CITY OF IONE
FINANCE COMMITTEE MEETING
THURSDAY, JULY 25, 2024
6:00 PM
Diane Wratten, Vice Mayor
Dominic Atlan, Councilmember
1 E. Main Street, lone, CA 95640
The Agenda is also available on City's Website: www.ione-ca.com A. CALL TO ORDER
B. PLEDGE OF ALLEGIANCE
ROLL CALL
PUBLIC COMMENT: EACH SPEAKER IS LIMITED TO 4
MINUTES
NOTE: This is the time for members of the public who wish to be heard on matters that do not appear on the Agenda. Persons may address the Finance Committee at this time on any subject within the jurisdiction of the Finance Committee. Is there any person in the audience who wishes to address the Committee at this time?
E. DISCUSSTION ITEMS:
1. Loan for Captial Improvements to WWTP/Tertiary
PRESENTATIONS: None
G. REGULAR AGENDA:
1. Review and Discuss Interfund Loan repayments for 2024-25
2. Review the City of lone's Purchase and Bidding Ordinance and discuss a Purchase and Bidding Policy
1. ADJOURNMENT
ADA COMPLIANCE STATEMENT
In compliance with the American with Disabilities Act, if you need special assistance to participate in this meeting, please contact City Clerk Janice Traverso at (209) 274-2412, ext. 102. Notification 24 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting.
OF TONE
CITY OF IONE
IONE, CA 95640
IFORNIN
Agenda Item #G1
DATE: JULY 25, 2025
TO: FINANCE COMMITTEE
FROM: JODI STENECK, FINANCE MANAGER
SUBJECT: INTERFUND LOAN REPAYMENTS FOR 2024-25
RECOMMENDED ACTION:
Provide recommendation to bring to the City Council regarding interfund loan repayments for 2024-25.
FISCAL IMPACT:
To be determined
BACKGROUND:
The City of lone has provided interfund loans throughout the years and for the last few years have been paying the minimum on each loan. Attached is the balance and payments for the last 2 fiscal year.
DISCUSSION:
Staff is recommending paying above the minimum, where funds are available, to escalate the payoff.
ATTACHMENTS:
Interfund Loans Recap to 6.30.2024
Fund balances as of 6-2024
INTERFUND LOANS
Advances To Other Funds Advances From Other Funds Balance Balance Balance (Fund paying out advance) Fund (Fund receiving advance) Fund 6/30/2022 Payments 6/30/2023 Payments 6/30/2024 General Fund 1111 Impact Fees-General Plan 9515 359.296 ($15,704) $ 343,592 ($15,704) $ 327,888 General Fund 1111 Impact Fees - Fire 9511 275,416 ($12,037) $ 263,379 ($12,037) $ 251,342 Sewer-Capital Projects 3121 General Fund 1111 234,549 ($10,251) $ ($10,251) $ 214,047 Local Transportation Comm 4211 General Fund 122,635 ($5,360) $ 117,275 ($5,360) $ 111,915 Local Transportation Comm 4211 General Fund 380,510 ($16,629) $ 363,881 ($16,629) $ 347,252 Gas Tax Fund 2111 General Fund 187,714 ($8,307) $ 179,407 ($8,307) $ 171,100 Gas Tax Fund 2111 Impact Fees - General Plan 41,199 ($1,801) $ 39,398 ($1,801) $ 37,597 ARSA 8231 General Fund 1111 60,510 ($2,645) $ 57,865 ($2,645) $ 55,220 Traffic Mitigation Fee-Local 9518 General Fund 1111 172,462 ($7,538) $ 164,924 ($7,538) s 157,386 Measure M 9613 General Fund 1111 325,303 ($14,217) $ 311,086 ($14,217) $ 52390568
$2.191.296 $2,065, 105 ($94,489)
Account Description Amount
1111-00-1000 GENERAL FUND 1,898,580.77
1222-00-1000 GENERAL FUND OPERATING RESERVE 187,269.00
1333-00-1000 GENERAL FUND CAPITAL RESERVE 262,177.00
2111-00-1000 GAS TAX 1,325,023.91
3111-00-1000 WWTP - OPERATION & MAINT. 1,011,574.18
3121-00-1000 SEWER CIP 2,427,382.21
3131-00-1000 TERTIARY PLANT -1,047,816.98
4211-00-1000 TRANSP. COMMISION LOCAL 163,841.33
5117-00-1000 FEMA - SAFER GRANT (FIRE) 48,924.61
5118-00-1000 CALIFORNIA SURCHARGES 10,131.05
5119-00-1000 COVID RELIEF 1,206,518.60
7112-00-1000 REHAB HOUSING TRUST GRANT 55,070.67
7113-00-1000 LOW INCOME HOUSING GRANT 85,615.20
7114-00-1000 97 HOME 0260 GRANT 778.51
7115-00-1000 01 HOME 5180 GRANT 161.60
7116-00-1000 FIRST TIME HOMEBUYERS GRANT 323,581.05
7117-00-1000 06 HOME 2370 GRANT 101,222.42
7118-00-1000 05 STBG 1381 GRANT 63,964.56
7119-00-1000 08 HOME 4711 GRANT 557,954.87
7120-00-1000 10 HOME 6852 GRANT 2,932.23
7121-00-1000 SELF HELP HOUSING GRANT 152,762.61
8211-00-1000 CONSERVATION MAINT. FIRE BREAK 16,849.21
8221-00-1000 LIGHTING & LANDSCAPE DIST 1 C -1,393.47
8231-00-1000 ARSA -10,000.35
9111-00-1000 CFD - COMMUNITY FACILITIES DIST -296,319.05 9511-00-1000 IMPACT FEES - FIRE DEPT -695,837.03
9513-00-1000 IMPACT FEES - PD 1,062,747.52
9514-00-1000 IMPACT FEES - PARKS 1,166,895.83
9515-00-1000 IMPACT FEES- GENERAL PLAN -237,153.60
9516-00-1000 IMPACT FEES - GENERAL ADMIN 253,383.08
9517-00-1000 CITY DRAINAGE CIP 126,972.45
9518-00-1000 IMPACT FEES - LOCAL TRAFFIC MITIG. 1,763,012.58 9519-00-1000 IMPACT FEES - REGIONAL TRAFFIC MIT 142,477.96 9520-00-1000 RAILROAD DEPOT PARK 24,615.92
9612-00-1000 COPS 326,584.18
9613-00-1000 MEASURE M - FIRE 983,963.61
9614-00-1000 PUBLIC SAFETY - PROP 172 2,761.91
9670-00-1000 RESTRICTED - POLICE 534,830.99
9675-00-1000 RESTRICTED - FIRE 722,789.45
9721-00-1000 ASSET SEIZURE 8,563.55
9731-00-1000 AFFORDABLE HOUSING DEV. FEE 53,715.10
Total 14,787,109.24
OF TONE
CITY OF IONE
IONE, CA 95640
FOR
Agenda Item #G2
