HomeMy WebLinkAboutAgenda CC 06.08.2010 WorkshopNotice of Meeting of the
Governing Body of the
City of Georgetown, Texas
JUNE 89 2010
The Georgetown City Council will meet on JUNE 8, 2010 at 3:00 P.M. at City Council Chambers - 101 East
7th Street
If you need accommodations for a disability, please notify the city in advance.
A Workshop presentation and discussion on revisions to the Fiscal and Budgetary Policy for the 2010/I1
budget cycle -- Micki Rundell, Chief Financial Officer
B Presentation and discussion on the City's proposed 2010/2011 Capital Improvement Program for both
utilities and general capital improvements -- Paul Brandenburg, City Manager
C Workshop presentation, discussion and possible direction to staff on General Government budget issues
-- Laurie Brewer, Assistant Finance Director, Micki Rundell, Chief Financial Officer, and Paul
Brandenburg, City Manager
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
1. Advice from attorney about pending or contemplated litigation and other matters on which the
attorney has a duty to advise the City Council, including this week's agenda items
E Sec 551.072: Deliberations about Real Property
1. Discussion regarding the terms of the purchase contract for approximately 20 acres on D.B. Woods
Road -- Paul Brandenburg, City Manager
2. Discussion of the value of land as it pertains to the Southwest Bypass and Texas Crushed Stone --
Paul Brandenburg, City Manager
F Sec 551.086: Competitive Matters
1. Presentation and possible action to approve the 2010-201.1 Electric Capital Improvement Projects
Plan as it pertains to matters that involve extension costs and financial investments -- Tom Benz,
Director of Systems Engineering and Jim Briggs, Assistant City Manager for Utility Operations
G Sec 551.087: Incentives
1. Discussion of incentives for INTRALINK-SPINE, INC. -- Mark Thomas, Economic Development
Director
1 I1
I, Jessica Hamilton, 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 , 2009, at , and remained so posted for at least
72 continuous hours preceding the scheduled time of said meeting.
Jessica Hamilton, City Secretary
City of Georgetown, Texas
June 8, 2010
SUBJECT:
Workshop presentation and discussion on revisions to the Fiscal and Budgetary Policy for the 2010/11
budget cycle — Micki Rundell, Chief Financial Officer
ITEM SUMMARY:
Annually, as part of the budget process, the Fiscal and Budgetary Policy is reviewed and updated for the
upcoming budget year. The General Government and Finance Subcommittee (GGAF) reviewed the policy at
their May 4, 2010 meeting. They discussed the possible addition of a funding target for the City's TMRS
pension liability. Staff has included a 75% funding goal on page 234. Other minor adjustments were also
incorporated into the draft.. Proposed amendments include:
Pg 225 — Clarification of services and departments included in the General Fund
Pg 228 — Revised definition of "Balanced Budget" as approved by City Council on November 24, 2010 Pg
230 — Defined "Sustainable Revenues"
Pg 231 — FOR CONSIDERATION — Reallocation of the 10% paid to the General Fund from the
utilities. Revised the current 2% In -Lieu -of Franchise Fee to 3%, thereby reflecting the rate paid by external
utilities in Franchise Fees, and lowered the current Return on Investment from 8% to 7%. The total
percentage remains unchanged. This action reallocates the total to more accurately reflect ROW maintenance
costs. Initially, staff recommended to GGAF to change the allocation to 6%/4%, but after reviewing the
impacts to the various funds, as well as, comments from the City's financial advisors, it is recommended to
change this allocation to'7%/3%. This change will then be incorporated into the upcoming utility rate reviews
planned for 2010/11. Pg 232— Clarification regarding offsetting the vacancy factor against actual salary
expense savings within the departments.
Pg 234 — Addition of Council action regarding revisions to TMRS and related disclosures approved on April
26, 2010. FOR CONSIDERATION: A recommendation from GGAF was to establish a funding goal for the
City's pension liability. No exact number was determined. Staff has included a goal of 75% for
consideration.
