HomeMy WebLinkAboutAgenda CC 06.11.2013 WorkshopNotice of Meeting of the
Governing Body of the
City of Georgetown, Texas
JUNE 11, 2013
The Georgetown City Council will meet on JUNE 11, 2013 at 3:00 P.M. at the Council Chambers at 101 E.
7th St., Georgetown, TX
The City of Georgetown is committed to compliance with the Americans with Disabilities Act (ADA). If you
require assistance in participating at a public meeting due to a disability, as defined under the ADA,
reasonable assistance, adaptations, or accommodations will be provided upon request. Please contact the City
Secretary's Office, least four (4) days prior to the scheduled meeting date, at (512) 930-3652 or City Hall at
113 East 8th Street for additional information; TTY users route through Relay Texas at 711.
Policy Development/Review Workshop -
A Presentation concerning the TxDOT: Texas-Oklahoma Passenger Rail Study -- Edward G. Polasek,
AICP, Transportation Services Director and Jim Briggs, General Manager, Utilities
B GUS Capital Improvement Plan - Utilities & Transportation -- Wesley Wright, Systems Engineering
Director and Jim Briggs, General Manager of Utilities
C Fiscal and Budgetary Policy - Workshop presentation and discussion on revisions to the Fiscal and
Budgetary Policy for the 2013/14 budget cycle -- Micki Rundell, Chief Financial Officer
Executive Session
In compliance with the Open Meetings Act, Chapter 551, Government Code, Vernon's Texas Codes,
Annotated, the items listed below will be discussed in closed session and are subject to action in the regular
session.
D Sec. 551.071: Consultation with Attorney
- Advice from attorney about pending or contemplated litigation and other matters on which the
attorney has a duty to advise the City Council, including agenda items
- CTSUD Update
- Rivery Update
- LCRA Update
Sec 551.086: Competitive Matters
GUS Capital Improvement Plan - Electric --Wesley Wright, Systems Engineering Director and Jim
Briggs, General Manager of Utilities
Adjournment
Certificate of Posting
I, Jessica Brettle, City Secretary for the City of Georgetown, Texas, do hereby certify that this Notice of
Meeting was posted at City Hall, 113 E. 8th Street, a place readily accessible to the general public at all
times, on the _____ day of _________________, 2013, at __________, and remained so posted for at least
72 continuous hours preceding the scheduled time of said meeting.
__________________________________
Jessica Brettle, City Secretary
City of Georgetown, Texas
June 11, 2013
SUBJECT:
Presentation concerning the TxDOT: Texas-Oklahoma Passenger Rail Study -- Edward G. Polasek, AICP,
Transportation Services Director and Jim Briggs, General Manager, Utilities
ITEM SUMMARY:
The Texas Department of Transportation (TxDOT) has initiated the Texas-Oklahoma Passenger Rail Study
to address the continued growth along the already-congested I-35 corridor. The study will evaluate a range of
passenger rail service options from Oklahoma City to South Texas passing through Georgetown. TxDOT is
approaching this study through an service-level environmental impact state that must comply with Federal
requirements found in the National Environmental Policy Act. Part of those requirements is outreach to local
communities along the corridor.
The study team hosted 12 public open houses earlier this year to scope the environmental analysis, and will
be hosting the next round of public meeting sometime this summer.
Jennifer Moczygemba, Rail System Section Director, from TxDOT will present an overview and update to
the study at the City Council Workshop.
FINANCIAL IMPACT:
SUBMITTED BY:
Edward G. Polasek, AICP, Transporation Services Director
ATTACHMENTS:
Fact Sheet
Cover Memo
Item # A
Fact Sheet
in coordinati on with Oklahoma DOT
Texas’ populati on and economy are booming, with much
of its growth occurring in the already-congested IH-35
corridor. While the Texas Department of Transportati on
(TxDOT) conti nues to look at roadway improvements to
keep all of us and our economy moving, other opti ons, such
as passenger rail service, fi t the needs of many travelers and
would reduce demand on the state’s roadways. Through
the Texas-Oklahoma Passenger Rail Study (TOPRS), TxDOT
will consider how passenger rail service could fi t into
this corridor.
TOPRS will evaluate a range of passenger rail service opti ons
in an 850-mile area from Oklahoma City to South Texas and will
conclude with a service-level environmental impact statement
(EIS). The study will consider the corridor as a whole, as well as
within three secti ons:
• Oklahoma City to Dallas and Fort Worth
• Dallas and Fort Worth to San Antonio
• San Antonio to Rio Grande Valley / Corpus
Christi / Laredo
Because the corridor extends north of the Red River to
Oklahoma, the Oklahoma Department of Transportati on
(ODOT) is an important partner in the study. In additi on,
transit service providers, railroads, metropolitan planning
organizati ons (MPOs), citi es, counti es, as well as community
members, will be engaged throughout the study.
The service-level EIS, a federally required document that
complies with the Nati onal Environmental Policy Act (NEPA),
will provide a high-level review of rail needs and potenti al
service opti ons in the corridor. The study could conclude with
a decision to advance individual projects for more detailed
study or a decision against making further investments in
passenger rail in the corridor.
At the end of this study, a service development plan
will be given to TxDOT that will serve as a roadmap to
implement the preferred alternati ve determined by the
EIS process. With the service development plan in place,
TxDOT can complete additi onal environmental review and
identi fy funding to begin the next phase.
Map of the TOPRS corridor.
TxDOT launches study of passenger rail
from Oklahoma City to South Texas
Next Steps
The study should be completed by December 2014
and will document the costs, benefi ts, and impacts of rail
service alternati ves as to a no-build alternati ve in a service-
level environmental impact statement (EIS).
As part of the Nati onal Environmental Policy Act (NEPA)
requirements the service-level EIS will provide a high-level
review of rail needs and potenti al service opti ons
in the corridor.
The study team will be reaching out to the public for
feedback on developing the alternati ves and the results
of the study. Check the website at www.TXOKrail.org for
ways to get involved and to join the mailing list.
Summer 2013
www.TXOKrail.org
Attachment number 1 \nPage 1 of 2
Item # A
Hoja de Datos
in coordinati on with Oklahoma DOT
Tanto la población como la economía de Texas se encuentran en
pleno auge, con una gran parte de este crecimiento ocurriendo en
el ya congesti onado corredor IH-35. Mientras que el Departamento
de Transporte del estado de Texas (TxDOT; por sus siglas en
inglés), conti nua realizando mejorías en las vías de transporte para
mantenernos a nosotros y a nuestra economía en movimiento, existen
otras opciones, como el servicio de tren de pasajeros, que cumplen
muy bien con las necesidades de muchos viajeros y reducirían la
demanda sobre las carreteras y autopistas del estado. A través del
Texas-Oklahoma Passenger Rail Study (TOPRS) (Estudio de trenes de
pasajeros entre Texas y Oklahoma), TxDOT evaluará la forma en la que
el servicio de tren de pasajeros podría incluirse en este corredor.