DATE: JULY 25, 2025
TO: FINANCE COMMITTEE
FROM: JODI STENECK, FINANCE MANAGER
SUBJECT: REVIEW THE CITY OF IONE'S PURCHASE AND BIDDING
ORDINANCE AND FINANCIAL POLICIES AND PROCEDURES
HANDBOOK
RECOMMENDED ACTION:
Review both the City of lone's Purchase and Bidding ordinance and the Financial Polices and Procedure Handbook.
FISCAL IMPACT:
N/A
BACKGROUND:
The City of lone last updated the Purchase and Bidding Ordinance in November 2019 and the Financial Policies and Procedure Handbook was created in June 2015 with an amendment regarding Debt Issuance and Management Policy in May 2018.
DISCUSSION:
At the last City Council meeting, staff was directed to review the Purchase and Bidding ordinance and policies to determine if any changes were needed. It was also suggested that stafi insure that they adhere to the ordinance and policies
ATTACHMENTS:
City of lone's Purchase and Bidding Ordinance
Amendment to the Financial Policies and Procedures Handbook - May 2018 City of lone Financial Policies and Procedures Handbook - June 2015 7/18/24, 12:15 PM lone, CA Code of Ordinances
Chapter 2.44 - PURCHASING AND BIDDING POLICY
Sections:
Footnotes:
Editor's nora-Ord. No. 05, adopted Novamber , 2019, amanded Chapter 2,4 in is entirely 1o read as heroin sof out. Former Chapler 24. 58
2.44.010—2.44.120, pertained to the purchasing department, and derived from Ord. No. 133, 1968; Ord. No. 436, adopted September 21, 2010 and Ord. No. 462, adopted March 19, 2013.
2.44.010 - Established.
The City of lone hereby establishes a purchasing and bidding policy under the direction of the city manager and finance office director.
(Ord. No. 505, 11-16-2019)
2.44.020 - Intent.
The purchase and bidding policy provides a fair and equitable process for all interested and qualified vendors in providing a bid to the city. The city will make an award in a manner consistent with the city purchase and bidding policy. Any exceptions to this policy must be approved by the city council. The city council may, by majority vote and in accordance with its fiduciary responsibilities, approve expenditures of any amount, for any length of term, not otherwise inconsistent with any applicable law.
(Ord. No. 505. 11-16-2019)
2.44.030, 2.44.040 - Reserved.
2.44.050 - Duties.
The duties of the city manager and/or finance office director, or their designee, shall be to make and provide all purchases of materials and services for the city:
A. As are required and requested by the various departments and activities of the city which are usual, normal and necessary for the achievement of the end objective of said departments and are within and contemplated by the regularly adopted budget of the city for said department or departments; and B. As requested by various departments and as specifically authorized by the city council, whether included within or without the then valid budget for said city.
(Ord, No. 505, 11-16-2019)
2.44.060 - Rules, regulations and definitions.
The city purchasing department will set up and submit to the city council, for its approval, and within 60 days after the appointment by the city council of the purchasing agent, proposed rules and regulations with respect to the policy of purchasing, the manner of purchasing and the coordination of such purchases with budgetary provisions and limitations, and, about:blank 1/21
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when such rules and regulations have been adopted by the city council, then, and continuing from the date of said adoption until otherwise modified, such rules and regulations shall afford direction to the city purchasing department and to the city purchasing agent in the exercise of the duties, responsibilities and authority granted by this chapter.
Definitions:
"City manager" means the appointed city manager or a designee authorized to act on behalf of the city manager. "Department director" means the city employee or consultant authorized to act as the head of a city department or authorized designee acting on behalf of the director, regardless of title. (Ord. No. 505, 11-16-2019)
2.44.070 - Chapter not to affect state law.
No provision in this chapter abrogates or alters the basic legal requirements for competitive bidding for materials and services where otherwise required by state law.
(Ord. No. 505. 11-16-2019)
2.44.080 - Local preference program.
A. Definition. "Local business" means a vendor, contractor, or consultant who has paid its local business tax to the City of lone at least 24 months prior to bid or proposal opening date; does business in the City of lone by providing goods, services, or construction; and maintains a physical business address located within the 95640 ZIP Code and performs business within such geographical limit on a day-to-day basis. Post office boxes shall not be used for the purpose of establishing said physical address. However, should there be a lack of bids by a local business, preference will be next given to bidders within Amador County and then to all others in that order.