Pg 237 — Establishment of a reserve within the Technology ISF for the replacement of major technology
systems.
Pg 238 — The addition of the General Government and Finance Subcommittee in providing additional
oversight to financial operations.
Pg 238 — Adding the 3 year term limit for external auditors and the requirement to re -bid these services at
least every 3 years.
Pg 239 — The addition of "Public Trust" as an objective in the City's investment policy.
Pg 241 — FOR CONSIDERATION - Adding the exception to the possible use of Revenue bonds greater than
20 years for utility plant and system expansions with a useful life greater than 30 years. GGAF requested a
cost benefit analysis be done when considering extending debt issues longer than 20 years.
Pg 242 — Clarification on Certificates of Obligation as the funding instrument for self-supporting general
debt. Also includes the Electric and Water Services Funds as possible users of self-supporting CO debt for
non -system capital assets.
Pg 243 — FOR CONSIDERATION — Adding the exception for 20 year average debt for utility system
expansions whose useful life is greater than 30 years to be funded with longer term debt. A cost benefit
analysis requirement has also been added.
In addition, references to fiscal year 2010/11 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 adopted with the 2010/11 budget.
The Policy will be formally adopted as part of the 2010/11 Annual Operation Plan, planned for late August
FINANCIAL IMPACT:
An action item is included on the June 8 agenda to accept this changes. The Policy is formally adopted with
the appoval of the 2010/11 budget ordinance.
SUBMITTED BY: Cover Memo
Item # A
Micki Rundell
ATTACHMENTS:
Red Line copy of proposed 2010/201.1. Fiscal & Budgetary Policy
Presentation
Cover Memo
Item # A
Attachment number 1
Page 1 of 23
City of Georgetown
Fiscal and Budgetary Policy
DRAFT - .ILd F 2�11
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.
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
fvlairater;ance Planrtira and Dever me at Police, Fire and
Parks weli as aaiirt waste rrar�a err�rrt. too ,. °.a ag
t ;PAK, - �
49
Special Revenue Funds (SRF) account for specific revenues
that are legally restricted for specified purposes. The City
currently budgets 12 SRF Funds and includes Tourism,
Parkland Dedication, Library Donations, Animal Services
Donations, and Street Maintenance Sales Tax.
Debt Service Fund is used to account for the payment of
general long-term debt principal and interest.
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Capital Project Funds are used to account for the acquisition
or construction of major capital facilities other than those
financed by enterprise activities.
Proprietary Funds: Internal Service Funds account for good or services provided
by one internal department to another. The City uses this
system to recognize fuii---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 Accountina and Basis of Budoetin
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
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11. 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. 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 Vt 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 Vision Statement of the 2030 Plan.
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 1 sc
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.
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C. Balanced Budget - The goal of the City is to adopt and maintain a balanced
ca e� gtin butt . et c,�sin sustainable fundin sources that arg exgected to continue to
be available it°� subsequent fiscal years,_ Excess balances in 0,-)eratina funds from
previous fiscai ,gars shall remain in the fund in which they were appL9 �iatect uc til
tither such excess balances are rtrogosed and adopted pursuant to Sgcftpn B of the
this policy; until they are used to reduce outstartdi debt obligations of thsmt it : or
bothr batanc e •rig dget—with—c .rent--r on ,s— e —°; -r t
reA-moo neat , and _frrn +rig-e d' re . ,. f : P -ess- beta
fn r. , -f s--fr oocu_ wou -then be , .,d--feat- n-recr '
exile cares/ex-p �-er-as-c l-fw-v s.
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.
D. 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.
E. 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 report to 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.
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 Director of Finance 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.
G. 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?
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The Chief Financial Officer must certify availability of revenues or funding sources
prior to adoption.
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.
H. 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.
I. 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 t 1--2010/11 is- 45, included in the General
Fund.
