HomeMy WebLinkAbout(1995, 02/27) - F-3 - AmendedBUDGET ADOPTION AND ADMINISTRATION
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PURPOSE:
To establish the policy for the preparation, adoption, and administration of the
City's Annual Budget.
POLICY:
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. Throughout
this process, the Finance Committee will be involved as necessary to provide
broad policy guidance. The role of the full City Council is detailed more
specifically below.
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 Finance Department shall prepare
preliminary fund balance estimates for the current year and preliminary
revenues estimates for the next fiscal year. In January of each year, the Finance
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 Finance Director and approved by the City Manager.
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After submission of revenue and appropriation requests by each department, the
Finance Department shall summarize the requests for review by the City
Manager and department. After review by the City Manager and department,
the Finance 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 check list.
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.
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.
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.)
All budget amendments exceeding $30,000 shall be referred to the City Council
Finance Committee for review and recommendation before acted upon by the
City Council, except (a) projects that have received prior City Council approval;
b) donations on projects from sources other than City funds; (c) emergencies in
which time does not permit prior Council Finance Committee review.
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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 Finance 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 and Benefits, Maintenance and Operations, and Capital
Outlay are the City's three Classifications.).
Realignments. 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 Department function and the employee who
accomplishes it are replaced by a slightly different function assigned to the
Police Department, the City Manger may authorize the transfer of appropriate
salary and benefit funds to support this function.
Reprogramming. 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.
Capital 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 exceeded. Change orders
exceeding those thresholds may be approved by the City Manager as follows:
Total project spending may not exceed 125% of the original contract
award amount without City Council approval.
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.
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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 Finance Director.
Reserves. Funds from unappropriated contingency reserves may be transferred
to active Classification accounts only by City Council Budget Amendment.
City Manager and Finance Director Responsibilities. The Finance 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.
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): •
Capital Projects in excess of $30,000.
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 and will be referred to the Council Finance Committee for
recommendation.
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Fiscal Year End Closing - (Note: This policy was rescinded in error in 1991 and
should be rewritten and reinstated.) The Finance 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.
Formerly F -10, F -11, F -12, F-21
Adopted -January 24, 1994
Amended - February 27, 1995
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