B. Local Preference in Purchasing. In bidding for, or letting contracts for procurement of, supplies, materials, and equipment, as described in the purchasing policies of the city, the city council, or other authorized purchasing authority, may give a preference to local businesses in making such purchase or awarding contracts in an amount not to exceed five percent of the local business' total bid price.
The total bid price shall include not only the base bid price, but also all alterations to the base bid price resulting from alternatives which were both part of the bid and actually purchased or awarded by the city council or other appropriate authority.
C. Local Preference for Services. In awarding contracts for services, including consultant services, preference to local businesses shall be given whenever practicable, and, the contractor or consultant will also, to the extent legally permitted, solicit applications for employment and proposals for subcontractors and sub-consultants for work associated with the proposed contract from local residents and firms as opportunities occur and hire qualified local residents and firms whenever feasible.
D. Local Preference in Public Works Contracts (Sub-Contracting).
1. A contractor shall use good faith efforts to sub-contract the supply of materials and equipment to local business enterprises and to sub-contract services to businesses whose work force resides within the 95640 ZIP Code.
2. A "good faith" effort, includes but is not limited to, the following or similar actions to recruit and maintain a work force that resides within the 95640 ZIP Code.
a. Contact local recruitment sources to identify qualified individuals. b. Advertise in local trade papers and local newspapers of general circulation in the 95640 ZIP Code area. about:blank 2/21
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c. If portions of the work are performed by subcontractors, identify qualified subcontractors whose workforce includes persons living within the 95640 ZIP Code or demonstrate that no local subcontractors are qualified to perform the work or supply the materials or equipment. d. Develop a written plan to recruit a work force within the 95640 ZIP Code. e. Establish a goal for local hiring that is based upon the types of skills needed to complete the project with the city.
3. Any notice inviting bids that may require the use of subcontractors shall include notification of this section.
4. Every bidder must complete and sign under penalty of perjury a certification of good-faith effort to hire a work force that resides within the 95640 ZIP Code or within Amador County if not within the City of lone, on the form provided in the City of lone's bid package, and submit said certification with the sealed bid no later than the date and time of the bid opening. Bidder shall attach to the certificate documentary evidence supporting bidder's promise to meet or make a good-faith effort to meet the local hiring goal. The purchasing agent may reject as non-responsive the bid of any contractor proposing to use subcontractors that fails to comply with the requirements of this subsection.
5. If the city finds that a contractor to whom a city contract for public works has been awarded, or a subcontractor listed by contractor on a public works project, has failed to comply with the good-faith requirement during the performance of the contract, the city may disqualify the contractor and/or subcontractors for bidding or being listed in any bid on any city contract for public works for a period of one year from the date of the city's disqualification. The city clerk shall keep a current list of all disqualified contractors and subcontractors on file.
E. Exceptions to Local Business Preference Policy. The preference set forth in this section shall not apply to the following purchases or contracts:
1. Goods or services provided under a cooperative purchasing agreement.
2. Purchases or contracts which are funded in whole or in part by a governmental entity, other than the city, and the laws, regulations, or policies governing such funding prohibit application of that preference.
3. Purchases made or contracts let under emergency or noncompetitive situations.
4. Application of the local business preference to a particular purchase, contract, or category of contracts for which the city council is the awarding authority may be waived at the city council's discretion. (Ord. No. 505, 11-16-2019)
2.44.090 - Small business preference.
A. In the bidding of a construction contract, procurement of goods, or delivery of services, the purchasing agent shall give a preference to a small business in an amount not to exceed five percent of the small business total price. The total bid price shall include not only the base bid price, but also all alterations to the base bid price resulting from alternatives which were both part of the bid and actually purchased or awarded by the city council or other appropriate authority. This preference shall not be in addition to any preference granted under Section 2.44.080(B).
B. As used in this section, "small business" means a business entity that has for at least the 24 months prior to submittal of its bid: (i) held a current business license issued by the city, and (ii) maintains its principal business office within the 95640 ZIP Code, and that either employs fewer than 100 employees or has average annual gross receipts of $10,000,000.00 or less over the previous three years.
C. No preference shall be given pursuant to this section where legal constraints on the expenditure of funds prohibit the giving of such contract.
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(Ord. No. 505, 11-16-2019)
2.44.100 - Verification of preference eligibility.
A. Any vendor or consultant claiming to be a local business or small business shall so certify in the bid in writing. The purchasing agent shall not be required to verify the accuracy of any such certifications, and shall have the discretion to determine if a vendor or consultant meets the definition of "local business" or "small business." The decision of the purchasing agent declaring that any person or business is not a local business or small business shall be subject to appeal.
B. Enforcement.
1. The information furnished by each bidder requesting a local business or small business preference shall be under penalty of perjury.
2. No person or business shall knowingly and with intent to defraud, fraudulently obtain, retain, attempt to obtain or retain, or aid another in fraudulently obtaining or retaining or attempting to obtain or retain certification as a local business or small business for the purpose of this chapter.
3. No person or business shall willfully and knowingly make a false statement with the intent to defraud, whether by affidavit, report, or other representation, to a city official or employee for the purpose of influencing the certification or denial of certification of any entity as a local business or small business.