TOPRS evaluará un rango de servicios de tren de pasajeros dentro
de un área de 850 millas desde Oklahoma City hasta el Sur de Texas y
concluirá con una declaración sobre el impacto ambiental al nivel del
servicio (EIS; por sus siglas en inglés). El estudio considerará el corredor
como una unidad entera y también separada en tres secciones:
• De Oklahoma City a Dallas y Fort Worth
• De Dallas y Fort Worth a San Antonio
• De San Antonio a Rio Grande Valley / Corpus
Christi / Laredo
Debido a que el corredor se exti ende más al norte de Red River
hasta Oklahoma, el Departamento de Transporte del Estado de
Oklahoma (ODOT; por sus siglas en inglés) es un socio importante
en este estudio. Además, proveedores de servicios de tránsito,
ferrocarriles y organizaciones de planeación metropolitana (MPOs;
por sus siglas en ingles) y ciudades y condados, así como miembros
de la comunidad, parti ciparán a lo largo del estudio.
El EIS de nivel de servicio, un documento requerido por el gobierno
federal que cumple con la Ley Nacional de Políti ca Ambiental (NEPA;
por sus siglas en inglés), proporcionará una revisión de alto nivel
de las necesidades de ferrocarriles y de las posibles opciones de
servicio en el corredor. El estudio podría concluir con una conclusión
de avanzar proyectos individuales para un estudio más detallado o
con una decisión en contra de realizar más inversiones en trenes de
pasajeros en el corredor.
Al fi nal de este estudio, se le dará un plan de desarrollo de los
servicios a TxDOT que servirá como hoja de ruta para implementar la
alternati va preferida determinado por el proceso de EIA. Con el plan
de desarrollo de los servicios en el lugar, TxDOT puede completar la
revisión ambiental adicional y identi fi car los fondos para comenzar
la siguiente fase.
Mapa del corredor TOPRS.
TxDOT lanza un estudio sobre trenes de pasajeros
desde Oklahoma City al Sur de Texas
Próximos Pasos
Se esti ma que el Estudio de Trenes de Pasajeros Texas-Oklahoma
(TOPRS; por sus siglas en inglés) se dará por completo en 24
meses. El estudio documentará los costos, benefi cios e impactos
de las alternati vas de trenes de pasajeros en comparación con
una alternati va que no requiere construcción por medio de una
declaración de impacto ambiental al nivel de servicio (EIS).
Este es un estudio requerido a nivel federal para cumplir con la
Ley sobre Políti ca Medio Ambiental (NEPA; por sus siglas en inglés),
el EIS al nivel de servicio proporcionará una detallada revisión de
las necesidades ferroviarias y opciones de servicio posibles a lo
largo del corredor.
El equipo de estudio se pondrá en contacto con el público para
recolectar información concerniente al desarrollo de alternati vas
y para comunicar los resultados del estudio. Para recibir más
información y parti cipar en el proceso de estudio, por favor visite
el siti o web www.TXOKrail.org.
Verano 2013
www.TXOKrail.org
Attachment number 1 \nPage 2 of 2
Item # A
City of Georgetown, Texas
June 11, 2013
SUBJECT:
GUS Capital Improvement Plan - Utilities & Transportation -- Wesley Wright, Systems Engineering Director
and Jim Briggs, General Manager of Utilities
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Cover Memo
Item # B
City of Georgetown, Texas
June 11, 2013
SUBJECT:
Fiscal and Budgetary Policy - Workshop presentation and discussion on revisions to the Fiscal and
Budgetary Policy for the 2013/14 budget cycle -- Micki Rundell, Chief Financial Officer
ITEM SUMMARY:
This item is to review the proposed changes to the Fiscal and Budgetary Policy for the upcoming budget and
to gather feedback on various proposed changes. Proposed amendments include:
Page 4 – Wording for Operating Budget section updated to reflect the City of Excellence vision and 5
focus areas
Page 9 – Adds the establishment of a Power Contract Credit Reserve to provide financial assurances
to the City’s power supply contract providers
Page 18 – Amends the years an external auditor may be retained to 5 years, consistent with GGAF
recommendations in January 2013 and GFOA best practices
Page 19 - Amends the Cash Management and Investments section to reflect changes to the Investment
Policy adopted in January 2013 by adding Texas Municipal Obligations rated A or better to the
authorized investments
Page 28 – Amends the Staffing policy to reflect changes approved by Council for the Compensation
plan
In addition, references to fiscal year 2013/14 have been updated and designated amounts have been left
blank. These amounts will be included once they have been determined and will be included in the final
document that is included in the 2013/14 adopted budget.
FINANCIAL IMPACT:
SUBMITTED BY:
ATTACHMENTS:
Fiscal and Budgetary Policy Workshop
Policy Draft Redline
Fiscal and Budgetary Policy presentation
Cover Memo
Item # C
Council Meeting Date: or Council Workshop Date: June 11, 2013
Regular Agenda Consent Executive Session Attachments
Ordinance Publication Date: Draft Ordinance to City Secretary:
AGENDA ITEM COVER SHEET
SUBJECT:
Fiscal and Budgetary Policy Workshop - Workshop presentation and discussion on revisions to the Fiscal and
Budgetary Policy for the 2013/14 budget cycle. – Micki Rundell, Chief Financial Officer
ITEM SUMMARY/SPECIAL CONSIDERATIONS:
This item is to review the proposed changes to the Fiscal and Budgetary Policy for the upcoming budget and to
gather feedback on various proposed changes. Proposed amendments include:
· Page 4 – Wording for Operating Budget section updated to reflect the City of Excellence vision and 5
focus areas
· Page 9 – Adds the establishment of a Power Contract Credit Reserve to provide financial assurances to
the City’s power supply contract providers.
· Page 18 – Amends the years an external auditor may be retained to 5 years, consistent with GGAF
recommendations in January 2013 and GFOA best practices.
· Page 19 - Amends the Cash Management and Investments section to reflect changes to the Investment
Policy adopted in January 2013 by adding Texas Municipal Obligations rated A or better to the authorized
investments.
· Page 28 – Amends the Staffing policy to reflect changes approved by Council for the Compensation plan
In addition, references to fiscal year 2013/14 have been updated and designated amounts have been left blank.
These amounts will be included once they have been determined and will be included in the final document that is
included in the 2013/14 adopted budget.
FINANCIAL IMPACT:
COMMENTS:
ATTACHMENTS:
Red-line copy of the proposed 2013/14 Fiscal and Budgetary Policy
Power Point presentation, highlighting the Policy and recommended changes
Must be published 72 hours before meeting; deadline to WC
Sun is 11:00 Monday
Draft ordinance must be given to City Secretary one week before
Council meeting
Attachment number 1 \nPage 1 of 1
Item # C
City of Georgetown, Texas
Fiscal and Budgetary Policy
Attachment number 2 \nPage 1 of 30
Item # C
1
Table of Contents
I. Purpose 2
II. Fund Structure and Basis of Budgeting 2-3
III. Fund Balance Policies 4
IV. Operating Budget 4-6
V. Revenue Management 7-9
VI. Expenditure Policies 10-13
VII. Budget Contingency Plan 13-14
VIII. Capital Improvement Program (CIP) Budget 14-15
IX. Capital Maintenance and Replacement 16-17
X. Accounting, Auditing and Financial Reporting 18
XI. Asset Management 18-19
XII. Debt Management 20-23
XIII. Other Funding Alternatives 24
XIV. Financial Conditions & Reserves & Stability Ratios 24-27
XV. Internal Controls 27-28
XVI. Staffing 28
Attachment number 2 \nPage 2 of 30
Item # C
2
City of Georgetown
Fiscal and Budgetary Policy
Approved June 11, 2013
I. PURPOSE
The City of Georgetown is committed to financial management through integrity, prudent
stewardship, planning, accountability, full disclosure and communication. The broad
purpose of the Fiscal and Budgetary Policies is to enable the City 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 and financial reporting, internal
controls, both operating and capital budgeting, revenue management, investment and
asset management, debt management and forecasting. This is done in order to:
A. Demonstrate to the citizens 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 principals (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 and
Parks, as well as, solid waste management.
