuel and Lease Rates – fuel rates are based on the cost of the fuel plus a profit margin to
fund operations; lease rates are based on the appraisal of the land or facility plus an escalation
for consumer price index and used to fund operations, capital improvement, contingency, and
debt service requirements.
8. Internal Cost Recovery Fees – Additionally, enterprise activity rates will include transfers to and
receive credits from other funds as follows:
a. General and Administrative Charges – Administrative costs should be charged to all funds for
services of general overhead, such as administration, finance, customer billing, legal and other
costs as appropriate. These charges will be determined through an indirect cost allocation
following accepted practices and procedures and reviewed annually by the City’s external
auditors.
b. Payment for Franchise of Right of Way and Payment in Lieu of Taxes – The intent of these
transfers to the General Fund are to provide a benefit to the citizens for the ownership of the
various utility operations.
Water, Wastewater, Irrigation and Stormwater Drainage
• In-Lieu-of-Franchise-Fee. 3% of operating revenues from Charges, Connect Fees, Tap Fees,
Penalties and Late Fees.
• Payment in Lieu of Taxes (PILOT). The transfer is calculated at 7% of operating revenues
from Charges, Connect Fees, Tap Fees, Penalties and Late Fees.
Electric
For customers inside the City, the franchise fee is $0.002947/kWh sold. The payment in lieu of
taxes for customers inside the City is 7% of gross revenue of the base monthly charge, and
$0.007253/kWh sold. For customers outside the City, there is no franchise fee to the City of
Georgetown; however, those customers may be subject to franchise fees in the jurisdiction in
which they reside. Outside the City customers are charged a payment in lieu of taxes equal to
7% of gross revenue of the base monthly charge, and $0.0102/kWh sold.
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FY2023 Annual Budget
9. Revenue Monitoring – Received revenues will be regularly compared to budgeted revenues and
variances will be investigated, and any abnormalities will be included in the quarterly report to the
City Council.
10. Other Funding Alternatives
When at all possible, the City will research alternative funding opportunities prior to issuing debt or
increasing user-related fees.
a. Grants – All grant applications must be approved by the City Council prior to being submitted to
a granting agency. Prior to submittal to Council, departments will verify that the benefits of the
grant exceed the cost of grant administration and will also provide the required grant forms to
Finance for review in accordance with the Grant Acquisition, Management, and Compliance
Policy. Finance will review and sign the forms which provides detailed information including, but
not limited to, the term of the grant, any matching requirements, the resulting operational
requirements once the grant is discontinued, and a budget request detailing the line items to be
effected, all of which should be included in the Council agenda item packet requesting approval
to apply. The City Council must also authorize acceptance of any grant awards received.
b. Use of Reserve Funds – The City may authorize the use of reserve funds to potentially delay or
eliminate a proposed bond issue. This may occur due to higher than anticipated fund balances
in prior years, thus eliminating or reducing the need for debt proceeds, or postpone a bond issue
until market conditions are more beneficial or timing of the related capital improvements does
not correspond with the planned bond issue. Reserve funds used in this manner are replenished
upon issuance of the proposed debt.
c. Developer Contributions – The City will require developers who negatively impact the City's
utility capital plans offset those impacts. These policies are further defined within the City's
utility line extension policy and other development regulations.
d. Leases – The City may authorize the use of lease financing for certain operating equipment when
it is determined that the cost benefit of such an arrangement is advantageous to the City.
e. Impact Fees – The City will impose impact fees as allowable under state law for transportation,
water and wastewater services. These fees will be calculated in accordance with statute and
reviewed at least every three years. All fees collected will fund projects identified within the Fee
study and as required by state laws.
V. EXPENDITURE MANAGEMENT
A. Appropriations – The point of budget control is at the department level budget for all funds. The Charter
(Section 6.03) provides that any transfer of appropriation between funds must be approved by the City
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FY2023 Annual Budget
Council and that the City Manager, without City Council approval, is authorized to transfer appropriations
among departments, within the same operational division and fund.
B. Expenditure Monitoring – Expenditures and encumbrances will be regularly compared to budget, variances
will be investigated, and any abnormalities will be included in the quarterly report to the City Council.
Projected year-end expenditures will be reported in the annual budget.
C. Personnel Costs – Costs related to salaries and benefits are budgeted at 100% total costs, assuming open
positions are filled throughout the fiscal year. New positions that are added during the budget process may
have staggered hire dates with appropriate costs reflected in the budget.
1. Vacancy Factor – Major Funds with Personnel Budgets will include a vacancy factor of at least 1% of
total fund salaries and related benefits (retirement, FICA, Medicare) to offset salary savings within
the budget. The vacancy factor will be budgeted as a negative expense within the fund. This factor
will be reduced throughout the year as vacant positions are recognized within the department
budget.
Compliance Status – General Fund, Electric Fund, Water Fund and Joint Services Fund FY2023 in
compliance.
2. Benefit Payout Reserve – The City will establish a benefit payout reserve equal to 15% of the accrued
benefit liability for employees in the General and Joint Services Funds who are currently eligible to
retire. Only terminating employee benefit expenses may be paid from this reserve. This reserve shall
be funded as an offset to the vacancy factor.
Compliance Status – Benefit payout reserve FY20 23 in compliance.
3. Position Control – The annual budget includes a set number of positions within departments when
approved and adopted by City Council. Additional positions cannot be added without approval of
the City Council. The City Manager may approve the transfer of authorized positions between
departments if funds are available within the department.
The City Manager may designate up to 10 placeholder positions in the position control schedule to
be available for use throughout the year to respond to service areas with pressure or unusual hiring
environment circumstances. The position control schedule and the expense budget will be amended
by Council to reflect mid-year changes as soon as practical.
4. Use of Excess Salary Savings – Departmental savings generated due to open positions or other salary
line item savings cannot be spent by the department unless previously approved by the City Manager
and validated by Finance as excess funds.
D. Special Purpose Funding – In order to support community assistance programs, the City designates specific
funding for special purposes, including Strategic Partnerships for Community Services, and Public Art. The
City reserves the ability to cap this special purpose funding when necessitated by budget contingency or
compliance issues, such as revenue shortfalls, or other reasons as determined by City Council.
1. Strategic Partnerships for Community Services – The City of Georgetown values partnerships with
organizations that are committed to addressing our communities’ greatest public challenges and has
identified key priorities in the following areas:
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FY2023 Annual Budget
a. Public Safety
b. Transportation
c. Housing
d. Parks & Recreation
e. Veteran Services
f. Safety Net
The City has targeted funding for these programs to be $5.00 per capita, which may be adjusted to
offset the effects of general inflation based upon Consumer Price Index. If previous funding levels
are higher than the targeted amount, and to avoid significant reductions in levels of funding, the City
Council shall seek to attain this target chiefly through population growth. These funds will be
allocated and paid according to the City Council’s guidelines for such programs.