III. REVENUE MANAGEMENT
A. Characteristics — The City will strive for the following optimum characteristics in its
revenue system:
1. Simplicity — The City, where possible and with out 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.
4. Revenue Adequacy — The City should require there be a balance in the revenue
system; i.e., the revenue base will have the characteristics of fairness and
neutrality as it applies to cost of service, willingness to pay, and ability to pay.
5. Realistic and Conservative Estimates - Revenues will be estimated realistically,
and conservatively, taking into account the volatile nature of various revenue
streams.
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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. ct-r.t s
3. 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 (1&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.
4. 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.
5. 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 e,-,
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.
6. 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
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process. An- or. - A rate study will be conducted every 3 years to review rate
methodology and ensure revenues will meet future needs.
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.
In -Lieu -of -Franchise -Fee. This transfer, currently % of operating
revenues, 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.
7. 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.
8. 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.
IV. 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 between
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.
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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
209440 201011 `i the Vacancy Factor equals $(2 &,4 )a
This factor will be reduced throuohout th-_year as vacant f)ositions
are recor3ni�ed witk°yin 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. For
2000/102010/11, $&�,5- is budgeted for this reserve.
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.
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 99-02010/11 is $311,331 for Social Service Funding and
$88,718 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
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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.
D. Purchasing — All City purchases of goods or services will be made in accordance
with the City's current Purchasing Policy and with State law. The City's Purchasing
Policy is more restrictive than State Law is. The City's Purchasing Policy requires all
contracts greater than $15,000 be approved by the City Council. Only materials and
other bid items are allowed to be purchased up to the $25,000 limit allowed by State
Law without Council approval. The following shows a summary of approval
requirements for purchases.
APPROVAL REQUIREMENTS FOR PURCHASES
Supervisor or
Dollar Figure
Director
Department
Purchasing
City
City
Designee
Director
Agent
Manager
Council
Less than $1,000
✓
(Purchase Order or Credit Card)
$1,000 to less than $5,000
✓
✓
(Bid Form)
$5,000 to $10,000
✓
✓
✓
$10,000 to less than $25,000
✓
✓
✓
✓
$15,000 or more
✓
✓
✓
x
Professional Service Contracts
$25,000 or more
✓
✓
✓
x
✓ Denotes signature approval
X Council authorization
Formal bids are required for all purchases over $50,000 in accordance with State law.
E. 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.
F. 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.
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V
Texas Municl al Retirement Svsteni shall include a written descriDtion, and, detailed
OUld result from the
1, The numerical assessments shall include the followina,
eMployee_pay and as an alinual dollar amount to the General FUnd and
to each Citv tin -
Council at least 72 hours Drior to consideration anci aQ roval, and must be read
aloud to the Q0Unngc]i_prior to Council consideration,
3, The estimated cha,n es to the Citv's contribution rate and the unfunded-
ed on information
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 Cky's
revenue streams.
A. Once o budgetary shortfall is projected, the City Manager will
take the necessary actions tooffset any revenue shortfall with areduction incurrent
expenses. The City Manager may:
° Freeze all new hire and vacant positions except those deemed tobeanecessity.
° Review all planned capital expenditures.
° Delay all ^non*oeontia|^spending orequipment replacement purchases.
The City Manager shall report inatimely manner iothe City Council the projected
shortfall and the actions taken ioresolve it.
B. further Action` Ifthe actions identified insubsection Aare insufficient tooffset the
projected revenue deficit for the current fiscal year, the City Council may approve the
following actions, in the order listed:
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1. Apply unspent, unobligated surplus funds from prior fiscal years to fund one-time
costs in the current fiscal year budget.
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.
VI. 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.
• Georgetown Utility Systems (GUS) Advisory Board will review the Electric, Water
and Wastewater plans prior to Council adoption. Georgetown Transportation
Advisory Board will review the Streets and Stormwater Drainage plans prior to
adoption.
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.
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All utility contracts and other utility expenditures greater than $50,000 are
reviewed by the Georgetown Utility Systems (GUS) Advisory Board prior to
presentation to Council.