Special Revenue Funds (SRF) account for specific revenues
that are legally restricted for specified purposes. The City
currently budgets 17 SRF Funds and includes Tourism,
Parkland Dedication, Library Donations, Animal Services
Donations, and Street Maintenance Sales Tax.
Attachment number 2 \nPage 3 of 30
Item # C
3
Debt Service Fund is used to account for the payment of
general long-term debt principal and interest.
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 good or services provided
by one internal department to another. The City uses this
system to recognize cost for fleet replacement and
maintenance, facility maintenance and computer replacement
and maintenance.
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’s 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 they 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:
· Encumbrances, which are treated as expenditures in the year they are encumbered,
not when expended.
· Grants, which are considered revenue when awarded, not received.
· Principal and interest on long-term debt, which are recognized when paid.
General government funds include the general fund, special revenue funds, debt service
fund and general capital project funds.
Proprietary Funds, which include the enterprise and internal service 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
Attachment number 2 \nPage 4 of 30
Item # C
4
III. 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 property classified in
one of the other four categories.
IV. 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. Comprehensive Plan – The 2030 Plan is written from a perspective of some twenty
years into the future. It expresses what we envision and desire our community to be
in the year 2030, and it reflects on all that we have accomplished since we launched
the revision of our Comprehensive Plan in 2006. The Plan utilizes a Vision
Statement to guide the desired outcomes for the community.
B. Council Vision – The Council has further defined the City’s Comprehensive Plan by
defining its vision to become the City of Excellence. This vision is to be
accomplished through five (5) focus areas. These focus areas become the City’s
strategic goals through development and implementation of defined Business Plans
for each focus area.
1. Economic Development
2. Signature Destination
3. Public Safety
4. Transportation
5. Utility Services
Attachment number 2 \nPage 5 of 30
Item # C
5
C. Five-Year City of Excellence Business Plan – A “dashboard” plan will be
developed that links the 2030 Plan with the City Council’s City of Excellence vision
and five focus areas (strategic goals) that further the implementation of the Vision.
From those strategic goals an implementation plan for each of the 5 focus areas will
be created.
1. A Five-Year Financial Forecast will be created and updated annually that will
identify potential tax impacts, rate adjustments and other factors that will impede
the implementation of the City of Excellence Business Plan.
2. Year-One of this Business Plan is the basis for the Annual Budget.
D. 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”.
Therefore, the budget will be presented to the City Council no later than the 1st day of
August to provide the City Council time to adopt the budget in the required time
frame.
1. Proposed Budget – A proposed budget shall be prepared by the City Manager
with participation of all of the City’s Division Directors within the provision of the
Charter and the 2030 Plan and the City of Excellence Vision.
a. The budget shall include four basic segments for review and evaluation:
· Revenues
· Personnel Costs
· Operations and Maintenance
· 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 citizen 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 budget will be filed with the City Secretary when it is
submitted to the City Council. A copy will also be available at the
Georgetown Public Library for citizen review.
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.
Attachment number 2 \nPage 6 of 30
Item # C
6
E. 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 B of the
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.
F. 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.
G. 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. The City Manager will also
present a mid-year updateto the City Council within 60 days following the end of the
second fiscal quarter that updates the status of projects and related financial goals
set forth in the budget.
H. Control and Accountability – Each Division 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 compliance with spending limitations.
Division Directors may transfer funds up to $20,000 within the operations and
maintenance or capital line items within a departmental budget category without
additional approval. All transfers within the Personnel line items require approval of
the Chief Financial Officer and City Manager. All other transfers of appropriation or
budget amendments require either City Council or City Manager approval as outlined
in Section IV.B.
I. Budget Amendments – The Charter (Section 6.04) provides a method to amend for
budget amendments and emergency appropriations. The City Council may authorize
with a majority plus one vote, an emergency expenditure as an amendment to the
original budget. This may be done in cases of grave public necessity to meet an
unusual and unforeseen condition that was not known at the time the budget was
adopted. In practice, this has been interpreted to include revenue-related expenses
within the enterprise funds and timing differences on capital improvement projects.
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 Chief Financial Officer must certify availability of revenues or funding sources
prior to adoption.
Attachment number 2 \nPage 7 of 30
Item # C
7
The City will amend the budget at year end, if needed, for revenue based
expenditures that exceeded budgeted amounts due to increased revenue and
recognize any grant funded expenditures for grants received after the budget was
adopted or last amended. The City will also amend the budget if necessary as part
of the Mid-Year Review process for any capital project timing adjustments from prior
year, as well as, any other known adjustments needed and approved at that time.
J. 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 insurance deductibles, unexpected legal expenses and equipment repairs.
K. Council Discretionary Account – The budget may contain appropriated funds to be
used at the discretion of the City Council. Actual expenditure of these funds is
specifically approved by the City Council on an item by item basis. The Council
Discretionary Account for 2013/14 is $10,000 included in the General Fund.
V. 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 Parks and 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.
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 Parks and Recreation for the Recreation and
Tennis Centers is targeted to be between 50 – 60%, with some variance in
individual programs.
Attachment number 2 \nPage 8 of 30
Item # C
8
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 two particular
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.
4. Property Tax Revenues – All real and business personal property located within
the City will be valued at 100% of the fair market value for any given year based
on the current appraisal supplied by the Williamson County Appraisal District.
Conservative budgeted revenue estimates result in a projected ninety-eight
percent (98%) budgeted collection rate for current ad valorem taxes. Two
percent (2%) of the current ad valorem taxes will be projected as the budget for
delinquent ad valorem tax collection. For budgeting purposes, the City will
forecast the proposed property tax rate using the effective maintenance &
operations (M&O) rate plus the interest & sinking (I&S) rate needed to fund tax
supported debt service. Increases to the M&O rate will be deliberated and
determined by the City Council. Proposed tax revenue will be budgeted at a 98%
collection rate.
5. Interest Income – Interest earned from investments will be distributed to the
funds in accordance with the equity 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 two
years 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.
Attachment number 2 \nPage 9 of 30
Item # C
9
7. Enterprise Fund Rates – The City will review and adopt utility 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. Utility rates will be reviewed annually as part of the budget
process. A rate study will be conducted every 3 years to review rate
methodology and ensure revenues will meet future needs.
A restricted Power Contract Credit Reserve has been established to provide
financial assurances to the City’s wholesale power contract providers as fiscal
surety against any potential risk on the City’s behalf and will be maintained as
“restricted” fund balance on the City’s financial statements.
A Rate Stabilization Reserve (RSR) Account has been established in the
Electric Fund to offset and mitigate potential impacts to customer rates due to
increased fuel costs or other external factors that may negatively impact Electric
Rates. The Rate Stabilization Reserve (RSR) may provide funding for:
· Deferring or minimizing the rate impact of future cost increases
· Costs associated with providing additional power supply
· Filling contractual obligations
· Balancing of annual power costs
RSR funds will be monitored monthly to ensure the electric rate is being
managed per the Policy. Increases to RSR are made through the Power Cost
Adjustment rate as determined by the fund, at the recommendation of the
Assistant City Manager.