4. A business which has obtained city certification as a local business or a small business by reason of having furnished incorrect supporting information or by reason of having withheld information, and which knew or should have known the information furnished was incorrect or the information withheld was relevant to its request for certification, and which by reason of such certification has been awarded a contract to which it would not otherwise have been entitled, shall:
a. Pay to the city any difference between the contract amount and what the city's costs would have been if the contract had been properly awarded;
b. Be subject to debarment from future award of contracts from the city at the discretion of the city. (Ord. No. 505 11-16-2019)
2.44.110 - Quality and fitness.
The preferences established in this section shall in no way be construed to inhibit, limit or restrict the right and obligation of the city council and the purchasing agent to compare quality and fitness for use of supplies, materials, equipment, and services proposed for purchase and to compare the qualifications, character, responsibility, and fitness of all persons, firms, or corporations submitting bids or proposals. In addition, the preferences established in this section shall in no way be construed to prohibit the right of the city council or the purchasing agent from giving any other preference permitted by law or this chapter.
(Ord. No. 505, 11-16-2019)
2.44.120 - Pre-qualification of bidders for public works projects.
A. The city manager may designate public works projects or parts thereof that require specialized skills or cost in excess of $2,000,000.00 to be subject to prequalification of bidders.
B.
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To become a prequalified bidder, a contractor must submit to the city a prequalification application consisting of a standardized questionnaire, financial statement, and statement of experience. The forms for the questionnaire, financial statement, and statement of experience will be provided as part of the prequalification bidding packet.
C. The questionnaires and financial statements submitted by prospective contractors are not public records and are not subject to public inspection. Records of the names of contractors applying for prequalification status are public records and subject to disclosure. Documents submitted by a prospective contractor will be submitted under penalty of perjury.
D. The city will rate prospective contractors in accordance with the rating system attached as Exhibit "A" ("rating system"). The city will devise the questions, process and scoring of the rating system, so as to best evaluate a contractor's ability to successfully complete a particular project. The city will complete the rating system prior to closing of the period for submission of pre-qualification packages for any given project or pre-qualification process.
The rating system will be applied uniformly and objectively to all prospective contractors, which have submitted properly completed documents in accordance with this policy.
Editor's note- Exhibit "A" was not included in the codification of this chapter.
The city may determine that only a certain number of the top scoring rated contractors shall be considered prequalified for a specific project. This determination shall be made prior to issuing the notice inviting pre-qualifications for the specific project.
E. When the city uses this pre-qualification process, the only contractors eligible to submit a bid are prequalified contractors. Further, such contractors shall submit bids only naming a prequalified subcontractor, if the city also pre-qualifies subcontractors in a similar manner as prime contractors. Any bid received listing an unqualified subcontractor will automatically be disqualified as nonresponsive. No bid shall be accepted for the project from unqualified contractors.
F. A contractor's pre-qualification status will immediately terminate if: (1) the contractor fails to give the city written notice of changes in the information previously provided within ten days before a bid opening; (2) the contractor's license is suspended or terminated by the California State Licensing Board; (3) the contractor is convicted of any crime of moral turpitude; (4) the contractor's application contains materially false information; or (5) the contractor's control over a public works contract, whether within the city's jurisdiction or otherwise, is terminated for cause.
G. The city shall give written notice to each contractor of the pre-qualification determination for that contractor. A contractor may appeal a rating of "not qualified," including a decision to revoke a previous qualified rating. There is no appeal from a finding that a contractor is not pre-qualified because of a failure to submit required information, because of failure to submit required information in a timely manner, because of the omission of requested information or because of the falsification of information. Without a timely appeal, the contractor waives any and all rights to challenge the decision of the City of lone, whether by administrative process, judicial process, or any other legal process or proceeding.
H. A contractor may appeal the decision as follows:
1. By giving written notice of appeal to the city manager no later than ten days after receipt of the not qualified rating.
2. The notice of appeal shall contain at least the following:
•
a. The name, address and telephone nümber of the person making the appeal; b.
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A description of the determination which is the subject of the appeal, and the date of the notice of determination; and c. A brief description of the grounds for the appeal.
1. The city will provide the contractor with a written statement of the basis for the not qualified determination and supporting evidence received from others or adduced as a result of investigation.
J. The informal hearing is to be concluded no later than five business days after the City of lone's receipt of the notice of appeal, and no later than five business days prior to the last date for the receipt of bids on the project. It is the intention of the City of lone that the date for the submission and opening of bids will not be delayed or postponed to allow for completion of an appeal process.
K. The city manager or designee shall hear the appeal. The hearing shall be an informal one. The contractor may rebut evidence which is the basis for the determination and present evidence why the contractor is qualified.
L. The city manager or designee may affirm the earlier determination or reverse the determination and assign a different rating. This decision will be in writing containing a summary of the facts that led to the decision. The decision of the city manager is final. A contractor shall have no right to appeal that decision to the council.
M. The city manager may cancel the pre-qualification process at any time during the prequalification process, even after receiving and scoring applications. If the pre-qualification process is cancelled, the normal competitive bidding rules will apply. The city assumes no liability for the cost a prospective contractor may have incurred by submitting an application for pre-qualification, and the submittal of a pre-qualification application is a waiver to claim any such cost or losses due to cancellation of the process.
(Ord. No. 505, 11-16-2019)
2.44.130 - Administrative guidelines.
A. Vendor Limit. Combined purchase orders cannot exceed $50,000.00 per vendor, per fiscal year except in the case of major expenditures in which a vendor has participated in a public formal bidding process.
B. Change Orders or Amendments. A change order or amendment is a change in a contract term, other than as specifically provided for in the contract, that authorizes or necessitates any increase or decrease of the cost of the contract or in the time of completion that can be authorized by the city manager or department director. A valid request for a change order or amendment must meet the following criteria:
1. The change was not reasonably foreseeable at the time that the contract was signed;
2. The change must be relevant to the original contract; and
3. The change is authorized by the contract provisions and in the best interest of the city.
C. Conflict of Interest. No employee, officer, councilmember, or agent shall participate in the selection, award, or administration of a contract if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, councilmember, agent, or any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated, herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract.