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
the I & S (interest and sinking) portion of the tax rate dedicated to fund short-term
debt for equipment replacement will not exceed $0.04. The estimated short-term
I & S for 200 90 2010/11 is $p 02
VII. 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.
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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:
PCI 'i
Rating
100 — 85
Good
85 — 45
Fair
45 — 0
Poor
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.
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 re lacement of ma `cr #om and
will be funded over time throu h excess revenues within the fund. FUndinn for
ra�a'cr s stecrr assumes that bCil rah' the re l;cement cast wiil 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. 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
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facilities. Determination for facility repairs is based on useful life of the various
elements of the facilities. 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 Wit- 2010/1'I equals $60,000 .
Vlll. ACCOUNTING, AUDITING AND FINANCIAL REPORTING
w Accounting — The City is solely responsible for the recording and reporting of its
financial affairs, both internally and externally. The Chief Financial Officer is the
City's Chief Financial Officer and 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.
I Formatted: Indent: Left: 0.75", No bullets or
nce tat connnlittee GGAF stops: Not at 0
I e t «its will numbering, Tab .75
�"�F. General Government and �-inq ..,_,.___.,...
establish a subcommittee of City Council members that mat+ meet mcsr�fhly to rovlde
additional c versic IIt to the a, it "s Finanr. , o erations. This subcommittee will also
review cfgrTdrl c;vernment items that are neat reviewed t> another Cit advisor
hoard before beh resented to Cit Counci€, The Cit 's CFO will be the liaison for
this subcommittee,
Ft.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 L� - 3
ears at which tune tt�e Cit will re bid these servioes, threreb chian in firms at
least every 3 ears.
C 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 Principals (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.
D E , Internal Reporting — The Finance Department will prepare internal financial
reports, sufficient to plan, monitor and control the City's financial affairs.
IX. 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.
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.
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2. Obiectives — 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
• Frurc.sb[ic trust trcu h ��,. or�siie action sc cutcciitrt of public ria.
• Receive the highest possible rate of return (yield) 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
• 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.
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 start up costs,
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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.
X. 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
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• 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 can not 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 g2S tion
can be made for it nt ex Mansions c>r related s stem ex ansions whose useful life
is in excess of 3f3 ears. A cost benefit an sis will be clone to full disclose the
im acts of extendino debt be and 30 gars.:
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 r funded y e4keF .4; 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:
• When the proposed debt will have minimal impact on future effective property
tax rates;
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• 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
• 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 go, fwa o `j tk,,R
s rtifirates of obligation ,bt 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 issue this type of debt in addition_ the Electric; and Water
Services Funds can utilize this method of tund'on. non- a stem ca ital 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. Short-term borrowing - The City may authorize the issuance of Public Property
Finance Contractual Obligations (PPFCO) which are 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 warrants 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.
E. Federal Requirements — The City will maintain procedures to comply with arbitrage
rebate and other Federal requirements.
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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 23 gear averarle life include debt
issues for maior system expansions, such as water, sewer or electric plants, in which,
ease the t2ity may issrre debt r�reater than 2d years sirsce the average life of the
asset exceeds 30 years, A cost benefit analysis indicatin the im acts of etendirsc
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 ... 2010/11 is budgeted at 2A44
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.
XI. 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
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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.
XII. 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.
B. 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 transfers and
charges, general debt service (tax supported), direct cost for purchased power and
payments from third party grant monies. Total reserves for 14-2010/11..are
$ 50; .
1. General Fund — The unobligated fund balance in the General Fund should equal
at least ninety (90) days or 25% of annual budgeted General Fund operating
expenditures. 009/-1-0-201 i/11 reserves are $6. -- million.
2. Tourism Fund — A minimum sixty days (60) or 16.67% of operating expenditures
will be reserved within the fund balance.
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3. Water and Wastewater Funds_— Working capital reserves in these funds should
be 25% or ninety (90) days.
4. Other Funds —
• Stormwater Drainage Fund - $150,000
• Airport Fund — As funds are available, up to ninety (90) days or 25% of
operating expenses (less fuel costs).