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 Return on Investment – The intent of this transfer is to provide a
benefit to the citizens for the ownership of the various utility operations they
own. For all utilities except for Electric:
· In-Lieu-of-Franchise-Fee. This transfer, currently 3% of operating
revenues generated inside the City, is consistent with the franchise rates
charged to investor owned utilities franchised to operate within the City.
· Return on Investment. The return on investment (ROI) transfer is
currently calculated at 7% of operating revenues for all utilities except
sanitation both inside and outside the City.
The Franchise and Return on Investment for the Electric Utility is based on
kWh sold. For customers inside the City, a $0.0102 charge per kWh,
equivalent to the 3% and 7% paid by other utility customers, will be included
Attachment number 2 \nPage 10 of 30
Item # C
10
in the cost per kWh. For customers outside the City, a $0.007253 charge per
kWh, equivalent to the 7% ROI paid by utilities, will be included in the cost.
8. Intergovernmental Revenues – All potential grants will be examined for matching
requirements and must be approved by the City Council prior to making
application of the grant. It must be clearly understood that operational
requirements (on-going costs) set up as a result of a grant program could be
discontinued once the term and conditions of the program have been completed.
9. Revenue Monitoring – Revenues as they are received 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.
VI. EXPENDITURE POLICIES
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. The City Manager may
also authorize transfer of salary adjustment monies between funds that are budgeted
in a citywide account.
B. 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 – General Fund appropriations will include a vacancy factor
equal to 1% of total General Fund salaries and related benefits to offset salary
savings within the budget. The vacancy factor will be budgeted as a negative
expense within the General Government Department of the General Fund. For
2013/14 the Vacancy Factor equals_________. This factor will be reduced
throughout the year as vacant positions are recognized within the department
budget.
2. Benefit Payout Reserve - The City will establish a benefit payout reserve equal to
15% of the accrued benefit liability for employees who are currently meet eligible
to retirement. Only terminating employee benefit expenses may be paid from this
reserve. This reserve shall be funded as an offset to the vacancy factor.
For2013/14, $30,000 is budgeted for this reserve.
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.
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”.
Attachment number 2 \nPage 11 of 30
Item # C
11
C. Special Purpose Funding – In order to support community assistance programs,
the City designates specific funding for special purposes, including Social Services,
Children’s Programs, 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. Social Service Funding and Children’s and Youth Program Funding – The City
has targeted funding for these programs to be $5.00 per capita, which may be
adjusted to offset the effects of general inflation based upon CPI. If previous
funding levels are higher than the targeted amount, and to avoid significant
reductions in levels of funding, the City Council shall seek to attain this target
chiefly through population growth. Funding for these programs will be split 83%
for social services and 17% for youth funding. These funds will be allocated and
paid according to the City Council’s guidelines for Social Service and Children’s
and Youth Program Funding.
The funding level for 2013/14 is _$_______ for Social Service Funding and
_$_______ for Children’s and Youth Program Funding, both of which are the
same as in the previous year.
Any given year, unallocated funds in either the social Services Fund or the
Children’s and Youth Program Funds can be allocated to the other fund, in an
amount not to exceed the estimated increase for the following year in the fund
receiving the transfer.
2. Public Art Funding - The City will annually allocate funding for Public Art on a
year to year basis depending on the availability of funds in an amount to be
determined at the discretion of the City Manager. Funding priority will be given to
projects that include a matching donation, including contributions from local
organizations and sponsors. Any unspent funds will accumulate and be
reallocated in the following budget year. Disbursement of these funds will be
determined by the City Council at the recommendation of the City’s Arts &
Culture Advisory Board.
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.
Attachment number 2 \nPage 12 of 30
Item # C
12
D. Purchasing – The City will maintain and regularly review a written Purchasing
Policy. All City purchases of goods or services will be made in accordance with the
City’s current Purchasing Policy and with State law.
The following shows a summary of approval requirements for purchases.
Dollar Limits: Procurements: Requirements:
Under
$3,000
Under the small purchase
limit
No competitive bids and City credit
cards may be used.
$3,000
up to
$50,000
Within informal bid limit A minimum of three informal
competitive bids required unless
exempted: HUB requirements apply in
accordance with state law.
$10,000
and above
Within City Manager’s
approval
In addition to the requirements above,
the City Manager must approve the
purchase.
$50,000
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.
In addition to the above, all purchases must be approved accordingly to preapproved
limits within each department.
E. Contracts and Change Orders - Contracts and related change orders must follow
the City Purchasing Policies and State Law. In accordance with State Law, change
orders are limited to 25% of the total contract amount. Change orders greater than
$50,000 require the same advisory board review and Council approvals as the
original contracts.
F. Prompt Payment – 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.
G. 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.
H. 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.
Attachment number 2 \nPage 13 of 30
Item # C
13
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.
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 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 has established -80% as the targeted funding goal for the City’s
unfunded pension liability. The City’s funded pension liability is 85.0% as of
December 31, 2011, as disclosed by TMRS.
6. The City may elect to make an annual 1-time payment prior to further fund the
City’s unfunded pension liability. Such payment will be approved and authorized
by the City Council prior to December 31 in order to be recognized in the
following year’s TMRS employer contribution rate calculation.
VII. BUDGET CONTINGENCY PLAN
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:
· Freeze all new hire and vacant positions except those deemed to be a necessity.
· Review all planned capital expenditures.
· 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.
Attachment number 2 \nPage 14 of 30
Item # C
14
2. Notwithstanding Section XII B.1 of this policy, authorize a reduction in the
unobligated fund balance in the General Fund, pursuant to Section XII B.1 of this
policy, from 90 to 75 days.
3. Direct other reductions in services, including workforce reductions.
C. Replenish Fund Balance - As soon as practicable, without placing undue strain on
city services, the City Council shall increase the unobligated fund balance in the
General Fund, up to the 90-day amount required in Section XII B.1 of this policy.
VIII. 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.
· Needed capital improvements are identified through system models, repair and
maintenance records and growth demands.
· Economic development projects that have capital infrastructure needs must be
reviewed and approved for funding by the City no later than March 1 to be
included in the annual CIP process. Any economic development project
approved for funding after March 1 will be included in the following year CIP
process unless otherwise authorized by City Council.
· 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.
· Citizen involvement and participation will be solicited in formulating the capital
budget through neighborhood meetings, public hearings and other forums.
· 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.
Attachment number 2 \nPage 15 of 30
Item # C
15
Prior to Council adoption, the following Advisory Boards will review the
Capital Projects budget:
Georgetown
Utility Systems
Advisory Board
(GUS)
Georgetown
Transportation
Advisory Board
(GTAB)
General
Government and
Finance Advisory
Subcommittee
(GGAF)
Parks Advisory
Board
Electric
Water
Wastewater
Streets
Stormwater Drainage
Airport
Facilities
Other General
Government
Capital
Parks and
Recreation
B. Control – All capital project expenditures must be appropriated in the capital budget.
Availability of resources must be identified and then reviewed by the Finance
Division before any CIP contract is presented to the City Council for approval.