Nothing in this policy does or is to be construed as limiting the applicability of any other federal, state, or local laws and regulations governing prohibitions against financial conflicts of interest, including but not limited to the Political Reform Act (Government Code Section 81000 et seq.) and implementing regulations from the Fair Political Practices Commission (Title 2, Section 18110 et seq., of the California Code of Regulations), and Government Code Sections 1090-1999 and 1126. All such laws and regulations shall apply to every employee, officer, councilmember, and agent of the city.
D.
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Local Vendors. Purchasing goods and services from local vendors which stimulate the local economy is encouraged but not required.
E. Green Purchasing Practices. The city is committed to green purchasing practices in obtaining goods and services.
The city shall consider environmentally-preferable products when appropriate. Nothing in this policy requires the procurement of products that do not adequately perform their intended use, requires procurement that excludes adequate competition, or requires the procurement of products that are unavailable at a reasonable price or at a reasonable time. An environmentally-preferable product means a product that meets any of the following criteria:
1. Is durable, repairable, reusable, or recyclable;
2. Has minimal packaging, toxic content, or chemical-hazard potential;
3. Is resource or energy efficient in any or all phases of its manufacture, use, or disposal; or
4. Its use or disposal minimizes or eliminates the city's potential environmental liability. (Ord. No. 505. 11-16-2019)
2.44.140 - Expenditure categories.
Purchases, which include those made by purchase order (PO), written agreement, amendment or change order that require city expenditures, are classified into five categories based on the anticipated expenditure amount. Each category establishes an authorization level, procurement method, and maximum term, which shall apply unless specifically exempted in accordance with this policy.
A. Expenditures of $50.00 or less (petty cash)
B. Expenditures of $51.00 to $5,000.00 (operational)
C. Expenditures of $5,001.00 to $15,000.00 (minor)
D. Expenditures of $15;001.00 to $50,000.00 (intermediate) E. Expenditures over $50,001.00 (major)
A. Expenditures of $50.00 or Less.
Authorization: Department director, who may delegate to a department manager Procurement: No bids or PO necessary; petty cash advances or reimbursement Term Limit: N/A
Note: These transactions take the place of ordinary ongoing purchases and shall be limited in use. about:blank 7/21
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A cash disbursement or reimbursement may be obtained from the finance department and must not exceed $50.00. A petty cash request form shall be completed and signed by the department director before submittal. The form shall include the date, description of the item to be purchased, and account number. Petty cash amounts will be advanced to accommodate miscellaneous minor expenditure amounts of $50.00 or less and for which normal payment provisions are not practical. The finance department will periodically audit petty cash expenditures as to form and regulations and may confirm purchases.
B. Expenditures of $51.00 to $5,000.00 During the Initial Term. 15] Authorization: Pepartment director, who may delegate to a department manager Procurement: No PO necessary; three informal bids/proposals | whenever possible
Term limit: Three years plus one three-year extension
C. Expenditures of $5,001.00 to $10,000.00 During the Initial Term.
Authorization: Department director
Procurement: PO required plus three informal bids/proposals Term Limit: Three years plus one three-year extension
D. Expenditures of $10,001.00 to $15,000.00 During the Initial Term.
Authorization: City manager
Procurement: PO required plus three informal bids/proposals plus city contract 181
Term limit: Three years plus one three-year extension
E. Expenditures over $15,001.00.
Authorization: City council
Procurement: PO required plus formal bids/proposals plus city contract Term limit: No limit, any term approved by majority vote of the city council about:blank 8/21
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F. Report to City Council. Any and all expenditures by department director or city manager in excess of $1,000.00 shall be reported to the city council at the next regular council meeting following said expenditure. Said report may be in the form of a list provided by the city manager describing the purpose and the amount of the expenditure.
(Ord. No. 505, 11-16-2019)
Footnotes:
- (5) --
For purposes of this policy, the "initial term" shall be either: (i) a term under the contract or PO not to exceed one year, or (il) a term longer than one year but not to exceed the maximum number of years authorized under a "Term limit" (set forth below) as long as the contract includes a continuing obligation for performance by a contracting party and the city has an obligation for payment only for the services actually performed and accounted for by invoice or other monthly or regular periodic documentation acceptable to the city. Under any contract or PO, either the contracting party or city may terminate the contract or PO prior to the expiration of the initial term for the other party's nonperformance. -- (6) -
Designee must have signature authorization form on file with the finance department, or active designation letter for a specific date range. "Informal" bid/proposal means verbal or written, via telephone, e-mail or other casual medium.
The city's templates for contracts, agreements, amendments and change orders shall be used for category D and E purchases. The city manager may allow for modifications of these templates or use of other contracts, agreements, amendments and change orders, or may require use of city templates for category B and C purchases when the city manager determines it is prudent due to the level of risk exposure to the city, the need to spell out a complex scape of work, or any other reason she believes to be in the best interest of the city. To meet prevailing wage requirements any maintenance or repair project over $15,000.00 or construction project over $25,000.00 will require a written contract.
2.44.150 - Procurement procedures--Major expenditures (over $50,001.00).
