Post on 15-Oct-2020
TML Workshop
George W. Bush
A Good Budget…… Reflects the Goals & Objectives of the
Organization
Is a Tool for Planning and Management
Is Monitored Routinely
Reflects Organizational Structure and Control
GFOA Best Practices Many topics in the budgeting area
Budgeting Techniques
Budget Process
Capital Budgeting
Forecasting & Analysis
Long Term Strategy & Planning
Budget Guidelines
Budget Document
GFOA Awards Program Distinguished Budget Presentation Award
Criteria defined & explained
Reviewed by financial professionals
Feedback from reviewers on areas to improve
Criteria focused on document presentation Introduction & Overview
Financial Structure, Policy & Process
Financial Summaries
Capital & Debt
Departmental Information
Types of Budgets Operations Budget
Zero-Based Budget
Lump Sum Budget
Line Item Budget
Program Budget
Results Oriented / Performance Budget
Capital Budget
Multi Year Capital Planning
Annual Appropriation
Operating Budget Structurally Balanced
Appropriated for One Fiscal Year
Should Include: Overall Summary of Issues, Challenges & Opportunities
Summary and Explanation of Revenues and Expenditures by Fund
Defined Programs and Objectives
Staffing Levels
Performance Measures
Appropriations Typically Lapse at Fiscal Year End
Capital Budget Capital projects are different from programs adopted in the
operating budget, often representing very large financial obligations that may span two or more fiscal years
Capital budgets should include the following: Descriptions of the scope of each project Estimated costs of the project based on recent and accurate
sources of information Schedule for completion of each project
Phasing: Engineering, Design, Construction
Identified funding sources for all phases of the project Current Year Appropriation Future Year Funding Sources
Any impact on the operating budget
Budget Documents Annual Operating Budget
Required by State Statute and City Charter Allocates Resources to Achieve the City’s Vision, Mission &
Goals Based on Council Priorities Serves as a Policy Document
Capital Budget Plan for Acquisition or Construction of Major Capital Items City Charter Requires Five Year CIP Projects and Scope Identified Potential Funding Sources Identified 1st year Appropriated in Operating Budget Other Years are for Planning Only
Operating Budget Components Transmittal Letter
Summary of the key issues and factors driving the proposed budget Should be from official filing budget
Three Year Historical Summary (Total Budget) Last Year’s Actual This Year’s Budget & Projected FYE Proposed Budget
Proposed Budget by Fund Written Summary Revenue Schedule Proposed Expenditures by Department
Appendix Supplemental Information & Schedules
What should be in the Appendix Supplemental information that may be helpful for
readers or for future reference
Financial Policies
Compensation Plans
Ordinances
Glossary of Terms
Components of a Budget Revenues
Identify & estimate revenues by fund to support the operating costs by fund Property Tax Sales Tax Charges for Services
Expenses/ Expenditures Total funds to be spent during the year
By Fund By Department/ Program
Fund Balance/ Cash Reserves What are the expected ending balances? How do they compare to policy requirements?
Funds and Fund Balance City finances are organized on the basis of Funds –
based on function and purpose
Each Fund is a separate, self-contained set of accounts, assets, liabilities, revenues and expenditures
Smaller cities can operate with only one fund
New Braunfels has 43 funds – 199 million dollar budget
Each fund operates as a separate entity
Key Characteristics of the Budget Process
Incorporates a long-term perspective
Establishes linkages to broad organizational goals
Focuses budget decisions on results and outcomes
Involves and promotes effective communication with stakeholders
Provides incentives to government management and employees
Budget Cycle Forecasting
Analysis
Preparation
Presentation/ Formal Filing
Workshops
Public Hearing
Formal Adoption
Implementation
Monitor & Adjust if Necessary
Financial Policies Key to Budget Policies provide guidance to staff and council in
managing the city’s finances
Provides for consistent financial management practices
Bond rating agencies expect to see formal adopted policies when assessing a city’s financial strengths
Financial Policies- Areas Covered Accounting, Auditing & Financial Reporting
Financial Consultants
Budget & LR Financial Planning
Revenues & Other Resources
Expenditures & Services
Fund Balance/Ending Balances
Capital Expenditures & Improvements
Debt
Cash Management/ Investments
Grants
Policy: Budget Management Balanced Budget
Recurring Revenues > Recurring Expenditures
One Time Funds only used for One Time Expenditures
Tools to Manage Growth in Tax Bills Property Revaluation
Tax Rate Adjustments
Changes to the Homestead Exemption
