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HomeMy WebLinkAbout12 - Procedure for Accepting DonationsCouncil Agenda Item 12 CITY OF NEWPORT BEACH Administrative Services Department Accounting —Fiscal Services —Revenue —Management Information Services —Resource Management August 8, 2000 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL From: Dennis Danner, Administrative Services Director /L/ SUBJ: PROCEDURE FOR ACCEPTING DONATIONS Background. Each year, the City is fortunate to receive donations for a number of purposes. In the past, each of these donations has been handled as an individual agenda item requiring specific City Council approval action. Accordingly, staff reports and related administrative handling matters have been part of the process. One result of this has been a corresponding (but normally brief) delay in putting the funds to work as they were intended. Purpose. The purpose of this proposed procedural change is to simplify and expedite the donations receipt and posting process for all but very large donations. Attached is a draft revision to the City Council policy on Budget Adoption and Administration. The added language, which is contained in paragraph 3 of page 3 of the attachment (underlined) would authorize the City Manager to accept donations of up to $5000 on behalf of the City and appropriate them for the purpose intended. The City Council would then be notified of all such actions on a quarterly basis. Larger donations would still be handled specifically by the City Council. Recommended Action. Approve the new procedure by adopting the proposed amendment to Policy F -3. BUDGET ADOPTION AND ADMINISTRATION PURPOSE F -3 To establish the policy for the preparation, adoption, and administration of the City's Annual Budget. POLICY A. Organization and Development of the Annual Budget. Each year the City shall prepare and adopt, by formal Resolution, an annual budget as required by the City's Charter and as provided for in the City's Budget Instructions. The City programs expenditures by three classifications. These are Salaries and Benefits, Maintenance and Operations, and Capital Expenditures. Capital Expenditures are subdivided into Capital Outlay, which is generally used for items of operating equipment or other purchases in excess of $500.00, and Capital Projects, which generally deal with Public Works related improvements for a distinct and identifiable purpose and function. Budgeted Expenditures for all three classifications are aligned in the Budget Document by Department Budget Units, which usually coincide with Operating Divisions within the City's organizational structure; and, separately, by Capital Projects. Therefore within each Division Budget, there will be sections for Salaries and Benefits, Maintenance and Operations, and Capital Outlay. The section dealing with Capital Projects, which are identified by Fund and purpose, is located after the Division Budgets. During December of each year, the Administrative Services Department shall prepare preliminary fund balance estimates for the current year and preliminary revenue estimates for the next fiscal year. In January of each year, the Administrative Services Department shall prepare a budget calendar and issue budget instructions and expenditure detail to each department for use in preparation of the next year's City budget. Included in these instructions will be budget guidelines and appropriation limits for each department. These guidelines will be developed by the Administrative Services Director and approved by the City Manager. After submission of revenue and appropriation requests by each department, the Administrative Services Department shall summarize the requests for review by 1 F -3 the City Manager and department. After review by the City Manager and department, the Administrative Services Department shall prepare the City's proposed budget for the next fiscal year and shall submit said proposed budget to the City Council as required by the City's Charter and the Budget Instructions. Thereafter, the City Council shall hold as many budget study sessions as it deems necessary. Council budget study sessions shall be recorded. All proposed Council changes in the City Manager's proposed budget shall be added to a budget checklist. Subsequent to Council review and prior to its final adoption, the City Manager shall provide each Council Member with an itemized list of all proposed changes to permit a roll call vote by the City Council on each item during the budget hearing at the regular Council meeting. The City Council shall hold a budget hearing and shall adopt a budget on or before June 30 as required by the City Charter. B. Administration of the Annual Budget. During the budget year, Department Heads and their designated representatives may only authorize expenditures based on appropriations previously approved by City Council action, and only from accounts under their organizational responsibility. In addition, budget expenditures may only be authorized in the year appropriated. Any unexpended appropriations, except valid encumbrances, expire at fiscal year end unless specifically reappropriated by the City Council for expenditure during the new fiscal year. Department Heads are responsible for not authorizing expenditures above budget appropriations in any given area, without additional appropriation or transfer as specified below. 1. New Appropriations. During the Budget Year, the City Council may appropriate additional funds for special purposes by a City Council Budget Amendment. The City Manager has authority to approve requests for budget increases not to exceed $1,000 in any Budget Activity or Capital Project. (This must be specifically included in each year's Budget Resolution to remain valid.) ' 2. Transfers. During the fiscal year, actual expenditures may exceed budget appropriations for specific expenditure line items within departmental budgets. If a total departmental budget, within a specific Classification, is not exceeded, the Administrative Services Director has the authority to transfer funds within that Classification and department, to make the most efficient use of funds appropriated by the City Council. (Salaries N F -3 and Benefits, Maintenance and Operations, and Capital Outlay are the City's three Classifications.) 