Prior to presentation to Council, the following Advisory Boards will review:
Georgetown Utility
Systems
Advisory Board
(GUS)
Georgetown
Transportation Advisory
Board (GTAB)
General Government
and Finance Advisory
Subcommittee
(GGAF)
All utility contracts and
other utility expenses
greater than $50,000
All Transportation,
Stormwater Drainage and
Airport expenditures and
contracts greater than
$50,000
All General Government
non-routine contracts and
expenditures greater than
$50,000
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.
Recognizing that long-term debt is usually a more expensive financing method,
alternative-financing sources will be explored before debt is issued. When debt is
issued, it will be used to acquire major assets with expected lives equal or exceeding
the average life of the debt issue.
Short-term financing including Capital Leasing and other tax-supported obligations
can be used to fund vehicles, computers and other operating equipment provided the
impact to the tax rate is minimal.
Caution should be used in replacing assets with short-term, tax-supported
obligations due to the repetitive nature of the replacements. The total amount of I &
S (interest and sinking) portion of the tax rate dedicated to fund short-term debt for
equipment replacement will not exceed $0.04.
Attachment number 2 \nPage 16 of 30
Item # C
16
IX. 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 capital 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 street seal coat, 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 their non-enterprise fund
infrastructure assets. In order to adopt this alternative method, the City has
implemented an asset management system that determines if the minimum
standards are being maintained. This measurement system will be updated at least
every 3 years. The City has elected to use this alternative method for reporting its
street infrastructure assets.
The City uses the CarteGraph PavementView 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.
PCI Rating
100 – 85 Good
85 – 45 Fair
45 – 0 Poor
Attachment number 2 \nPage 17 of 30
Item # C
17
C. Internal Service funds – The City currently utilizes internal service funds to maintain
and replace existing assets. Assessments are made to the using funds for the use of
equipment currently in use and to be purchased during the year. 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.
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. The City
currently uses a four-year replacement cycle for all desktop computers. 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. Funding for
major systems assumes that 50% of the replacement cost will be debt funded.
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, including Parks and Recreation. 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. An additional
unscheduled repair reserve equal to 10% value of annual internal service funding
is also budgeted. The estimate reserve for 2013/14 equals $30,000.
Attachment number 2 \nPage 18 of 30
Item # C
18
X. 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 Chief Financial Officer (CFO) 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 Subcommittee (GGAF) – The City may
establish a subcommittee consisting of (3) City Council members and (2) citizens
that may meet monthly to provide additional 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 CFO 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, thereby changing firms at
least every 5 years.
D. External Reporting – Upon completion and acceptance of the annual audit by the
City’s auditors, the City shall prepare a written Comprehensive Annual Financial
Report (CAFR) which shall be presented to the City Council within 180 calendar days
of the City’s fiscal year end. The CAFR 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.
E. Internal Reporting – The Finance Department will prepare internal financial reports,
sufficient to plan, monitor and control the City’s financial affairs.
XI. 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 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 Comprehensive Annual Financial Report (CAFR) and/or
managed by the City
1. Statement of Cash Management Philosophy - The City shall maintain a
comprehensive cash management program to include the effective collection of
all accounts receivable, the prompt deposit of receipts to the City’s depository,
the payment of obligations, and the prudent investment of idle funds in
accordance with this policy.
Attachment number 2 \nPage 19 of 30
Item # C
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2. Objectives – The City’s investment program will be conducted as to accomplish
the following listed in priority order:
· Safety of the principal invested
· Liquidity and availability of cash to pay obligations when due
· Ensure public trust through responsible actions as custodians of public funds.
· Maximize earnings (yield) to the greatest extent possible consistent with the
City’s investment policy.
3. Safekeeping and Custody – Investments may only be purchased through
brokers/dealers who meet the criteria detailed in the investment policy, which
also addresses internal controls related to investments.
4. Standard of Care and Reporting – Investment will be made with judgment and
care, always considering the safety of principal to be invested and the probable
income to be derived. The Chief Financial Officer is responsible for the overall
management of the City’s investment program and ensures all investments are
made in compliance with the investment policy. An investment report, providing
both summary and detailed information, will be presented to the City Council
quarterly.
5. Authorized Investments – The City can currently invest in the following:
· Certificates of Deposit
· U.S. Treasury and Agency securities
· Investment Pools that meet the requirements of the PFIA
· No-load Money Market Mutual Funds
· Fully collateralized Repurchase Agreements
· Obligations of Municipal Issuers in Texas rated not less than A or its
equivalent.
· Other investments as approved by City Council and not prohibited by law
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 capitalized:
· The asset owned by the City.
· 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.
· The original cost of the asset must be at least $5,000.
· The asset must be tangible.
· On-going repairs and general maintenance are not capitalized.
Attachment number 2 \nPage 20 of 30
Item # C
20
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.
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 lines will be capitalized in accordance with the
capitalization policy. Costs should include engineering, construction and other
related costs including right of way acquisition.
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.
XII. 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.
A. Usage of Debt - Long-term debt financing will be considered for non-continuous
capital improvements of which future citizens will be benefited. 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
Attachment number 2 \nPage 21 of 30
Item # C
21
· 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 purchasing 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. The I & S (interest and
sinking) portion of the tax rate cannot exceed $0.04 for short-term debt (3-10 years).
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 full faith and credit of the City as well as the City’s ad valorem
taxing authority back general obligation bonds. Conditions for issuance of
general obligation debt include:
· When the project will have a significant impact on the tax rate;
· When the project may be controversial even through it is routine in nature; or
· When the project falls outside the normal bounds of projects the City has
typically done.
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. 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:
Attachment number 2 \nPage 22 of 30
Item # C
22
· When the proposed debt will have minimal impact on future effective property
tax rates;
· 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
· 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. Every effort will be
made to ensure public participation in decisions relating to debt financing.
4. Self-supporting General 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) whom then
pledges 4B sales tax revenue for the repayment of that debt.
5. Internal borrowing between City funds – The City can authorize use of existing
long-term reserves as “loans” between funds. The borrowing fund will repay the
loan at a rate consistent with current market conditions. The loan will be repaid
within ten (10) years. The loan will be considered an investment of working
capital reserves by the lending fund.
6. 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.
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. In such situations, the City will publicly present the reasons for the
negotiated sale. The City will rely on the recommendation of the financial advisor in
the selection of the underwriter or direct purchaser.
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.
Attachment number 2 \nPage 23 of 30
Item # C
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E. Federal Requirements – The City will maintain written procedures to follow post
issuance compliance rules, arbitrage rebate and other Federal requirements.
· Post issuance tax compliance rules will include records retention,
arbitrage rebate, use of proceeds, and
· Continuing disclosure requirements under SEC Rule 15c2-12 or as may
be required by bond covenants or related agreements.
F. Debt Structuring – The City will issue bonds with an average life 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 average life 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 average life of the
asset exceeds 30 years. A cost benefit analysis indicating the impacts of extending
debt beyond 20 years will be completed.
G. Debt Coverage Ratio – Refers to the number of times the current combined 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 these 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. Debt coverage for 2013/14 is budgeted at ___times
coverage. A coverage ratio of 1.5 times will also be required for all funds issuing
self-supporting debt.
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.
Attachment number 2 \nPage 24 of 30
Item # C
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XIII. 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 potential grants will be examined for any matching requirements and the
source of those requirements identified. A grant funding worksheet, reviewed by
Finance, that clearly identifies funding sources, outcomes and other relevant
information will be presented and approved by the City Council prior to any grant
application being submitted. It must be clearly understood that any resulting
operation requirements of the grant could be discontinued once the term and
conditions of the project have been terminated. The City Council must authorize
acceptance of any grant funding.