5. Electric Fund — The remaining balance to meet the citywide requirement of
seventy-five (75) days of reserve funds will be maintained within this fund.
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 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.
C. 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 120 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 1 year, provided proper delinquency procedures have
been followed, and include this information in the annual report to the City Council.
D. Capital Project Funds — Every effort will be made for all monies within the Capital
Project Funds to be expended 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.
E. 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
The fund balance should not fall below one month or 1/121h annual debt service
requirements, in accordance with IRS guidelines.
F. 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.
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G. 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.
XIII. 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.
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
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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.
XIV. STAFFING
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. Cost of Living Adiustment (COLA) - To protect city employees from the effects of
general inflation, the City may fund an annual COLA 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.
C. Additional Salary Adiustment - Additional salary adjustments for employees not
included in a defined pay plan may be recommended at the discretion of the City
Manager.
D. Pay for Performance — The City Council may fund a one-time bonus incentive
program to aid in retaining quality employees and reward employees for productivity
and job performance. This program will be funded with one-time available resources
and paid as a lump -sum distribution for performance that exceeds expectations
during the review period.
• In addition, the City may also choose to fund an on -going merit adjustment based
on performance that exceeds expectations during the review period. This is in
addition to any one-time bonus incentive that may be awarded.
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City of Georgetown, Texas
June 8, 2010
SUBJECT:
Presentation and discussion on the City's proposed 2010/2011 Capital Improvement Program for both
utilities and general capital improvements -- Paul Brandenburg, City Manager
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Cover Memo
Item # B
City of Georgetown, Texas
June 8, 2010
Workshop presentation, discussion and possible direction to staff on General Government budget issues --
Laurie Brewer, Assistant Finance Director, Micki Rundell, Chief Financial Officer, and Paul Brandenburg,
City Manager
ITEM SUMMARY:
This presentation will be handed out on the Bias.
This presentation will review the proposed debt funded projects or purchases to be included in the upcoming
2010/11 budget and their related impact on the tax rate. Reviewed items include major equipment purchases
such as police vehicles, facilities construction such as Fire Station 5 and other general capital items. Further
issuance of the November 2008 bond authroization for Parks and Roads will also be discussed.
The estimated tax impact of any proposed debt issue will also be presented. The goal of this workshop is to
get direction on this items for inclusion in the upcoming budget.
FINANCIAL IMPACT:
SUBMITTED BY:
Micki Rundell
Cover Memo
Item # C
City of Georgetown, Texas
June 8, 2010
Sec 551.071: Consultation with Attorney
1. Advice from attorney about pending or contemplated litigation and other matters on which the attorney has
a duty to advise the City Council, including this week's agenda items
1111flu&IN lu/.11
FINANCIAL IMPACT:
SUBMITTED BY:
Jessica Hamilton, City Secretary
Cover Memo
Item # D
City of Georgetown, Texas
June 8, 2010
Sec 551.072: Deliberations about Real Property
1. Discussion regarding the terms of the purchase contract for approximately 20 acres on D.B. Woods Road
-- Paul Brandenburg, City Manager
2. Discussion of the value of land as it pertains to the Southwest Bypass and Texas Crushed Stone -- Paul
Brandenburg, City Manager
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Rachel Saucier
Cover Memo
Item # E
City of Georgetown, Texas
June 8, 2010
Sec 551.086: Competitive Matters
1. Presentation and possible action to approve the 2010-2011 Electric Capital Improvement Projects Plan
as it pertains to matters that involve extension costs and financial investments -- Tom Benz, Director of
Systems Engineering and Jim Briggs, Assistant City Manager for Utility Operations
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Rachel Saucier
Cover Memo
Item # F
City of Georgetown, Texas
June 8, 2010
Sec 551.087: Incentives
1. Discussion of incentives for INTRALINK-SPINE, INC. -- Mark Thomas, Economic Development
Director
FINANCIAL IMPACT:
SUBMITTED BY:
Rachel Saucier
Cover Memo
Item # G