Compliance Status – FY2023 in compliance.
2. Public Art Funding – The City will annually allocate $43,000 of funding for Public Art in the Tourism
Fund. Any unspent funds will accumulate and be reallocated in the following budget year.
Disbursement of these funds will be determined by the City’s Arts & Culture Advisory Board.
Compliance Status – FY2023 in compliance.
Every effort will be made to include public art funding in future City facilities whose primary purpose
is for public use. These projects will include a reasonable allowance for public art that fits the scope
and purpose of the building so long that it does not negatively impact the project cost beyond the
original budget. In the event there is cost savings in the construction of City Facilities, the City Council
may consider utilizing that savings on the purchase of public art for the facility.
E. Purchasing – The City will maintain and regularly review written Purchasing Policies. All City purchases of
goods or services will be made in accordance with the City’s Charter, current Purchasing Policy and with
State law.
The following table shows a summary of requirements for purchases of goods and services and does not
substitute the formal Purchasing Policies.
Dollar Limits: Procurements: Requirements:
$3,000 and less Under the small purchase
limit
No competitive bids and City credit
cards may be used.
$3,001 up to
$25,000
Within informal bid limit No competitive bids; Historically
Underutilized Business (HUB)
requirements apply in accordance with
state law.
$25,001
up to
$50,000
Within informal bid limit A minimum of three informal
solicitation for bids required unless
exempted; Historically Underutilized
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Business (HUB) requirements apply in
accordance with state law.
$50,001
and above
In excess of the informal bid
limit
Formal solicitations, which includes
public notices, required unless
exempted. Advisory board review and
recommendation may be
required. Council approval required.
Common exemptions to the formal solicitation process include the procurement of professional services, the
purchase of goods or services from a sole source provider, and purchases for public health emergencies
(Texas Local Government Code 252.022).
In addition to the above, all purchases must be approved according to signature authority limits.
F. Contracts, Change Orders and Amendments – Contracts and related change orders and amendments must
follow the City’s Purchasing Policies and State Law. Contract term lengths should balance the need for value
as well as the ability to respond to changing conditions.
G. Prompt Payment – In accordance with State Law, all invoices approved for payment by the proper City
authorities shall be paid within thirty (30) calendar days of receipt of goods or services or invoice date,
whichever is later in accordance with State law. The City will take advantage of all purchase discounts, when
possible.
H. Risk Management – The City will pursue every opportunity to provide for the Public’s and City employees’
safety and to manage its risks. The goal shall be to minimize the risk of loss of resources through liability
claims with an emphasis on safety programs.
I. Retirement Benefits – Proposals to revise benefits administered and provided by the Texas Municipal
Retirement System shall include a written description, and, detailed and summary numerical assessments of
the changes that would result from the proposed benefit revision.
1. The numerical assessments shall include the following:
a. The estimated change to the TMRS contribution rate that would result from the proposed
change in benefits, expressed as a percentage of employee pay and as an annual dollar amount
to the General Fund and to each City fund.
b. The estimated change to the City’s unfunded pension liability, expressed as a dollar amount.
c. The estimated change to the City’s actuarial funding ratio.
2. The description and numerical assessments must be provided to the City Council at least 72 hours
prior to consideration and approval, and must be read aloud to the Council prior to Council
consideration.
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3. The estimated changes to the City’s contribution rate and the unfunded pension liability presented
pursuant to the section must be based on information provided by the TMRS actuary or by a
professional actuary authorized by the TMRS to provide such information.
4. Proposals to revise TMRS benefits must be voted on individually as part of the City Council’s
legislative agenda.
5. The City will amortize any unfunded actuarial liability (UAAL) over a period not to exceed the
amortization period used by the TMRS actuary. The City may amortize its UAAL more quickly by
making contributions to TMRS in excess of the rate specified by TMRS.
6. The City may elect to pay a higher contribution rate than required by the TMRS, to reduce the City’s
unfunded pension liability. Such payment will be approved and authorized by the City Council as part
of the City's annual budget process.
J. Retirement Cost-of-Living Adjustment
1. Within 60 days of when the TMRS annual funding update becomes available each year, staff will
review and may prepare a summary of costs and options for potential cost-of-living adjustment
(COLA) for City of Georgetown retirees.
2. Consistent with state statutes governing the Texas Municipal Retirement System, the City may
provide an automatic COLA for members of the TMRS who are retired from the City of Georgetown
and receiving a monthly retirement benefit from the TMRS.
3. The City Council may adjust the COLA provided to city retirees based upon the funding level of the
City’s pension plan, as calculated by the TMRS, as follows:
When the funding level of the
City’s pension plan is
The COLA
should be
Less than 70.0%
Zero
70.0% to 79.9%
0.3% of CPI
80.0% to 89.9%
0.5% of CPI
90.0% and greater
0.7% of CPI
4. Adjustments made pursuant to Subsection J.3. should reflect the reciprocal effect of the prospective
change in the COLA on the funding level of the City’s pension plan.
K. Deferred Compensation Benefits – In addition to the retirement benefit administered by the TMRS, the City
will sponsor a Deferred Compensation 457 plan and ROTH plan, which are supplementary individual
retirement savings plans. The City will encourage employee participation in these plans.
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FY2023 Annual Budget
VI. STAFFING AND COMPENSATION
City Council and Management recognize the importance of attracting, hiring, developing, and retaining the best
people, and compensating them for the value they create. Our outstanding and innovative City employees work
diligently to bring the Vision of Council to life and deliver exceptional services to our customers while
exemplifying our Core Values. The following programs are subject to available funding in the annual operating
budget.
A. Adequate Staffing – Staffing levels will be adequate for the fiscal functions of the City to operate effectively.
Workload allocation alternatives will be explored before adding additional staff.
B. Competitive Compensation – In order to maintain a competitive pay scale, the City has implemented a
Competitive Employee Compensation Maintenance Program to address competitive market factors and other
issues impacting compensation. The program consists of:
1. Annual Pay Plan Review – To ensure the City’s pay system is accurate and competitive within the
market, the City will review its pay plans annually for any potential market adjustments necessary to
maintain the City’s competitive pay plans.
2. Pay for Performance – Each year the City will fund performance based pay adjustments for regular
non-public safety personnel. This merit-based program aids in retaining quality employees by
rewarding their performance. Pay for Performance adjustments are based on the employee’s most
recently completed performance evaluation.
3. Public Safety Steps – Each year the City will fund anniversary step increases for public safety sworn
personnel consistent with public safety pay scale design.
