HomeMy WebLinkAboutResolution No. 2016-C09I
RESOLUTION NO. 2016-C9
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA
ADOPTING AND APPROVING THE BUDGET POLICY
WHEREAS, the City of Azusa ("City') desires to maintain current and comprehensive financial
policies; and
WHEREAS, there is. a need to formalize the policies regarding the budget process and
monitoring; and
WHEREAS, the City desires to adopt a Budget Policy (Exhibit A);
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Azusa,
California does hereby find, determine and declare as follows:
Section 1. Approve and adopt the Budget Policy attached hereto as Exhibit A;
Section 2. Authorize City staff to take all actions necessary to carry out the Policy.
PASSED, APPROVED and ADOPTED this 19'" day of January, 2016.
oseph omero Rocha
4ayor
ATTEST:
Je9ee'y4FCqtfTjK, Jr.
City Clerk
STATE OF CALIFORNIA ) i,
COUNTY OF LOS ANGELES ) ss:
CITY OF AZUS.A )
I HEREBY CERTIFY that the foregoing Resolution No. 2016-C9 was duly adopted by
the City Council of the City of Azusa at a regular meeting thereof, held on the 19th day of
January, 2016, by the following vote of Council:
AYES: COUNCILMEMBERS: GONZALES, MACIAS, ALVAREZ, ROCHA
NOES: COUNCILMEMBERS: NONE
ABSENT: COUNCILMEMBERS: CARRILLO
APPROVED AS TO FORM:
Best Bes & Krieger, L P�—
City Attorney
1
Budget Policy
City ofAzusa Budget Policy EXHIBIT A
SECTION 1 —GOAL STATEMENT
This Budget Policy sets forth budget management objectives for the City of Azusa and establishes general
parameters to assure that the City's finances are managed in a manner that will:
(1) provide for the delivery of quality services and products cost effectively;
(2) provide for an acceptable level of services and products as the community grows,
(3) ensure that the City is living within its means; and
(4) provide reserves for unbudgeted needs that might arise from time to time.
While this policy provides guidelines for general use, it allows for exceptions in extraordinary conditions.
In the event there are proposed exceptions to the Budget Policy guidelines, those exceptions will be
discussed in the applicable staff reports at the time the exception is identified for City Council
consideration.
SECTION 2 — GENERAL OBJECTIVES
2.1 The City will maintain sound financial practices in accordance with State law, and direct its
financial resources toward meeting the City's goals as identified and prioritized by the City
Council.
2.2 The City will develop and maintain financial management programs to assure its long-term
ability to pay the costs necessary to provide the services required by its citizens.
2.3 Department directors have primary responsibility for formulating budget proposals in line with
City Council and City Manager priority direction, and for implementing them once they are
approved.
2.4 The Finance Departmentis responsible for coordinating theoverall preparation and administration
of the City's annual budget and Capital Improvement Program.
2.5 The Finance Department assists department staff in identifying budget problems, formulating
solutions and alternatives, and implementing any necessary corrective actions.
2.6 The City prepares its annual budget for all funds on an estimated cash receipts and
disbursements basis and by a process. The City maintains three primary types of funds:
operating, capital project and other special revenue funds.
2.6.1 Operating funds finance the continuous, traditional service delivery functions of a
municipality. Expenditure authority (appropriations) for each of these funds lapses at the
end of each fiscal year, and a new budget must be adopted by the City Council.
2.6.2 Capital project funds include the General and Enterprise Capital Improvement Program funds.
2.6.3 Special revenue funds are distinguished from operating/budgetary funds by their limited
objectives and/or finite life spans. Examples of special revenue funds are the Proposition A and
C Funds, and Grant Funds.
2.7 The City will maintain a financial records management information system capable of tracking
revenues and expenditures by line item, by source, by fund, by department or any other format
deemed necessary or desirable.
The purpose of the policy is to assist the City in the pursuit of the following important objectives
stated above, while providing full and complete financial disclosure and ensuring compliance with
applicable state and federal laws.
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City of Azusa BudaetPolicy EXHIBIT A
SECTION 3 — BUDGET DEVELOPMENT PROCESS
The Finance Department is responsible for coordinating the overall preparation of the City's budgets. To
accomplish this, staff issues budget instructions and forms, and communicates regularly with department
staff. The guidance provides the overall steps in which more detailed budget instructions and coordinating
efforts are developed.
The following are key procedural steps in the City's budget development process. Note that the process
and dates indicated below provides the best timing, and may be changed for future processes.
3.1 In mid-February, budget development instructions and other materials are provided to the
departments.
3.2 The departments review and update their existing budget, including expenditure and revenue
estimates, narratives, activity details and request for changes in personnel.
3.3 The new budget is prepared by the Finance Department with the various departments' assistance.
3.4 Budget meetings are setup with Departments and the City Manager in April
3.5 In May, a preliminary budget is reviewed by the City manager and a study session is held for the City
Council. This will include projected ending fund balance of the current fiscal year. Amendments to
the preliminary budget can be requested by City Council during the study session.
3.6 In June, usually the first meeting, a final budget is presented to City Council for adoption.
3.7 The final budget is published and distributed during the first quarter of the new budget year.
SECTION 4— REVENUE OBJECTIVES
4.1 The City will strive to diversify and stabilize its revenue base, reducing dependency upon any single
revenue source.