Sales Tax Elastic Revenue Source
Self-imposed cap on operating budget dependence
Set aside 10% for pay-as-you-go CIP
Policy: Budget Management Pay As You Go CIP Funding
Targeted Funding Amount
Goal is to adequately fund ongoing rehabilitation
Conservative Revenue Estimates Sales Tax
Utility Revenues
Employee Compensation
Personnel cost is 70-75% of operating budget Council Adopted Compensation Philosophy
Third year in Market Study Implementation
Budget Management Budget Amendments
Operating Budget
Increase (or Decrease) to the overall appropriation at the department/division level
Appropriation expires at FY end
Capital Projects
Capital Projects are Budgeted at the Project Level
Appropriation does not expire at FY end
Policy: Operating Deficits Steps to take if operating deficit is anticipated by FYE Defines corrective actions to be taken Implement as early as possible Some options:
Reduce PAYG CIP Deferral of capital purchases Expenditure reductions Hiring freezes Freeze merit increases Use of fund balance Increase fees Lay-off employees
Phases of the Budget Cycle Budget Preparation
Revenue Estimates
Establish Budget Priorities
Develop Proposed Budget
File Proposed Budget Review Proposed Budget
Budget Approval
Implement & Monitor Budget Periodic Reporting
Corrective Action- If Necessary
Follow Up- Annual Audit
Budget Management Budget management is a continual process
If we aren’t preparing a budget we are monitoring and reporting on the current budget Monthly reporting on finances
Summarize key revenues and monitor expenditures
Early identification of potential issues
Important to assess budget proposal on a long range forecast Decisions made this year impact every future year
Budget needs to be sustainable
Monitoring Spending Budgetary control at the line item level
Detail of planned spending at the line item level Budget transfers between line items
Encumbrance of funds through Purchase Orders ensures that funds are available when needed
Prompt payment of invoices Records Expenditure on the General Ledger Releases Encumbrance on Purchase Order
Most departmental spending should be within a percentage of the fiscal year elapsed Exceptions due to seasonality
Parks & Recreation River Activities
Departmental Accountability Allow flexibility for changes during the year
Establish authority for Line item transfers (Manager)
Transfers between programs (Director & ACM)
Transfers between departments (City Manager)
Require appropriate detail in budget submission
Establish service level expectations
Monitor & report on performance
Directors held accountable for budget Budget management is a factor in their annual performance
evaluation
Monthly Financial Reports New Braunfels produces monthly financial reports
Monthly reports include income statements for major operating funds and investment report
Monitor key revenue streams Sales Tax Property Tax Building Permit Activity Fines & Forfeitures Utility Revenues Airport Fuel Sales
Quarterly reports include all funds are presented to Council
Review key items with City Manager Copy to Mayor & Council
Budget Amendments Know your City’s requirements
Amendment- Increase to the overall appropriation at the fund level
Council Approve individual actions as needed
Formally Adopted by Ordinance
Capital Projects
Budget approved at the Project Level
Increase to project budget requires a formal amendment
New Braunfels Fund Balance Policy Maintain an operating reserve for use in the event of unanticipated,
extraordinary expenditures and/or the loss of a major revenue source. General Fund - a minimum of twenty-five (25) percent of the General
Fund budgeted expenditures for the current fiscal year. Special Revenue Funds - ten (10) percent of the budgeted annual
expenditures. Enterprise Funds - (25) percent of the budgeted annual expenditures.
And can only be appropriated by an affirmative vote of five of the seven Council members.
Capital project funds’ reserves - established by project, not by fund and will, in general, reflect three (3) percent of the total project costs.
Debt Service Funds - not less than ten percent of the principal and interest payments on outstanding debt for each fiscal year and can only be appropriated by an affirmative vote of five of the seven Council members.
Year End Estimates/Projections Part of the budget process
Re-estimate revenues
Departments provide projections, identify savings or potential overage
Estimate ending fund balances
Gives a good starting point for next year
Allows corrective action to be taken if necessary
Formally adopted as final budget amendment of the year in September Presented in budget document
Explanation for projection vs original budget
Technical Resources GFOA – www.gfoa.org
Best Practices
Elected Officials Guide Series
TML Series – www.tml.org
GFOAT - www.gfoat.org
Finance Forum
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QUESTIONS?