C. Self-Insurance Program – The City is committed to providing quality healthcare insurance that offers the
most flexibility in health benefits and options to its employees. In order to provide the most cost effective
solution, the City has determined that establishing a self-funded health insurance plan offers the greatest
opportunity to mitigate future cost increases while offering quality health care services to its employees. The
City has established a mechanism to manage the accounts and payments associated with this program. Per
GASB Statement No. 66, such funding should be accounted for as an Internal Service Fund (ISF).
1. Employee Health Insurance ISF – This fund contains premium contributions from employees and
budgeted health insurance contributions included in the City’s annual budget process. To maintain
stable revenue to this fund, and to clearly set expenditure expectations for departments, any
budgeted appropriations for employee health insurance that are unused at the end of each fiscal
year will be transferred back to the self-insurance fund.
2. Self-Insurance Reserves – Annually through the budget process, staff and the City’s Health Benefit
Consultant firm will evaluate and recommend to Council the appropriate funding levels for two
reserves.
a. Incurred but Not Reported (IBNR) Reserve: In the event the City stopped self-insuring for health
benefits and was required to pay incurred costs, the City will reserve 10 percent of the annual
costs of claims, benefit administration and stop loss coverage.
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FY2023 Annual Budget
Compliance Status – IBNR reserve FY2023 in compliance.
b. Rate Stabilization Reserve: To alleviate shocks to the City and employees due to sharp increases
in health insurance costs, the City will reserve between 10 and 20 percent of annual medical
claims, benefit administration and stop loss coverage. Staff and the benefits consultant will
consider a 3 year forecast on premiums when determining to utilize the funds or rebuild the
reserve.
Compliance Status – Rate stabilization reserve FY2023 in compliance.
3. Employee Premiums – Annual premiums will be recommended to City Council through a
collaborative process between the City’s Employee Benefit Committee and external Health Benefits
consulting firm using historical data, reserves history and other analytic analysis.
VII. FUND BALANCE POLICIES
The City’s Fund Balance is the accumulated difference between assets and liabilities within governmental funds,
and it allows the City to meet its contractual obligations, fund disaster or emergency costs, provide cash flow for
timing purposes and fund non-recurring expenses appropriated by City Council. This policy establishes limitations
on the purposes for which Fund Balances can be used in accordance with Governmental Accounting Standards
Board (GASB) Statement Number 54.
The City’s Fund Balance will report up to five components:
A. Non-spendable Fund Balance – includes inherently non-spendable assets that will never convert to cash, as
well as assets that will not convert to cash soon enough to affect the current financial period. Assets included
in this category are prepaid items, inventory and non-financial assets held for resale.
B. Restricted Fund Balance – represents the portion of fund balance that is subject to legal restrictions, such as
grants or hotel/motel tax and bond proceeds.
C. Committed Fund Balance – describes the portion of fund balance that is constrained by limitations that the
City Council has imposed upon itself, and remains binding unless the City Council removes the limitation.
D. Assigned Fund Balance – is that portion of fund balance that reflects the City’s intended use of the resource
and is established in a less formal method by the City for that designated purpose.
E. Unassigned Fund Balance – represents funds that cannot be properly classified in one of the other four
categories.
VIII. LONG-TERM LIABILITY RESERVES
The City of Georgetown recognizes certain long-term unfunded commitments and contingencies that will require
substantial funding at some point in the future. The City is committed to addressing these commitments in a
fiscally prudent method by acknowledging their future financial impacts and developing strategies and
designated reserve funds to mitigate those future impacts.
A. The Finance Director will maintain a list of unfunded liabilities. The list will be included in the quarterly
financial report to Council and considered during the annual budget process.
IX. BUDGET CONTINGENCY PLAN
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FY2023 Annual Budget
This policy is designed to establish general guidelines for managing revenue shortfalls resulting from local and
national economic downturns that adversely affect the City's revenue streams.
A. Immediate Action – Once a budgetary shortfall is projected, the City Manager will take the necessary actions
to offset any revenue shortfall with a reduction in current expenses. The City Manager may:
1. Freeze all new hire and vacant positions except those deemed to be a necessity.
2. Review all planned capital expenditures.
3. Delay all "non-essential" spending or equipment replacement purchases.
The City Manager shall report in a timely manner to the City Council the projected shortfall and the actions
taken to resolve it.
B. Further Action – If the actions identified in subsection A are insufficient to offset the projected revenue deficit
for the current fiscal year, the City Council may approve the following actions, in the order listed:
1. Apply unspent, unobligated surplus funds from prior fiscal years to fund one-time costs in the current
fiscal year budget.
2. Authorize the use of the General Fund Economic Stability Reserve , contingency reserves, capital
reserves or any other reserves appropriate as outlined in the sections XII. CAPITAL MAINTENANCE
AND REPLACEMENT and XV. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS
3. Direct other reductions in services, including workforce reductions.
4. Authorize a temporary reduction in one or more fund’s contingency reserves from 90 days to 75
days.
C. Replenish Fund Balance – Generally, if any existing reserve is used as described above in the budget
contingency plan, the reserve should be restored in the next fiscal year. If the restoration within one year is
impractical or places an undo strain of City services, staff shall recommend to Council an alternative timeline
that is subject to Council approval.
X. CAPITAL IMPROVEMENT PROGRAM (CIP) BUDGET
The City’s goal is to maintain City facilities and infrastructure in order to provide excellent services to the
customers within the community, meet growth related needs, and comply with all state and federal regulations.
A. Preparation – The City annually updates and adopts a five-year Capital Improvement Program (CIP) schedule
as part of the operating budget adoption process. The plan is reviewed and adjusted annually as needed, and
year one is adopted as the current year capital budget. The capital budget will include all capital projects,
capital resources, and estimated operational impacts.
1. Needed capital improvements are identified through system models, repair and maintenance
records and growth demands.
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FY2023 Annual Budget
2. A team approach will be used to prioritize CIP projects, whereby City staff from all operational areas
provide input and ideas relating to each project and its effect on operations.
3. Citizen involvement and participation will be solicited in formulating the capital budget through
master planning processes, board meetings, public hearings and other forums.
4. Capital infrastructure necessary to meet the requirements of the City’s Annexation Plan will be
identified separately within the CIP plan, so that funding alternatives can be developed if needed.
Prior to Council approval, the following Advisory Boards will review the Capital Projects budget and
contracts for expenditures:
Electric Utility
Board
Water
Utility
Board
Parks
Advisory
Board
Georgetown
Transportation
Enhancement
Corporation
(GTEC)
Electric
Water
Wastewater
Parks and
Recreation
Transportation
projects
related to
economic
development
B. Control – All capital project expenditures must be appropriated in the capital budget.
C. Financing Programs – Where applicable, assessments, impact fees, pro rata charges, or other fees should be
used to fund capital projects which have a primary benefit to specific identifiable property owners. Debt
financing is referenced in Section XIV. Debt Management of this document.