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 both
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.
XIV. 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.
A. Operational Coverage – The City’s goal is to maintain operations coverage of
$1.00, 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 operating expenditures. Net budgeted
operating expenditure is defined as total budgeted expenditures less interfund
Attachment number 2 \nPage 25 of 30
Item # C
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transfers and charges, general debt service (tax supported), direct cost for
purchased power and payments from third party grant monies. Total reserves for
2013/14 are $__________. 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.
2. General Fund – The fund balance reserve in the General Fund should equal
ninety (90) days or 25% of annual budgeted General Fund operating
expenditures. 2013/14 reserves are $______ and are allocated as follows:
a. Base Level Reserve – will equal sixty (60) days of current year budgeted
operating expenditures which will be designated for emergency use only.
b. Budget Stabilization Reserve – will equal thirty (30) days of current year
budgeted operating expenditures and will be designated to protect the City
against short term operating deficits. The funds will be available for the
following purposes:
i. Defer short term tax increases
ii. Cover revenue shortfalls
iii. Fund unanticipated expenditures
If the Budget Stabilization Reserve is depleted during the fiscal year, the
balance must return to the 30 day requirement within the following year’s
adopted budget.
3. Tourism Fund – A minimum sixty days (60) or 16.67% 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 and
should be replenished in the following fiscal year’s budget.
4. Water Services Fund – Working capital reserves in should be 25% or ninety (90)
days of operating expenses, net debt service and long-term water contract costs.
These reserves are designated to be used to offset potential revenue shortfalls or
fund unexpected or emergency expenses that occur during the fiscal year.
These reserves should be replenished in the following budget cycle.
5. Other Funds –
· Stormwater Drainage Fund - $ 250,000 for unforeseen emergencies or
potential revenue shortfalls
· Airport Fund – As funds are available, up to ninety (90) days or 25% of
operating expenses (less fuel costs) for unforeseen emergencies or
potential revenue shortfalls
Attachment number 2 \nPage 26 of 30
Item # C
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6. Electric Fund – The remaining balance to meet the citywide requirement of
seventy-five (75) days of reserve funds will be maintained within this fund. It can
be used for unforeseen emergencies and expenditures. The Rate Stabilization
Account and the Power Contract Credit Reserve are not included in this
Contingency Reserve.
For all other non-enterprise 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.
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 30 days of service. Receivables aging past 90 days will be sent to
a collection agency. The Chief Financial Officer 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 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. 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 transferred to the Debt Service fund to service project-related debt
service.
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.
E. Investment of Reserve Funds – The reserve funds will be invested in accordance
with the City’s investment policy. Existing non-cash investment would be exempt
through retirement of the investment.
Attachment number 2 \nPage 27 of 30
Item # C
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F. Ratios/Trend Analysis - Ratios and significant balances will be incorporated into
both the mid-year and annual reports to the City Council. 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:
· Fund Balance/Equity: Assets - liabilities
FB/E AL (Acceptable level) minimum reserve
requirement
· Working Capital: Current assets less current liabilities
CA - CL AL minimum reserve requirement
· Current Ratio: Current assets divided by current liabilities
CA/CL AL > 1.00
· Quick Ratio: "Liquid" current assets divided by current
liabilities
Liquid CA/CL AL > 1.00
· Debt/Assessed AV Taxes Debt divided by assessed Ad Valorem value
D/AV AL < 5
· Debt Ratio: Current liabilities plus long-term liabilities
divided by total assets
CL +LTL/TA AL < 1
· Enterprise Oper Coverage: Operating rev divided by operating expense
OR/OE AL > 1.25
· Times Coverage Ratio: Operating revenue less operating expense
divided by annual debt service
(OR-OE)/DSV AL > 1.5
The City will be to develop minimum/maximum levels for the above ratios/balances
through analyzing of City historical trends and future projections. These ratios will
also be compared to other similar or regional municipalities for further analysis.
XV. INTERNAL CONTROLS
A. Written Procedures – Wherever possible, written procedures will be established
and maintained by the Chief Financial Officer 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 Chief
Financial Officer to ensure compliance with City policies and procedures and to
prevent the potential for fraud.
Attachment number 2 \nPage 28 of 30
Item # C
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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 Division Director will be notified. The City
Manager will also be notified depending on the seriousness of the infraction.
3. Results of all internal audits will be provided to City Council on a quarterly basis.
C. Division Directors Responsibility – Each division 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.
XVI. STAFFING AND COMPENSATION
Realizing the importance and contribution of employee’s in achieving and maintaining
the City of Excellence, the City’s goal as an employer is to attract and retain quality
employees who provide excellent, friendly services to our community in an effective and
efficient manner.
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 is
implementing a Competitive Employee Compensation Maintenance Policy to
address competitive market factors and other issues impacting compensation. The
program consists of:
1. Cost of Living Adjustment - (COLA) – To protect City employees from the effects
of general inflation, every odd numbered year, the City may fund a COLA
adjustment for all regular employees not included in a defined pay plan. The COLA
will be based on a three-year rolling average of the Consumer Price Index (CPI)
reported by the U.S. Bureau of Labor Statistics for Southern cities pertinent to
Georgetown’s population.
2. Pay Scale Review – To ensure the City’s pay system is accurate and competitive
within the market, every even numbered year, the City will review its pay plan for
any potential market adjustments necessary to maintain the City’s pay scale.
3. Pay for Performance – Each year the City will fund pay adjustments to aid in
retaining quality employees while recognizing increased job experience and
rewarding quality performance.
Attachment number 2 \nPage 29 of 30
Item # C
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Adjustments are based on the previous year’s annual performance evaluation. The
percentage adjustments are determined by the employee’s position within their pay
grade, including merit adjustments for productivity and quality performance during
the previous fiscal year.
In addition, the City may also choose to fund a one-time on performance that exceeds
expectations during the review period.