4.2 The City will utilize conservative growth and revenue forecasts.
4.3 The City will maximize the availability of revenue proceeds through responsible collection and
auditing of amounts owed the City.
4.4 The City will seek Federal and State grants and reimbursements for mandated costs whenever
possible.
4.5 The City will investigate potential new revenue sources, particularly those that will not add to the tax
burden of residents or local businesses.
4.6 General Fund revenues shall be pooled and allocated according to Council goals and established
policy. Enterprise funds and other legally restricted sourcesshall be allocated according to their
respective special purpose.
4.7 The City will maintain a user fee and charges schedule that:
4.7.1 Imposes user fees and charges when appropriate to capture the cost for the delivery of
services and goods; and
4.7.2 Imposes levels of cost recovery that support all costs including administrative overhead and
depreciation; and
4.7.3 Is reviewed and updated:
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City of Azusa Budget Policy EXHIBIT A
4.7.3.1 by applying a positive Consumer Price Index -Los Angeles/ Riverside/Orange
County, CA (CPI -U) rate annually; or
4.7.3.2 by applying the recommendation resulting from a cost recovery study immediately;
and
4.7.3.3 must be approved by City Council.
4.8 The City will maintain and further develop methods to track major revenue sources and evaluate
financial trends.
4.9 The City will prepare periodic financial reports of actual revenue received for review by the City
Council.
SECTION 5 — EXPENDITURE AND BUDGETING OBJECTIVES
5.1 Budgeted expenditures shall reflect the Council's goals.
5.2 The operating budget will be prepared annually.
5.3 In the context of the operating budget, operating expenditures and revenues shall be balanced.
5.4 The City will deliver services and goods in a cost effective manner, including utilization of the
services of volunteers and partnerships where it is economically and operationally viable.
5.5 Analyze opportunities to reduce costs and increase efficiency of operations.
5.6 One-time funding will not be used for on-going operations.
5.7 Surplus fund balances (and working capital in enterprise funds) may be used to increase reserves,
fund Capital Improvement Projects, fund capital outlay orbe carried forward to fund one-time
special projecttprogram expenses provided that the reserving requirements are met. (See
ATTACHMENT 1 for General Fund Reserve policy.)
5.8 Operating expenditures, exclusive of debt service, within the General Fund or Enterprise Funds will
not be directly supported by any debt financing or Enterprise Fund interest income.
5.9 The City will prepare periodic financial reports of expenditures for review by the City Council.
SECTION 6 — BUDGETARY CONTROLS
6.1 The Finance Department will maintain a system for monitoring the City's budget performance.
6.1.1 This system will provide the City Council with reports regarding major funds'level resource
collections and department level expenditures. Includedwill be provisions foramending the
budget during the year in order to address unanticipated needs, emergencies, or compliance
requirements of budgetary statutes.
6.1.2 Budget amendments requiring City Council approval will occur through a process coordinated
by the Finance Department. Significant financial issues that need to be addressed between
regular monitoring reports will be provided to Council as warranted. A resolution is required
when an amendment is approved by City Council.
6.2 The City Manager may take necessary actions to keep expenditures from exceeding revenues,
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Nhtf ofAzEXHIBIT T
including but not limited to establishing a budget freeze, postponing hiring of approved positions,
implement layoffs and/orreduced workweek.
6.3 Under the provisions of State law and the City's operating procedures, the operating budget
may be adjusted or amended in two different ways. Adjustment of the budget involves a
reallocation of existing appropriations and does not change the budget outcome.
Amendment of the budget involves an addition to or reduction of existing appropriations.
6.3.1 Under the first method, adjustment, departmental expenditures and
requirements are monitored throughout the year.
6.3.1.a Certain departments may develop the need for additional
expenditure authority to cover unanticipated costs that cannot be
absorbed within the budget, while other departments will not
require their full budget authorizations.
6.3.1.b The Finance Department reviews and analyzes all department and/or
fund budgets to determine what adjustments are necessary and
whether the adjustments can be made within existing appropriation
limits. These changes are then reviewed with the affected
department and/or fund managers.
6.3.1.c When an adjustment is needed, Finance staff will look first to savings
within the department; and then transfers between departments. No
City Council action is needed as State law allows budget transfer
adjustments to be done administratively.
6.3.2 Amending the City's budget occurs whenever the requested changes from
department and/or fund managers will cause the existing appropriation
level for the fund tochange. This situation generally occurs when the City
Manager and/or the City Council authorize additional appropriation.
6.4 The Finance Department will review all agenda items submitted for City Council action that contain
budget impacts. The objective of these reviews will be to ensure compliance with the budget and
disclosure of all fiscal issues to the Council. This information will be presented in the fiscal impact section
of each staff report.
6.5 Semi-annually, there will be comprehensive review of the operations to date in comparison to
the existing budget. Projections of revenues and expenditures through the end of the fiscal
year will be prepared and reviewed by the City Manager with a report submitted to the City
Council by their first meeting in March. This review will identify issues that will necessitate
remedial actions such as budget amendments and will be presented to City Council for
approval.
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