XI. CAPITAL MAINTENANCE AND REPLACEMENT
The City recognizes that deferred maintenance increases future capital costs. Therefore, a portion of all
individual funds with infrastructure should be budgeted each year to maintain the quality within each system.
A. Infrastructure Maintenance — On-going maintenance and major repair costs are included as expense within
the departmental operating budgets. These costs are generally considered system repairs and are not
capitalized for accounting purposes. They include such items as park and recreation facility repairs, street
repair, water line repairs and other general system maintenance.
B. Modified Approach — Pavement Condition Index (PCI) —
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FY2023 Annual Budget
Upon implementation of GASB 34 in 2003, the City elected to use the modified approach in maintaining and
recording its non-enterprise fund infrastructure assets. In order to adopt this alternative method, the City
implemented an asset management system that determines if the minimum standards are being maintained.
This measurement system was updated at least every 3 years in accordance with GASB 34 requirements until
2016.
Due to strong growth since 2016, the City has not been able to maintain the requirement of updating the PCI
every 3 years. From an operational standpoint, this requirement has become challenging because it does not
align with resource planning from the Streets Sales Tax Election. Therefore, in FY 2022, the City is changing
its accounting method for streets and street improvements from the modified approach to the traditional
depreciation of such assets. The City will begin capitalizing all new streets and street improvements as well
as begin depreciating existing street assets until their remaining useful life.
While the accounting method is changing for these assets, operationally, the City will continue to utilize the
Pavement Condition Index (PCI) and require studies that are operationally logical and feasible to perform
adequate maintenance of the assets.
C. Internal Service Funds Capital Maintenance & Replacement – The City currently utilizes internal service funds
to maintain and replace existing assets. Assessments are made to other funds for the use of existing
equipment and to purchase new equipment. In this way, suitable funds are available for the purchase of
operational assets without the issuance of debt.
1. Fleet Maintenance and Replacement – The City has a major investment in its fleet of cars, trucks,
tractors, and other equipment. The City will anticipate replacing existing equipment, as necessary
and will establish charges that are assigned to the using departments to account for the cost of that
replacement. Vehicle maintenance is also allocated in this manner. The targeted asset replacement
reserve amount is the average (1/5th) of the next five years on the replacement schedule for cash-
funded vehicles.
Compliance Status – Fleet replacement reserve FY2023 in compliance.
It is the general policy of the City not to hold back vehicles or equipment from replacement or
disposition. Departmental requests to hold back units must be approved by the Fleet Manager and
the City Manager.
2. Technology – It is the policy of the City to plan and fund the maintenance and replacement of its
computer network and other technology systems. A reserve will be established within the ISF for
replacement of major systems and will be funded over time through excess revenues within the
Fund. The targeted amount is the average (1/5th) of the next five years on the replacement schedule.
While cash funding is preferred, major IT systems and projects may require debt that is amortized
over a shorter useful life appropriate for the software or hardware.
Compliance Status – IT replacement reserve FY2023 in compliance.
3. Facilities Maintenance – The City has established an on-going maintenance program, which includes
major repairs, equipment, as well as contracts for maintaining City facilities. The City has anticipated
a useful life of such equipment and established a means of charging those costs to the various
departments in order to recognize the City’s continuing costs of maintaining its facilities.
Determination for facility repairs is based on useful life of the various elements of each facility. A
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FY2023 Annual Budget
proportional cost for each element is expensed within the budget for capital replacement. The
targeted replacement reserve amount is the average (1/5th) of the next five years on the replacement
schedule.
Compliance Status – Facilities replacement reserve FY2023 compliance.
D. Departmental Capital Maintenance & Replacement – The City also utilizes department capital maintenance
and replacement schedules for specialized assets and equipment necessary to provide services.
1. Parks and Recreation – As part of the City’s on-going maintenance program, the City also recognizes
the need to regularly maintain and replace playgrounds, equipment and facilities that are part of the
City’s Parks and Recreation system. Separate replacement and maintenance schedules will be
maintained for these items including, but not limited to, playground equipment, buildings, sport
courts, trees and grounds, and restroom facilities. The City’s goal is to provide level on-going funding
to ensure safe, well-maintained facilities for its citizens. The current funding level for maintenance
activities is an annual $50,000 budget in the General Fund. The capital equipment replacement
schedule will be funded with short-term property-tax backed debt instrument, with term length
consistent with useful life of the assets or shorter.
Compliance Status – Parks maintenance replacement FY2023 in compliance.
2. Cemetery Maintenance - The General Fund makes an annual transfer of $75,000 to the cemetery
fund to assist with general operations and maintenance activity not covered through cemetery
revenues.
3. Public Safety Equipment – As part of the City’s on-going maintenance program, the City also
recognizes the need to regularly maintain and replace specialized equipment in Police and Fire.
Separate replacement and maintenance schedules will be maintained for these items including but
not limited to for Fire: SCBA’s and other firefighting equipment and protective gear; and for Police:
bullet proof vests, armaments and other tactical equipment. The City’s goal is to provide level on-
going funding to ensure proper protection for employees and residents. The current funding level is
an annual appropriation in the General Fund of $80,000 for Fire and $88,000 for Police.
Compliance Status – Public safety equipment replacement FY2023 in compliance.
E. Surplus Property
1. From time to time it is necessary to dispose of certain vehicles or equipment that have been procured
with City funds and used in City services.
City staff will maintain reports and records of all surplus property dispositions in accordance with
good internal controls.
XII. ACCOUNTING, AUDITING, AND FINANCIAL REPORTING
A. Accounting – The City is solely responsible for the recording and reporting of its financial affairs, both
internally and externally. The Finance Director is responsible for establishing the structure for the City’s
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FY2023 Annual Budget
Chart of Accounts and for assuring that procedures are in place to properly record financial transactions and
report the City’s financial position.
B. Audit and Finance Sub-Committee – The City may establish a subcommittee consisting of at least 3 City
Council members that may meet quarterlyto provide additional strategic oversight to the City’s Finance
operations. The City’s Finance Director will be the liaison for this subcommittee.
C. Audit of Accounts – In accordance with the Charter, an independent audit of the City accounts will be
performed every year. The auditor is retained by and is accountable directly to the City Council. The auditing
firm will serve for up to 5 years, at which time, the City will re-bid these services and change firms if deemed
necessary by Audit and Finance Sub-Committee and City Council.