A. Formal Bids for Major Public Works Projects and Major Supplies and Equipment Purchases. Major public works projects and supplies and equipment are defined as purchases and projects having an actual or estimated value of greater than $50,001.00. The solicitation and selection of bids and award of contracts shall comply with the lone Municipal Code (public works contracts), and this policy, and shall be administered through each city department, according to the following procedures:
1. Invitation for Bids. An invitation for bids (the "invitation") shall be published at least two times in a newspaper, electronic bulletin board or online submission source, city website, or other generally-recognized source of local public works contract information, at least ten days and at least five days prior to the date of the opening of bids. Invitations shall include general descriptions of the work to be performed, the time and place of the opening of bids, the place where bidders may obtain bid documents, the amount of bid security required, and the amount and nature of performance and labor materials security that will be required.
2. Form of Bids. Bids conforming to the requirements of the invitation shall be submitted to the department director (the "director") in sealed packages or by other means which will prevent the divulging of bids prior to the stated time for opening of bids, all as specified in the invitation or the bid documents. Unopened bids, should be clearly marked or otherwise identifiable as bids for the project to which they apply.
3. Bid Security for Public Works Projects. Bids for public works projects shall be accompanied by cash, cashier's check, certified check, surety bond, or other form of security stated in the invitation or bid documents, in a sum equal to at least ten percent of the amount of the bid. about blank 9/21
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4. Opening of Bids. At the time and place stated in the invitation, the bids shall be publicly opened and announced.
The bid amounts shall be tabulated and the tabulation shall be available for public inspection at the public works department during regular business hours for a period of not less than 30 calendar days after the bid opening.
5. Review of Bids. The director shall review all bids received for completeness, accuracy, responsiveness to the invitation and the bid documents, and the city's experience with or knowledge of the qualification and reliability of each bidder and shall prepare a recommendation to the city council. Written amounts shall take precedence over associated numeric amounts. Mathematical errors, if found, shall be corrected and shall not disqualify a bid. The corrected total shall be the bid amount considered in determining the lowest responsible bidder and shall be the contract amount awarded if the bid is selected.
6. Award of Contract. Contracts shall be awarded by the city council to the lowest responsible bidder.
Determination of the lowest responsible bidder shall be at the sole discretion of the city council pursuant to findings and recommendations presented by the director at the time of the award of contract.
7. Equal Bids. If two or more equal low bids are received, the city council may award the contract to any one of the equal low bidders by the following:
a. Select one bid;
b. Reject all bids and re-solicit for bids;
c. Reject all bids and authorize negotiated agreement if consistent with federal and state laws; d. Select one bid, which is the most responsible bidder; or e. Take any other action that the city council deems to serve the best interest of the city.
8. No Bids. When no bids are received from responsible firms, the city council may accomplish the project in any manner it sees fit.
9. Rejection of Bids. The city council may reject any or all bids presented and may then direct that the project be re-advertised, may authorize negotiation of a contract with one or more responsible firms, or may resolve that the project can be performed more economically by city forces, day labor, time and materials contract, or other method.
10. Execution of Contract. The successful bidder shall execute the contract and furnish required performance security and labor and materials security when required pursuant to the bid document.
11. Forfeiture of Bid Security for Public Works Projects. If the successful bidder fails to execute the contract and furnish security within the stated time, and said failure is not primarily due to actions or omissions of the city or to acts of god, the bidder shall forfeit the bid security provided. The city council may then consider the bid of the next lowest responsible bidder.
12. Release of Bid Security for Public Works Projects. Bidders are entitled to the return of their bid security unless forfeited as provided herein. The city shall retain all bid security until a contract has been executed or until the city council rejects all bids at which time all bid security not forfeited shall be returned to the appropriate bidders.
13. Disposition of Forfeited Bid Security for Public Works Projects. The city shall retain forfeited bid security until a contract is awarded to another firm or the project is cancelled. The city shall retain an amount equal to the difference between the forfeiting firm's bid and the new contract amount, if any, and an additional amount about:blank 10/21
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equal to administrative and other costs incurred as a result of the failure of the forfeiting bidder to enter into a contract and provide required security, and shall return any remaining amount of the bid security to the forfeiting bidder.
14. Performance Security and Labor and Materials Security for Public Works Projects. The bidder to whom the contract is awarded (the "successful bidder") shall furnish performance security and labor and materials security in amounts specified in the invitation or bid documents.
B. Formal Proposals for Major Professional and Technical Services. Major professional and technical services are defined as services having an actual or estimated value of greater than $50,001.00. The solicitation and selection of proposals and award of contracts shall comply with the lone Municipal Code, and this policy, and shall be administered through each city department, according to the following procedures:
1. Maintenance and Repair Services. Services intended to preserve and/or restore a public work to a clean, safe, efficient, and/or continually usable condition. Maintenance and repair services include, but are not limited to:
carpentry, electrical, painting, plumbing, glazing, and other craftwork to preserve a facility in the condition for which it was intended; repairs, cleaning and other operations on machinery and other equipment permanently attached to a facility as fixtures; the mowing, pruning, and trimming of lawns, grass, trees, shrubs, bushes and hedges; and the regular removal or relocation of by-products or waste products accumulated at city facilities as the result of ongoing environmental processes.
2. The city manager shall approve the preparation and release of all requests for proposals (RFP) and requests for qualifications (RFO).
3. City staff shall determine, based on professional judgment, whether an RFP or an RFQ process best suits its needs and city staff, or a city-authorized consultant, shall prepare the RFP/RFQ document.
4. City staff, or a city-authorized consultant, or both shall prepare a list of suitable firms from known registries, professional organizations, and/or any other source.
5. City staff shall issue the RFP/RFQ to suitable firms, and may also advertise for competitive proposals.
6. City staff shall form a selection committee, which may include private consultants, to review the RFPs/RFQS received, and the selection committee may conduct interviews and/or hold discussions with proposing firms.