Attachment number 2 \nPage 30 of 30
Item # C
1
FISCAL & BUDGETARY
POLICY UPDATE
2013 Review & Proposed Revisions
City Council Workshop
June 11, 2013
Agenda
• Historical overview
• Policy Compliance
• Policy Areas
–Proposed revisions for 2013/14
Attachment number 3 \nPage 1 of 21
Item # C
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Historical Overview
• Fiscal and Budgetary Policy adopted 2001/02
– Updated & revised all financial policies/practices
– Based on recommended “BEST PRACTICES” by
Government Finance Officers Association (GFOA)
• Included plan to eliminate “WTTB”
– Up to 33% of Gen Fund operations funded by
transfer from Utility Funds
– “Scenario H” - fully implemented in 2003/04
• Review & update annually as part of the
budget process
Policy Compliance
SUSTAINABLE FUNDING SOURCES
MUST FUND ON-GOING EXPENSES
•Excess balances from previous fiscal
years shall be re-appropriated through the
next budget process or used to reduce
outstanding debt obligations or both
–Can also be re-appropriated during the year
for 1-time expenditures as a “Budget
Amendment”
Attachment number 3 \nPage 2 of 21
Item # C
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Policy Compliance
Requires 1.5 times coverage ratio for all
funds with debt service requirements
• Excess operating revenue net of operating
expenses must exceed annual debt payment
by 150% of debt payment
• Utility funds required by bond covenants
• Applies to GO debt repaid through self-
supporting fees
– GTEC, Stormwater & Airport Funds
– Electric & Water Services Funds
Policy Area Highlights
Proposed Revisions for 2013/14
Attachment number 3 \nPage 3 of 21
Item # C
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I. Policy Purpose
• Provides “fiscal discipline”
• Achieve and maintain long-term stable
and positive financial condition
• Provide guidelines for day-to day
planning and operations of City’s
financial management
II. Fund Structure & Basis of Budgeting
• Clearly identify fund structure
–Governmental Funds – General Fund, SRF, Debt
Svc and Capital Project Funds
–Proprietary Funds – Enterprise (utility & airport) &
Internal Svc Funds
• Basis of budgeting
– Modified accrual basis for governmental funds –
revenues recognized when received and expenses
recognized when incurred
– Full accrual basis for enterprise funds – revenues
recognized when earned, expenses when incurred
– Identifies exceptions
Attachment number 3 \nPage 4 of 21
Item # C
5
III. Fund Balance Policy
• Establishes limitations for governmental
fund balance necessary for GASB 54
– Non-spendable Fund Balance – Non-cash assets
– Restricted Fund Balance – Legal restrictions such as
HOT, bond proceeds & grants
– Committed Fund Balance – constrained by limitations
that the City Council has imposed on itself, and
remains binding until the City Council changes that
constraint
– Assigned Fund Balance – reflects City’s intended use
and isn’t established formally by the Council
– Unassigned Fund Balance – funds that can’t be
classified in any of the other categories
IV. Operating Budget
• Links to City’s comprehensive plan
–Added linkage to City of Excellence and 5
Focus Areas
• Preparation and adoption
• Defines “Balanced Budget”
• Quarterly reports to Council
• Assigns control and accountability of funds
–Transfers > $20K within a department
require City Manager approval
• Contingencies are addressed
Attachment number 3 \nPage 5 of 21
Item # C
6
V. Revenue Management
• Defines “conservative” revenue
projection philosophy
• Defines “sustainable” revenue
–Revenue that is consistently available year to
year
• Property Tax budgeted at effective M&O
rate + needed I&S rate
–Budgeted increases only relate to debt service
–M&O increases determined by Council
V. Revenue Management (con’t)
• User-based fees and service charges
• Utility Rates reviewed annually
–Rate study conducted at least every 3 years
–Establishes a Power Contract Credit Reserve
•Provides financial assurance to Wholesale Power
Providers
–In lieu of LOC – impacts rate negotiations for LT power
supply
•Recommended in recent Electric Rate Study
–Estimated reserve = $15M
–Defines the Electric Rate Stabilization Fund
and its uses
Attachment number 3 \nPage 6 of 21
Item # C
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V. Revenue Management (con’t)
• Administrative allocations
– Allocation methods reviewed annually by the City’s
external auditors
• For Water – Wastewater – Stormwater
– Return on Investments = 7 % operating revenue
– Franchise Fees - 3% operating revenues
• For Electric
–Both ROI and Franchise Fees are based on a per
kWh charge that is equivalent to the 7%-3%
provision in the other utilities
VI. Expenditure Policies
• Point of control for appropriations is at the
department level
– City Manager approves transfers between
department within the same fund
– Transfers between funds require Council
authorization
• Personal costs budgeted at 100% at
department level
– Vacancy Factor = 1% total General Fund salaries
o Reduced throughout year as vacant positions are
recognized within the department
Attachment number 3 \nPage 7 of 21
Item # C
8
VI. Expenditure Policies (con’t)
• Position Control – sets number of position
within the budget
– Use of Excess Salary Savings – requires City
Manager approval
• Social Service & Youth Program Funding -
funding level set at $5.00 per capita
– Can be adjusted by inflation
– Funding level increases achieved through growth
• Allocated 83% Social Services / 17% Youth
Programs
• Based on 2008/09 funding:
–$311,331 for Social Services
–$88,718 for Youth Programs
VI. Expenditure Policies (con’t)
• Social Service Funding (con’t)
– Includes ability to “cap” funding if needed due to
budget contingency or compliance issues
– Allows unallocated funding for social
service/children’s programs to be redistributed
between either program
Attachment number 3 \nPage 8 of 21
Item # C
9
VI. Expenditure Policies (con’t)
• Public Art Funding -
– Funding on year to year basis depending on
availability of funds
• Determined by City Manager
• Funding priority for “matching” funds from
organizations and sponsors
– Unspent funds reallocated in next year
– Council approves expenses based on
recommendation of City’s Arts & Culture
Advisory Board
• Bad debt limitations
– Write off Utility Debt > 1 Year as “Uncollectible”
VI. Expenditure Policies (con’t)
• Purchasing policy
–Will maintain/review its Purchasing Policy
–Follows state law
• 5% local vendor preference
–Purchases:
• Less then $3,000 – can use City Credit Card
• Up to $3,000 – do not require competitive bids
• Between $3,000 and $50,000 require minimum
of 3 informal bids
–2 of which should be HUB vendors if available
–Formal bids greater than $50,000
• Matches state law
Attachment number 3 \nPage 9 of 21
Item # C
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VI. Expenditure Policies (con’t)
• Purchasing policy (con’t)
– Change Orders
• Limited to 25% of total contract amount
• Change orders > then $50,000 require Council
approval
• Prompt payment to vendors
VI. Expenditure Policies (con’t)
• Retirement Benefits
– Any proposed change in benefits requires:
• % employee pay and annual dollar amount to each fund
• Estimated dollar change to City’s unfunded pension
liability
• Estimated change to City’s actuarial funding ratio
– Assessment of change to Council 72 hours before
consideration and must be read aloud
– Proposals must be voted on individually on
Council’s legislative agenda
– City has established 80% as the targeted funding
goal for City’s unfunded pension liability
• Can elect 1-time payment to buy down liability
Attachment number 3 \nPage 10 of 21
Item # C
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VII. Budget Contingency Plan
• Establish guidelines for managing revenue
shortfalls
– Immediate actions include freezing hiring of
new positions
– Delay all “non-essential” spending
– City Manager reports conditions to Council
• Determines use of “Contingency Reserves”
– Outlines replenishment if used
• Service level reductions addressed by
Council
– Includes workforce reductions
VIII. Capital Improvement Program
• Preparation - update 5-year CIP schedule
–Includes estimated operational impacts
–Identifies Annexation related projects for
potential funding alternatives if needed
–Provides exception for timing of Economic
Development related CIP
–GUS Advisory Board reviews Electric &
Water Services CIP
–GTAB reviews Streets, Stormwater Drainage
and Airport CIP
–GGAF reviews General Capital Projects