D. External Reporting – Upon completion and acceptance of the annual audit by the City’s auditors, the City
shall prepare a written Annual Financial Report which shall be presented to the City Council within 180
calendar days of the City’s fiscal year end. The report shall be prepared in accordance with Generally
Accepted Accounting Principles (GAAP) and shall be presented annually to the Government Finance Officer
Association (GFOA) for evaluation and consideration for the Certificate of Achievement in Financial
Reporting.
XIII. ASSET MANAGEMENT
A. Cash Management and Investments – The City Council has formally approved a separate Investment Policy
for the City of Georgetown that meets the requirements of the Public Funds Investment Act (PFIA), Section
2256 and 2257 of the Texas Local Government Code. This policy is reviewed annually by the City Council and
applies to all financial assets held by the City and applies to all entities (component units) included in the
City’s Annual Financial Report and/or managed by the City. Refer to the separate policy for details regarding:
1. Statement of Cash Management Philosophy
2. Objectives
3. Safekeeping and Custody
4. Standard of Care and Reporting
5. Investment Strategies
6. Authorized Investments and Approved Broker/Dealer List.
B. Fixed Assets – These assets will be reasonably safeguarded and properly accounted for, and prudently
insured.
1. Capitalization Criteria – For purposes of budgeting and accounting classification, the following
criteria must be met in order to be capitalized:
a. The asset owned by the City
b. The expected useful life of the asset must be longer than one year, or extend the life of an
identifiable existing asset by more than one year
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FY2023 Annual Budget
c. The original cost of the asset must be at least $5,000
d. The asset must be tangible, or uniquely intangible like a trademark.
On-going repairs and general maintenance are not capitalized. Public Education and Government
(PEG) Funds will capitalize assets in aggregate over $1,000 on an annual basis.
2. New Purchases – All costs associated with bringing the asset into working order will be capitalized
as part of the asset cost. This will include startup costs, engineering or consultant type fees as part
of the asset cost once the decision or commitment to purchase the asset is made. The cost of land
acquired should include all related costs associated with its purchase. Appropriate personnel and
overhead costs are capitalized in the Electric fund.
3. Improvements and Replacement – Improvements will be capitalized when they extend the original
life of an asset or when they make the asset more valuable than it was originally. The replacement
of assets components will normally be expensed unless they are a significant nature and meet all the
capitalization criteria.
4. Contributed Capital – Infrastructure assets received from developers or as a result of annexation will
be recorded as equity contributions when they are received.
5. Distributions Systems – All costs associated with public domain assets, such as streets and utility
distribution systems, will be capitalized in accordance with the capitalization policy. Costs should
include engineering, construction and other related costs including right of way acquisition. For the
Electric Distribution system, all component parts associated with a capital project shall be accounted
for and capitalized in accordance with the Federal Energy Regulatory Commission (FERC) guidelines.
These are an exception to the capitalization criteria above.
6. Reporting and Inventory – The Finance Division will maintain the permanent records of the City’s
fixed assets, including description, cost, department of responsibility, date of acquisition,
depreciation and expected useful life. Periodically, random sampling at the department level will be
performed to inventory fixed assets assigned to that department. Responsibility for safeguarding
the City’s fixed assets lies with the department supervisor or manager whose department has been
assigned the asset.
XIV. DEBT MANAGEMENT
The City of Georgetown recognizes the primary purpose of capital facilities is to provide services to the
community. Using debt financing to meet the capital needs of the community must be evaluated according to
efficiency and equity. Efficiency must be evaluated to determine the highest rate of return for a given investment
of resources. Equity is resolved by determining who should pay for the cost of capital improvements. In meeting
demand for additional services, the City will strive to balance the needs between debt financing and “pay as you
go” methods. The City realizes that failure to meet the demands of growth may inhibit its continued economic
viability, but also realizes that too much debt may have detrimental effects on the City’s long-range financial
condition.
The City will issue debt only for the purpose of acquiring or constructing capital assets for the general benefit of
its citizens and to allow it to fulfill its various purposes as a city. The City will seek input on major projects funded
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FY2023 Annual Budget
with debt via bond elections, master planning exercises, board meetings, budget workshops, and other methods
as needed.
A Debt Condition Update report will be provided annually.
A. Usage of Debt – Long-term debt financing will be considered for non-continuous capital improvements of
which future citizens will benefit. Alternatives for financing will be explored prior to debt issuance and
include, but not limited to:
• Grants
• Use of Reserve Funds
• Use of Current Revenues
• Contributions from developers and others
• Leases
• Impact Fees
When the City utilizes long-term financing, it will ensure that the debt is soundly financed by conservatively
projecting revenue sources that will be used to pay the debt. It will not finance the improvement over a
period greater than the useful life of the improvement and it will determine that the cost benefit of the
improvement, including interest costs, is positive to the community.
The City may utilize the benefits of short-term debt financing to purchase operating equipment provided the
debt doesn’t extend past the useful life of the asset and the potential impact to the tax rate is within policy
guidelines.
B. Types of Debt
1. General Obligation Bonds (GO’s) – General obligation bonds must be authorized by a vote of the
citizens of Georgetown. They are used only to fund capital assets of the general government and
are not to be used to fund operating needs of the City. The City’s ad valorem taxing authority backs
general obligation bonds. Conditions for issuance of general obligation debt include:
a. When the project will have a significant impact on the tax rate;
b. When the project may be controversial even though it is routine in nature; or
c. When the project falls outside the normal bounds of projects the City has typically done.
For debt programs that include multiple projects that will be issued over multiple years at the
discretion of the City Council, the City may present an Agreement with the Voters to manage future
property tax rate impacts. The Agreement with the Voters will be included in educational information
for all applicable GO Bond elections, and will include a maximum annual tax rate increase and a
cumulative total per bond authorization maximum tax rate increase. The City will include these
impacts in its annual Debt Condition report.
The City Council will carefully manage the unissued GO Bond authorization through annual review of
related projects to ensure full disclosure on future timing of projects included in the bond package.
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FY2023 Annual Budget
Timing of authorized projects and related bond issuance will be included in the Annual Budget and
published on the City’s website. Any changes to this schedule require specific Council authorization.
2. Revenue Bonds – Revenue bonds will be issued to provide for the capital needs of any activities
where the capital requirements are necessary for the continuation or expansion of a service. The
improved activity shall produce a revenue stream to fund the debt service requirements of the
necessary improvement to provide service expansion. The average life of the obligation should not
exceed the useful life of the asset(s) to be funded by the bond issue, and will generally be limited to
no more than twenty (20) years. An exception can be made for plant expansions or related system
expansions whose useful life is in excess of 30 years. A cost benefit analysis will be done to fully
disclose the impacts of extending debt beyond 20 years.