7. The selection committee shall rank the proposing firms according to the criteria specified in the RFP/RFQ and city staff shall notify firms of their position in the ranking.
8. City staff, or a city-authorized consultant, shall negotiate with the top-ranked firm to arrive at mutually- acceptable contract terms.
9. City staff, or its authorized consultant shall terminate negotiations and begin negotiations with the next-ranked firm if an agreement cannot be reached and continue this process until negotiations are successfully concluded or until the list of qualified firms submitting proposals is exhausted and an agreement cannot be reached
10. The city council shall award or reject the contract negotiated by city staff.
C. Procurement Procedures-Non-Major Expenditures ($50,000.00 and Under).
Informal Bids or Proposals. Intermediate, minor, and operational expenditure category projects, including minor public works projects, supplies, goods, equipment and minor services are defined as projects having an actual or estimated value of $50,000.00 or less. The solicitation and selection of bids and award of contracts shall comply with the lone Municipal Code for public works projects, service contracts, and this Policy, and shall be administered through each city department, according to the following procedures:
1. Informal bids shall be obtained verbally or in writing as dictated by this policy from the open market and a written record of informal bids shall be kept with the related PO. about:blank 11/21
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2. Bid Security. Security and labor and material security shall conform to the requirements for major public works projects but may be modified or waived by the city staff person authorized to make the purchase if warranted and in the best interest of the city.
3. Execution and Award of Contracts. The city council may award contracts, or the city manager, or designated city director, or staff personnel may award and execute contracts, set forth in Categories A, B, C or D above, and may waive competitive bidding requirements if in the best interest of the city, provided there are unencumbered appropriations in the fund accounts against which the expenses are to be charged.
D. Exemption to Any Procurement Method. Justification for exemption to any required procurement method may be submitted to the city manager or in the case of a major expenditure, to the city council under the following circumstances:
1. Sole-Source or Select-Source Purchase. To determine that a sole-source or select-source purchase exists, rationale and/or proof must be provided in the purchase requisition. a. Acquisition of brand name to insure compatibility with other city products and equipment. For example standardization of fleet inventory (select-source).
b. Change orders additions to an original scope of work when the original source is the only reasonable one to provide the additional goods, construction work or service needed (select-source). c.. Only one manufacturer or vendor makes and/or sells the required equipment (sole-source).
2. State, county, or other public agency cooperative purchasing program or contracts utilizing funding or other participation from agencies which require conformance with state, federal or other contracting regulations.
3. The city does not require a contract for equipment purchases such as a specific type or brand of supply or part necessary for acceptable operation of a machine or device, or as required by warranty or contract on the machine or device; written documentation supporting a purchase must be provided.
4. Emergency purchases made necessary by an immediate threat to life or property or a substantial disruption of a vital public service.
a. In advance of any local emergency, the city seeks to retain a list of available local businesses willing to provide necessary supplies, materials, equipment, services, food, care or shelter to the city through the office of emergency management. Once the emergency operations center (EOC) is activated, these memorandums will be activated.
b. In the event of an emergency, the city manager or designee may make immediate purchases of goods and services. Emergency purchases include any purchase required to prevent imminent danger or to prevent or mitigate the loss or impairment of life, health, property, or essential public services. Every effort shall be made to obtain advance approvals or to obtain approvals as soon as possible following the purchase. c. The city is not required to engage in either formal or informal competitive bidding in an emergency. The city council delegates to the city manager and city manager's designee the authority to waive any procedures in the policy that are not statutorily mandated when making emergency purchase of supplies, equipment, materials or services.
d. The city council shall ratify emergency suspension of procedures at the next properly noticed council meeting following the emergency procurement and consider whether further suspension of procedures is required to abate the impacts of the emergency.
5. The awarding officers) may waive irregularities in formal or informal bids received provided that it is in the best interest of the city to do so, and it does not result in unfair advantage to any bidder. about:blank 12/21
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6. The city council may authorize the award and execution of contracts without competitive bidding provided that such award is in the best interest of the city, or of the public health, safety and welfare. (Ord. No. 505 11-16-2019)
2.44.160 - Federally funded procurements.
This section pertains to federal-funded projects and purchases.
A. Any procurement made pursuant to a federal award or subject to reimbursement, in whole or in part, with federal funds must comply with the city's procurement procedures and all applicable procurement standards codified in 2 CFR 200.318-200.326 to include the following:
1. Comply with general federal requirements and recommendations:
a. Comply with currently applicable Department of Homeland Security Standard Terms and Conditions. b. Comply with the Solid Waste Disposal Act, 2 CFR section 200.322. c. Complete a cost or price analysis, including independent estimates, when necessary under 2 CFR 200,323.
d. Profit must be negotiated as a separate element of price, where required under 2 CFR 200.323(b). e. Use of federal excess and surplus property is encouraged over purchasing new. f. Geographical (local) preferences may not be used, unless expressly authorized by the awarding agency. g. A time and materials contract or a "cost-plus" contract may not be used. h. Intergovernmental agreements are encouraged where appropriate. i. Procurements are subject to requirements for monitoring and oversights, see 2 CFR 200.318(b). j. Records must be maintained by each department consistent with 2 CFR 200.318(i).
2. Federal contractors must meet requirements of being responsible contractors (see CFR 200.318(h) and the city will take all necessary affirmative steps to assure minority businesses, women's businesses and labor surplus area firms are used when possible.
3. Consistent with 2 CFR Section 200.320, the city will use one of the following approved procurement methods: Micro-purchases, small purchase procedures, sealed bids (formal advertising), competitive proposals, and noncompetitive proposals.