3. Donations. The City Manager may accept donations or grants of up to $5,000 on behalf of the City and appropriate the funds for the purpose intended. The City Council will be formally notified of such actions on a Resolution to remain valid.) 4. Reali &=ents. Further, funds may be realigned between one Department Budget Activity and another, within the same Classification, with City Manager approval. For example, if a Fire & Marine Department function and the employee who accomplishes it are replaced by a slightly different function assigned to the Police Department, the City Manager may authorize the transfer of appropriate salary and benefit funds to support this function. 5. Reprogra inning. Any reprogramming of funds among the three Classifications (Salaries and Benefits, Maintenance and Operations, and Capital Outlay) requires the City Manager's approval by Budget Amendment. The City Manager may authorize up to $30,000 into or out of any Classification within any department budget activity during the budget year. Any reprogramming of funds in excess of $30,000 requires City Council approval. 6. Coital Projects. The Department Head having primary responsibility for a Project, usually the Public Works Director, is authorized to actually encumber and approve subsequent expenditure of City funds for Capital Projects. However, contracts in excess of $30,000 require specific City Council authorization at the time of contract award. In addition, any contracts not of format and wording already approved by the City Attorney require specific City Attorney review and approval prior to contract award. Once a contract has been awarded, change orders may be approved by the Public Works Director, or other Department Head having responsibility for the Project, so long as the net total amount committed to the Project remains below 110.% of the original contract award amount; and so long as the original amount appropriated for the Project by City Council is not 3 F -3 exceeded. Change orders exceeding those thresholds may be approved by the City Manager as follows: a. Total project spending may not exceed 125% of the original contract award amount without City Council approval. b. The total amount authorized for a project may be increased by transferring funds from one Project to another, so long as the new total does not exceed 110% of the original amount appropriated by Council. (This must be specifically included in each year's Budget Resolution to remain valid.) In all instances, notification of any changes to capital project contract amount or budget authority must be communicated to the Administrative Services Director. All unexpended and unencumbered capital projects will be canceled on June 30 of each fiscal year. The appropriation balance of these canceled projects will be placed in a "Reserve for Capital Projects." All such canceled projects must compete with other projects for funding priority in the new fiscal year. The balance in the Reserve for Capital Projects will be utilized to fund new year capital projects at the level deemed appropriate by the City Council. 7. Reserves. Funds from unappropriated contingency reserves may be transferred to active Classification accounts only by City Council Budget Amendment. City Manager and Administrative Services Director Responsibilities. The Administrative Services Director is responsible for checking purchase requests against availability of funds and authorization as per the approved Budget. The City Manager is responsible for approving expenditures which do not conform with the approved Budget, but which fall within the exceptions noted in this policy statement. It is the responsibility of the City Manager to administer the City's budget within the framework of policy and appropriation as approved by the City Council. 4 F -3 Special City Council Expenditure Approval. Once the final Budget has been approved by the City Council, specific City Council approval to make expenditures consistent with the Budget will not be required, with two exceptions (see also Purchasing and Accounts Payable Procedures): a. Capital Projects in excess of $30,000. b. Consultant Contracts in excess of $30,000. All other budget administration actions, including the routine filling of vacancies in staff positions authorized within the Budget, will not require further City Council approval. However, new positions and other new expenditures do require City Council approval, and the City Council and City Manager reserve the right to impose any special fiscal control measures, including a personnel hiring freeze, and other spending controls, whenever circumstances warrant. Since the annual Budget is approved by formal Resolution, a request by a City Council Member for review of a portion or portions of the Budget, with a view toward changing amounts appropriated or the purposes for which they were appropriated, requires a majority vote of the City Council. C. Fiscal Year End Closin¢ (Note: This policy was rescinded in error in 1991 and should be rewritten and reinstated.). The Administrative Services Director has the authority to close the books of accounts of the City of Newport Beach in accordance with generally accepted governmental accounting principles as established by the Government Accounting Standards Board, Government Finance Officers Association, and other appropriate accounting or auditing pronouncements. Adopted - January 24, 1994 Amended - February 27,1995 Corrected - February 26, 1996 Amended - May 13,1996 Amended - May 26,1998 Amended - August 2000 Formerly F -10, F -11, F -12, and F -21 5