3. Certificates of Obligation, Contract Obligations (CO’s) – Certificates of obligation or contract
obligations may be used to fund capital requirements that are not otherwise funded by general
obligation or revenue bonds, as allowed by state law. Debt service for CO’s may be either from
general revenues (tax-supported) or supported by a specific revenue stream(s) or a combination of
both. Typically, the City may issue CO’s when the following conditions are met:
a. When the proposed debt will have minimal impact on future effective property tax rates;
b. When the projects to be funded are within the normal bounds of City capital requirements, such
as for roads, parks, various infrastructure and City facilities and equipment; and
c. When the average life of the obligation does not exceed the useful life of the asset(s) to be
funded by the issue.
Certificates of obligation will be the least preferred method of financing and will be used with
prudent care and judgment by the City Council during the budget development process.
4. Self-supporting Certificates of Obligation Debt – Refers to certificates of obligation issued for a
specific purpose and repaid through dedicated revenues other than ad valorem taxes. The annual
debt requirements are not included in the property tax calculation. Both the Airport and Stormwater
Drainage funds will issue this type of debt. In addition, the Electric and Water Services Funds can
utilize this method of funding non-system capital assets. The City also issues debt on behalf of the
Georgetown Transportation Enhancement Corporation (GTEC) and the Georgetown Economic
Development Corporation (GEDCO) whom then pledge 4A and 4B sales tax revenue for the
repayment of that debt. Tax Increment Reinvestment Zones also may issue self-supporting debt.
5. Internal borrowing between City Funds – The City Council can authorize use of existing long-term
reserves as formal loans between funds. The Council will consider the following circumstances:
1. The emergency or other circumstances and why an internal loan is the best viable
option;
2. The dollar amount of the loan will be within the core balance reserves of the lending
fund and will otherwise not be restricted by local or state regulation;
3. The borrowing fund will repay the loan at a rate consistent with current market
conditions. The loan will be considered an investment of working capital reserves by the
lending fund. The interest rate will be comparable to prevailing investment rates for
public funds at the time the loan is made; and a fixed, variable or other rate structure
will be defined at the time the loan is approved;
4. The maximum maturity will be three (3) years.
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FY2023 Annual Budget
5. A reimbursement resolution may be used to reimburse a short-term loan (up to 1 year
maturity) with long-term debt proceeds;
6. Formal loans will be appropriately recorded and reported.
6. Refundings – The City Council may refinance debt to achieve interest cost savings as market
conditions change, or to remove restrictive covenants, or to further other City goals as expressed by
Council. The City’s Financial Advisor will prepare refunding analysis for consideration and
demonstrate that the savings of the refinancing are greater than the costs to refinance, with a target
minimum net present value savings of 3-5%.
7. Other Short-term Borrowing – The City may authorize the issuance of Public Property Finance
Contractual Obligations (PPFCO) which is short-term obligations for the acquisition of personal public
property, such as equipment. PPFCOs are payable from either ad valorem taxes or another dedicated
revenue stream. Each issuance will be assessed to ensure cost effectiveness and the repayment
schedule will not exceed the useful life of the asset. Multiple equipment acquisitions can be grouped
in a single PPFCO issue in order to develop economies of scale.
In FY2021, the City issued a $48 million PPFCO for the energy costs of Winter Storm Uri. The Council
approved a 9.5 year term with a 5 year call option. Because energy costs are an ongoing operating
expense, it is the intent of the City to review all options to pay off this debt issue as soon as possible,
balanced against rate competitiveness, Electric fund liquidity, and other practical factors.
The City may authorize the issuance of Limited Tax Notes for tax-supported obligations whose
issuance timeframe occurs outside of the City’s normal bond issuance schedule or for other
emergency needs. The Limited Tax Notes must have a maximum maturity of seven years. They may
be sold either as public, rated offerings in a competitive or negotiated sale, or they may be privately
placed depending on the financing goals of the City and market conditions at the time of sale.
C. Method of Sale – The City will use a competitive bidding process in the sale of bonds unless conditions in the
bond market or the nature of the issue warrant a negotiated bid, private placement or other method. In
such situations, the City will publicly present the reasons for the other method. The City will rely on the
recommendation of the financial advisor in the selection of the underwriter or direct purchaser. The financial
advisor must meet all licensing requirements and comply with all Municipal Securities Rulemaking Board
(MSRB) regulations. The City’s financial advisor will not act as the underwriter on any City bond issue.
D. Disclosure – Full disclosure of operating costs along with capital costs will be made to the bond rating
agencies and other users of financial information. The City staff, with assistance of the financial advisor and
bond counsel, will prepare the necessary materials for presentation to the rating agencies and will aid in the
production of the Preliminary Official Statements. The City will take responsibility for the accuracy of all
financial information released.
E. Federal Requirements – The City will maintain written procedures to follow post issuance compliance rules,
arbitrage rebate and other Federal requirements.
1. Post issuance tax compliance rules will include records retention, arbitrage rebate, use of proceeds,
and
2. Continuing disclosure requirements under SEC Rule 15c2-12, MSRB standards, or as may be required
by bond covenants or related agreements.
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F. Debt Structuring – The City prefers to issue bonds with a term of twenty (20) years or less, not to exceed the
useful life of the asset acquired. The structure should approximate level debt service unless operational
matters dictate otherwise. Market factors, such as the effects of tax-exempt designations, the cost of early
redemption options and the like, will be given consideration during the structuring of long term debt
instruments. Exceptions to the 20 year term include debt issues for major system expansions, such as water,
sewer or electric plants, in which case the City may issue debt greater than 20 years since the useful life of
the asset exceeds 30 years. A cost benefit analysis indicating the impacts of extending debt beyond 20 years
will be completed.
Fixed interest rate basis will be preferred because it aids in predictable budget and multi-year forecasting for
the issuing funds. Variable rate debt can sometimes allow early repayment with no penalty. Variable rate
debt may be considered by the Council as a tool to provide flexibility in setting the tax rate and determine
use of one-time available fund balances. The City’s Financial Advisor will provide an analysis of the benefits
of a variable rate structure versus interest rate risk, remarketing risk, and liquidity risk. Because variable rate
debt introduces risk and administrative burden on staff and advisors, the amount of allowed variable rate
debt will be limited to no more than ten percent (10%) of the City’s outstanding debt principal per system
(tax-supported, utility supported).
G. Utility and Self-Supporting Debt Coverage Ratio – Refers to the number of times all utility supported debt
service requirements or payments would be covered by the current operating revenues net of on-going
operating expenses of the City’s combined utilities (Electric, Water, and Wastewater).