Attachment number 3 \nPage 11 of 21
Item # C
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VIII. Capital Improvement Program (con’t)
• Projects must be appropriated within CIP Budget
• Funding must be identified prior to CIP contract
approval
– Resource availability reviewed by Finance
– All utility contracts over $50,000 are reviewed by
GUS Advisory Board prior to Council approval
– All Transportation, Stormwater Drainage, and
Airport contracts > $50,000 will be reviewed by
GTAB before Council approval
– All general government non-routine contracts >
$50,000 will be reviewed by GGAF prior to
Council approval
IX. Capital Maintenance
• Deferred maintenance increases future capital
costs
• Includes PMIS standards for street maintenance
for GASB 34 Modified Approach
• On-going capital maintenance is included in
departmental operating budget
• Internal Service Funds - “lease” equipment back
to departments
– Establishes an unscheduled repair reserve
– Establishes a technology reserve for major
system replacement
Attachment number 3 \nPage 12 of 21
Item # C
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X. Accounting & Financial Reporting
• Establishes General Government and
Finance Subcommittee for added oversight
• Outside audit annually of all City accounts
– Accountable directly to City Council
–Limits for audit firms to changed to every 5 years
and requires services be re-bid at least every 5
years
•Consistent with GFOA best practices
• Prepare Comprehensive Annual Financial
Report (CAFR)
– GFOA standards
XI. Asset Management
• Investment Policy
– Reviewed annually
• Applies to all entities included in the City’s CAFR
– Conforms to all legal requirements
• “Public Funds Investment Act”
•Added Texas Municipal Issuers rated A or better
– Quarterly reports to City Council
• Fixed Assets
– Capitalization criteria - $5,000
Attachment number 3 \nPage 13 of 21
Item # C
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XII. Debt Management
• Considered for capital improvements which
benefit future citizens and includes:
– General Obligation Bonds
– Revenue Bonds
– Certificates of Obligation
– Self-supporting debt
– Internal borrowings
– Short-term borrowing - Public Property Financial
Contractual Obligations (PPFCO)
• Federal Requirements
– Post issuance compliance rules & disclosure
policies on record retention, arbitrage & use of
proceeds
XII. Debt Management (con’t)
• Debt structuring
– 20 year average life bonds
– Debt service can not exceed useful life of the
asset
– Exception for assets with useful life > 30 years
such as utility plants
• Cost benefit analysis of extending debt will be
completed
Attachment number 3 \nPage 14 of 21
Item # C
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XII. Debt Management (con’t)
• Debt coverage ratio - 1.5 times
– Refers to the number of times the debt service
payment would be covered by excess operating
revenues, net of operating expense
• Bond reimbursement resolutions
– Used for cash management and project timing
– Bonds that have a direct impact on property taxes
must be issued within the term of the authorizing
Council
• Provides exception for delays and market conditions
– Revenue bonds for approved capital projects
within legislative requirements for timing
• Currently 18 months
XIII. Other Funding Alternatives
• Provides guidelines on alternative funding
for new projects
– Grants
• Documents grant funding process with Council
– Use of Reserve Funds
• Used for debt management purposes
– Developer Contributions
• Links to development regulations
– Leases
– Impact Fees
• Reviewed at least every 3 years
Attachment number 3 \nPage 15 of 21
Item # C
16
XIV. Financial Conditions,
Reserves & Stability Ratios
• City will maintain a 1 to 1 operating
coverage
– On-going revenues fund on-going expenses
• Prohibits use of deferrals, short-term loans
or one-time revenue sources to balance the
budget
XIV. Financial Conditions, Reserves
& Stability Ratios (con’t)
• Requires minimum 75 days citywide
operating “contingency” reserves
– Allocated to maintain fund balance, working capital
and retained earnings within the various operating
funds at sufficient levels to protect the City’s
creditworthiness and its financial position from
unforeseeable emergencies
– Total Reserve for 2013/14 = $___ million
• 2012/13 reserve = $16.086 million
Attachment number 3 \nPage 16 of 21
Item # C
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XIV. Financial Conditions, Reserves
& Stability Ratios (con’t)
• General Fund – 90 days
– Base Level Reserve – 60 days budgeted operating
expenditures designated for emergency use only
– Base Stabilization Reserve – 30 days budgeted
operating expenditures designated to protect the City
against short-term operating deficits, used for:
• Defer short term tax increases
• Cover revenue shortfalls
• Fund unanticipated expenditures
– If Budget Stabilization Reserve is depleted during the
fiscal year, the balance returned to 30 day requirement
within the next year’s adopted budget
XIV. Financial Conditions, Reserves
& Stability Ratios (con’t)
• Tourism Fund - 60 days – 16.67% operating
expense
– Used to offset potential revenue shortfall and must be
replenished in following year
• Water Services Fund -90 days – 25% of operating
expense net of debt service & LT water contracts
– Used to offset potential revenue shortfalls or
emergency expenses and replenished following year
• Stormwater Drainage Fund –$250,000 for
unforeseen shortfalls/emergencies
Attachment number 3 \nPage 17 of 21
Item # C
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XIV. Financial Conditions, Reserves
& Stability Ratios (con’t)
• Airport Fund -90 days or 25% of operating
expenses less fuel costs – NOT MET
–New business plan to be reviewed with Council in
July 2013
• Electric Fund – remaining balance needed to
meet Citywide 75 days total reserve
– Used for unforeseen emergencies
– Power Contract Credit Reserve and Rate
Stabilization Account is NOT included in the
Contingency Reserves
XIV. Financial Conditions,
Reserves & Stability Ratios (con’t)
• Ratios & Trend Analysis
– Financial indicators with acceptable levels
• General Fund includes:
–Fund balance/Equity
–Working Capital
–Current Ratio
–Debt Ratio
– Track trends and compare to other like
communities
Attachment number 3 \nPage 18 of 21
Item # C
19
XV. Internal Controls
• Written procedures reviewed annually
• Internal Audit Program managed by Finance
Department to detect potential Fraud
– Departmental Audits – reviews processes to
ensure protection of City assets
– Employee & Transaction Audits – individual
discrepancies are identified
• Petty Cash, Travel & Credit Cards
– Results reported to Council each quarter
• Responsibility of Division Directors to
maintain costs within their departments.
XVI. Staffing and Compensation
• Provide adequate staffing for efficient
operations
• Establishes Competitive Employee
Compensation Maintenance Plan that
includes:
– Cost of Living Adjustment (COLA) for inflation
• Reviewed every odd numbered year
– Pay Scale Review to ensure pay plan remains
competitive in the market
• Address in even numbered years
– Pay for Performance to aid in retaining quality
employees
• Recognizes increased job experience
• Rewards quality performance
Attachment number 3 \nPage 19 of 21
Item # C
20
Major Areas for Discussion
•Table of Contents added for ease of use
•Power Contract Credit Reserve added for
financial assurance in Electric Wholesale
Power Contracts
•Update Operating Budget section to reflect
City of Excellence & Focus Areas
•Change auditor terms from 3 to 5 years
•Reflect new direction on Compensation
program
Next Steps
• Provide direction regarding policy
revisions
– Reviewed by GGAF on May 29 with proposed
revisions recommended to Council
• Policy formally adopted by ordinance
–1st Reading – Tonight’s regular agenda
• Budget prepared within policy
guidelines
Attachment number 3 \nPage 20 of 21
Item # C
21
QUESTIONS?
Attachment number 3 \nPage 21 of 21
Item # C
City of Georgetown, Texas
June 11, 2013
SUBJECT:
Sec. 551.071: Consultation with Attorney
- Advice from attorney about pending or contemplated litigation and other matters on which the attorney has
a duty to advise the City Council, including agenda items
- CTSUD Update
- Rivery Update
- LCRA Update
Sec 551.086: Competitive Matters
GUS Capital Improvement Plan - Electric --Wesley Wright, Systems Engineering Director and Jim Briggs,
General Manager of Utilities
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Cover Memo
Item # D