HomeMy WebLinkAbout(2001, 05/08) - F-3 - AmendedF -3
BUDGET ADOPTION AND ADMINISTRATION
PURPOSE
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 into four classifications. These are Salaries and
Benefits, Maintenance and Operations, Other Charges, 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 four 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, Other Charges, and Capital
Outlay. The section dealing with Capital Projects, which are identified by Fund
and purpose, is located after the Division Budgets.
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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. In accordance with City Council Policy F -2
Reserves/ Designations of Fund Balance), the status and possible changes in
Reserve Accounts shall be addressed as part of this process.
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After submission of revenue and appropriation requests by each department, the
Administrative Services Department shall summarize the requests for review by
the City Manager and Department Heads. After review by the City Manager
and Department Heads, 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 perrrut a roll call vote by the City Council
on each item during a 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 authorize only those
expenditures that are 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 $2,000 in any Budget Activity or Capital
Project. (This must be specifically included in each year's Budget
Resolution to remain valid.)
2. 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
quarterly basis by way of a Council Meeting agenda information item.
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This provision must be specifically included in each year's Budget
Resolution to remain valid.)
3. 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
and Benefits, Maintenance and Operations, Other Charges, and Capital
Outlay are the City's four Classifications.)
4. 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 Manager may authorize the
transfer of appropriate funds to support this function.
5. Reprogramming. Any reprogramming of funds among the three
Classifications (Salaries and Benefits, Maintenance and Operations, and
Capital Outlay) within a given fund requires the City Manager's approval.
Any budget revision that changes the total amount budgeted for any fund
other than the minor provisions contained in paragraphs B.1. and B.6.b.)
must be approved by the City Council.
6. Capital Projects. The Department Head having primary responsibility for
a Capital Project (usually the Public Works Director) is authorized to
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 percent of the original contract award amount; and so
long as the original amount appropriated for the Project by City Council is
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not exceeded. Change orders exceeding those thresholds may be
approved by the City Manager as follows:
a. Total project spending may not exceed 125 percent 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 percent of the original
amount appropriated by Council.
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 recorded in the Reserve for Capital Improvements or •
another appropriate Reserve Account by the Administrative Services
Director at fiscal year end (see also paragraph C -2 below).
7. Reserves. Funds from unappropriated contingency reserves may be
transferred to active Classification accounts only by City Council Budget
Amendment.
C. Additional City Council, 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 to 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.
1. 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):
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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.
2. At fiscal year end, the Administrative Services Director is authorized to
realign, reprogram, and /or transfer money among accounts within each
Fund in order 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. Any net shortage within a Fund
will be recorded as a decrease in Fund Balance and reported to the City
Council. Any net excess will be recorded as an increase to one or more
appropriate Reserve Accounts as recommended by the Administrative
Services Director and approved by the City Manager. (Information
regarding appropriation of Funds from the Reserve Accounts is contained
in City Council Policy F -2.)
Adopted - January 24,1994
Amended - February 27,1995
Corrected - February 26,1996
Amended - May 13,1996
Amended - May 26,1998
Amended - August 8, 2000
Amended - May 8, 2001
Formerly F -10, F -11, F -12, and F -21
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