The City will maintain a minimum debt service coverage ratio of 1.5 times for the utilities as a whole. The
bond ordinances allow the City to forego a debt reserve fund for its utility debt if the coverage is maintained
at 1.35 times or better. A coverage ratio of 1.0 times will also be required for all funds issuing self-supporting
debt (Airport, Stormwater, GTEC, GEDCO, PID and TIRZ).
Compliance Status – Debt coverage ratio FY2023 in compliance.
H. Bond Reimbursement Resolutions – The City may utilize bond reimbursements as a tool to manage its debt
issues, due to arbitrage requirements and project timing. In so doing, the City uses its capital reserve cash
to delay bond issues until such time when issuance is favorable and beneficial to the City.
The City Council may authorize a bond reimbursement resolution for General Capital projects that have a
direct impact on the City's ad valorem tax rate when the bonds will be issued within the term of the existing
City Council. In the event of unexpected circumstances that delay the timing of projects, or market
conditions that prohibit financially sound debt issuance, the approved project can be postponed and
considered by a future council until circumstantial issues can be resolved.
The City Council may also authorize revenue bond reimbursements for approved utility and other self-
supporting capital projects within legislative limits. Currently revenue bonds must be issued within 18
months after an eligible bond funded project is begun.
The total outstanding bond reimbursements may not exceed the total amount of the City’s reserve funds.
XV. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS
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The City of Georgetown will maintain budgeted minimum reserves in the ending working capital/fund balances
to provide a secure, healthy financial base for the City in the event of a natural disaster or other emergency,
allow stability of City operations should revenues fall short of budgeted projections and provide available
resources to implement budgeted expenditures without regard to actual timing of cash flows into the City.
Generally, if any existing reserve is used to cover expenses as described, the reserve should be restored in the
next fiscal year. If the restoration within one year is impractical or places and undo strain of City services, staff
shall recommend to Council an alternative timeline that is subject to Council approval.
A. Operational Coverage – The City’s goal is to maintain operations coverage of 1.0 (one), such that operating
revenues will at least equal or exceed current operating expenditures. Deferrals, short-term loans, or one-
time sources will be avoided as budget balancing techniques. Reserves will be used only for emergencies or
non-recurring expenditures, except when balances can be reduced because their levels exceed guideline
minimums as stated below.
1. Operating Reserves – The City will maintain reserves at a minimum of seventy-five (75) days (20.83%)
of net budgeted citywide operating expenditures. Net budgeted operating expenditure is defined
as total budgeted expenditures less interfund transfers and charges, capital improvements, direct
cost for purchased power, debt service, non-operating special revenue funds and payments to third
party grant agents. The amount of these funds are allocated within the following operating funds
and using the following guidelines to maintain the fund balance, working capital and retained
earnings (reserves) of the various operating funds at levels sufficient to protect the City’s
creditworthiness, as well as, its financial position from unforeseeable emergencies. For asset
replacement reserves, see Section XI. Capital Maintenance and Replacement.
Compliance Status – 75 day citywide reserves FY2023 in compliance.
2. General Fund – General Fund reserves will be assigned on the balance sheet. Reserves are allocated
as follows:
a. Base Level Reserve – will equal ninety (90) days, or 25%, of current year budgeted operating
expenditures designated for emergency use only.
Compliance Status – General Fund 90 day Reserve FY2023 in compliance.
b. Economic Stability Reserve – will equal up to 10% of current year budgeted operating
expenditures. The reserve will be designated to temporarily offset a decline in any General Fund
revenue source during the current fiscal year or in planning the future budget year. The reserve
may be used when growth in any General Fund revenue source from one fiscal year to the next
is below zero. The reserve will be available to support only existing programs approved in a prior
fiscal year.
Compliance Status – General Fund Stability Reserve FY2023 at 8%.
3. Tourism Fund – A minimum ninety (90) days of operating expenditures will be reserved within the
fund balance. These funds are designated to be used to offset any potential revenue shortfall that
occurs during the fiscal year.
Compliance Status – Tourism Fund Reserve FY2023 in compliance.
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4. Joint Services Fund – A minimum ninety (90) days of operating expenses will be reserved for
unexpected delays in revenue or emergency expenses.
Compliance Status – Joint Services Fund Reserve FY2023 in compliance.
5. Fleet Fund – A minimum ninety (90) days of operating expenses will be reserved for unexpected
delays in revenue or emergency expenses.
Compliance Status – Fleet Fund Reserve FY2023 in compliance.
6. Facilities Fund - A minimum ninety (90) days of operating expenses will be reserved for unexpected
delays in revenue or emergency expenses.
Compliance Status – Facilities Fund Reserve FY2023 in compliance.
7. Information Technology Fund - A minimum ninety (90) days of operating expenses will be reserved
for unexpected delays in revenue or emergency expenses.
Compliance Status – IT Fund Reserve FY2023 in compliance.
8. Water Services Fund – The Water Fund will maintain the following reserves and assign them on the
balance sheet. These reserves are designated to be used to offset potential revenue shortfalls or
fund unexpected or emergency expenses that occur during the fiscal year.
a. Operations Contingency Reserve – A minimum ninety (90) days or 25% of operating expenses,
including wholesale water contracts and net of transfers, designated for unexpected or
emergency use during the fiscal year. The targeted reserve amount is 120 days, and the
maximum amount is 365 days.
Compliance Status – Operating Water Fund Reserve FY2023 in compliance.
b. Non-Operating Contingency Reserve – to maintain continuity of debt payments, capital projects
and to begin recovering from a natural disaster during the lag time of revenue recovery. This
reserve will be a minimum of 50% of the average annual debt service over the forecasted 5 years.
Compliance Status – Non-operating Water Fund Reserve FY2023 in compliance.
9. Stormwater Drainage Fund – The Stormwater Fund will maintain the following reserves and assign
them on the balance sheet:
a. A minimum ninety (90) days or 25% of operating expenses, will be reserved in fund balance.
These funds are designated to be used to offset any potential revenue shortfall that occurs
during the fiscal year.
Compliance Status – Contingency Reserve FY2023 in compliance.
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY2023 in compliance.
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FY2023 Annual Budget
10. Electric Fund – The Electric Fund will maintain the following reserves and assign them on the balance
sheet:
a. Operations Contingency Reserve – A minimum ninety (90) days or 25% of operating expenses,
net of transfers and purchased power, designated for unexpected or emergency use during the
fiscal year.
Compliance Status – Operating Contingency reserve FY2023 in compliance.
b. Rate Stabilization Reserve – Up to 3 months of purchased power costs will be reserved to protect
against energy market exposure and to maintain wholesale power contracts and stability until
expenses are recovered through revenue generated in the Power Cost Adjustment Factor.
Compliance Status – Rate stabilization reserve FY2023 in compliance.
c. Non-Operating Contingency Reserve – to maintain continuity and begin recovery process from
a natural disaster during the lag time of revenue recovery:
• 1% of historical rate base (total assets plus accumulated depreciation)
• 1/5th of the average cash funded portion of the 5 year CIP
• At least 50% of annual debt service payment
Compliance Status – Non-operating reserve FY2023 in compliance.
d. Uses of Unanticipated and Unappropriated Electric Fund Balances – In the event that fund
balance in the Electric Fund exceeds recommended minimum cash as enumerated in the above
reserves, the funds may be used for the following purposes as approved by the City Council:
• Reduce the Power Cost Adjustment
• Reduce outstanding utility debt
• Fund capital projects
• Fund other one-time projects or equipment
11. Airport Fund – The Airport Fund will maintain the following reserves and assign them on the balance
sheet;
a. A contingency reserve of ninety (90) days of operating expenses will be maintained in the fund for
unforeseen or emergency expenditures. The reserve will represent all operating expenses minus
fuel costs and any transfers.
Compliance Status – Contingency Reserve FY2023 in compliance.
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY2023 in compliance.
12. GEDCO Fund –
a. A contingency reserve equal to 25% of budgeted sales tax revenue.
Compliance Status – Contingency Reserve FY2023 in compliance.
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FY2023 Annual Budget
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY2023 in compliance.
13. GTEC Fund –
a. A contingency reserve equal to 25% of budgeted sales tax revenue.
Compliance Status – Contingency Reserve FY2023 in compliance.
b. A debt service reserve equal to 1x the upcoming debt service payment for existing debt (example
- FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY2023 in compliance.
14. Rivery TIRZ Fund – A debt service reserve equal to 1x the upcoming debt service payment for existing
debt (example - FY2020 reserve = FY2021 debt payment before new sale).
Compliance Status – Debt Service Reserve FY2023 in compliance.
15.
For all other funds, the fund balance is an indication of the balance of each particular fund at a specific time.
The ultimate goal of each such fund is to have expended the fund balance at the conclusion of the activity
for which the fund was established.
Reserve requirements will be calculated as part of the annual budget process and any additional required
funds to be added to the reserve balances will be appropriated within the budget.
Funds in excess of the minimum reserves within each fund may be expended for City purposes at the will of
the City Council once it has been determined that use of the excess will not endanger reserve requirements
in future years. This action requires an amendment to the City’s Annual Budget and is outlined in Section III.
J. Use of Unanticipated and Unappropriated General Fund Balances.
B. Liabilities and Receivables – Procedures will be followed to maximize discounts and reduce penalties offered
by creditors. Current liabilities will be paid within 30 days of receiving the invoice. Accounts Receivable
procedures will target collection for a maximum of 60 days of service. The Finance Director is authorized to
write-off non-collectible, non-utility accounts that are delinquent for more than 180 days, and utility
accounts delinquent more than 180 days, provided proper delinquency procedures have been followed, and
include this information in the Annual Financial Report to the City Council.
C. Capital Project Funds – Every effort will be made for all monies within the Capital Project Funds to be
expended in a timely manner preferably within thirty-six (36) months of receipt. Due to the long timeline of
some projects, unused cash or bond proceeds will be reserved on the fund schedule and appropriated when
needed. The fund balance will be invested, and income generated will offset increases in construction costs
or other costs associated with the project. Capital project funds are intended to be expended totally, with
any unexpected excess to be approved for use according to the bond covenant and opinion of bond counsel.
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D. General Debt Service Funds – Revenues within this fund are stable, based on property tax revenues. Balances
are maintained to meet contingencies and to make certain that the next year’s debt service payments may
be met in a timely manner. Fund balance should not fall below 45 days annual debt service requirements, in
accordance with IRS guidelines.
Compliance Status – Debt Fund Reserve FY2023 in compliance.
E. Investment of Reserve Funds – The reserve funds will be invested in accordance with the City’s investment
policy.
F. Ratios/Trend Analysis – Ratios and significant balances will be incorporated into the annual bond rating
bookfor the Electric, Water and General Debt Service Funds. This information will provide users with
meaningful data to identify major trends of the City's financial condition through analytical procedures. The
following ratios/balances will be used as key financial indicators:
• Debt Ratio: Current liabilities plus long-term liabilities divided by total
assets
CL +LTL/TA AL < 0.5
• Times Coverage Ratio: Operating revenue less operating expense divided by
annual debt service
(OR-OE)/DSV AL > 1.5
The City will develop minimum/maximum levels for the above ratios/balances through analyzing of City
historical trends and future projections.
XVI. RISK MANAGEMENT AND INTERNAL CONTROLS
A. Written Procedures – Wherever possible, written procedures will be established and maintained by the
Finance Director for all functions involving cash handling and/or accounting throughout the City. These
procedures will embrace the general concepts of fiscal responsibility set forth in this policy statement.
B. Internal Audit Program – An internal audit program will be maintained by the Finance Director to ensure
compliance with City policies and procedures and to prevent the potential for fraud.
1. Departmental Audits – departmental processes will be reviewed to ensure dual control of City assets
and identify the opportunity for fraud potential, as well as, to ensure that departmental internal
procedures are documented and updated as needed.
2. Employees or Transaction Review – Programs to be audited include Petty Cash, City Credit Card
accounts, time entry, and travel. All discrepancies will be identified, and the employee’s Director
will be notified. The City Manager will also be notified depending on the seriousness of the
infraction.
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3. Fraud Awareness and Reporting – The City will maintain its personnel policy regarding fraud. They
will maintain an arrangement with a third party for anonymous reporting of fraud, waste, or abuse
of City resources. The City will provide training to all City employees on recognizing and reporting
fraud.
4. The Finance Director and City Manager will present an annual audit plan to the Audit and Finance
Sub-Committee. Results of all internal audits will be provided to the Sub-Committee and City Council
at year-end.
C. Directors Responsibility – Each Director is responsible for ensuring that good internal controls are followed
throughout their department, that all Finance Division directives are implemented and that all independent
auditor internal control recommendations are addressed. Departments will develop and periodically update
written internal control procedures.
D. Cybersecurity – The Information Technology department shall regularly assess new forms of security risk and
maintain multiple layers of protections and controls to thwart cyber attacks. The City will provide regular
cybersecurity awareness training for all employees.
E. Electric Utility Risk – Chapter 13.38 of the City’s Code of Ordinances establishes Council’s authority to oversee
all risk of the Electric utility including Congestion Revenue Rights auctions, wholesale power agreements,
futures contracts, and other transactions that expose the City to significant risk.
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