4. Contracts for federally-funded procurements must comply with 2 CFR Section 200.326, by acknowledging that federal financial assistance will be used to fund the contract, requiring that the contractor comply with all applicable federal law, regulations, executive orders and applicable federal policies; and specifying the federal government is not a party to the contract.
B. General Procurement Standards.
1. Code of Conduct. As representatives of the City of lone, all employees are expected to conduct themselves in a professional and ethical manner, maintaining high standards of integrity and the use of good judgement. Employees are expected to be principled in their business interactions and act in good faith with individuals both inside and outside the city. The following code of conduct shall govern the performance, behavior and actions of the city, including employees, directors, appointed or elected officials, volunteers, or agents who are engaged in any aspect of procurement, including, but not limited to, purchasing goods and services, awarding contracts and grants, and the administration and supervision of contracts:
a.
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No employee, director, appointed or elected official, volunteer, or agent of the city shall participate in the selection, award, or administration of contracts supported by a federal award if a conflict of interest is real or apparent to a reasonable person. b. Conflicts of interest may arise when any employee, officer, or agent of the city, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a real or apparent financial or other interest in or a tangible personal benefit form a firm considered for the contract.
c. No employee, director, appointed or elected official, volunteer, or agent of the city shall do business with, award contracts to, or show favoritism toward a member of his or her immediate family, spouse's family, or to any company, vendor, contractor, or parties to subcontractors who either employ or has any relationship to a family member; or award a contract or bid which violates the spirit or intent of federal, state and local procurement laws and policies established to maximize free and open competition among qualified vendors.
d. • The city's employees, directors, appointed or elected officials, volunteers, or agents shall neither solicit nor accept gratuities, favors, gifts, consulting fees, trips, or anything having a monetary value in excess of $25.00 from a vendor, potential vendor, family or employees of a vendor, contractor or parties to subcontractors.
e. Disciplinary measures for violations of the code of conduct by employees, directors, appointed or elected officials, volunteers, or agents who are engaged in any aspect of procurement, including, but not limited to, purchasing goods and services, awarding contracts and grants, and the administration and supervision of contracts could lead to disciplinary measures, up to and including possible termination of employment.
2. Solicitation Procedures.
a. Acquisition of unnecessary or duplicative items must be avoided. Consideration should be given to consolidating or dividing procurements to obtain a more economical purchase. When appropriate, an analysis will be made of lease versus purchase alternatives, and any other appropriate analysis to determine the most economical approach.
b. To foster greater economy and efficiency, and in accordance with efforts to promote cost-effective use of shared services, the city shall enter into state and local intergovernmental agreements or inter-entity agreements where appropriate for procurement or use of common or shared goods and services. c. Procuring federal excess and surplus property in lieu of purchasing new equipment and property whenever such use is feasible and reduces project costs shall be utilized. d. Value engineering clauses may be used in contracts for construction projects of sufficient size to offer reasonable opportunities for cost reductions. Value engineering is a systematic and creative analysis of each contract item or task to ensure that its essential function is provided at the overall lower cost. e. Contracts shall only be awarded to responsible contractors possessing the ability to perform successfully under the terms and conditions of a proposed procurement. Consideration will be given to such matters as contractor integrity, compliance with public policy, record of past performance, and financial and technical resources.
f. Records will be maintained sufficient to detail the history of procurement. These records will include, but are not necessarily limited to the following: Rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. The city clerk will be the repository for said records and shall be maintained for period of no less than seven years. about:blank 14/21
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g. Time and material type contracts (open-ended) may be used only after a determination that no other contract is suitable. Time and material type contract means a contract where the cost to the city is the sum of the actual cost of materials and direct labor hours charged at fixed hourly rates that reflect wages, general and administrative expense, and profit. Each time and material contract will set a ceiling price that the contractor exceeds at its own risk. A higher degree of oversight is required in order to obtain reasonable assurance that the contractor is using efficient methods and effective cost controls. h. The city alone will be responsible, in accordance with good administrative practice and sound business judgment, for the settlement of all contractual and administrative issues arising out of procurements.
These issues include, but are not limited to, source evaluation, protests, disputes, and claims. These standards do not relieve the city of any contractual responsibilities under its contracts. The federal awarding agency will not substitute its judgment for that of the city unless the matter is primarily a federal concern. Violations of law will be referred to the local, state, or federal authority having proper jurisdiction.
3. Competition.
a. All procurement transactions must be conducted in a manner providing full and open competition. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, and invitations for bids or requests for proposals will be excluded from competing for such procurements. Some of the situations considered to be restrictive of competition include, but are not limited to:
i. Placing unreasonable requirements on firms in order for them to qualify to do business; ii. Requiring unnecessary experience and excessive bonding; lii. Noncompetitive pricing practices between firms or between affiliated companies; iv. Noncompetitive contracts to consultants that are on retainer contracts; v. Organizational conflicts of interest;
vi. Specifying only a brand name product instead of allowing an equal product to be offered and describing the performance or other relevant requirements of the procurement; and vii. Any arbitrary action in the procurement process.
b. Procurements shall be conducted in a manner that prohibits the use of statutorily or administratively imposed state or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable federal statutes expressly mandate or encourage geographic preference.
Nothing in this section preempts state licensing laws. When contracting for architectural and engineering (A/E) services, geographic location may be a selection criterion provided its application leaves an appropriate number of qualified firms, given the nature and size of the project, to compete for the contract.
c. All solicitations will incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured. Such description must not, in competitive procurements, contain features which unduly restrict competition. The description may include a statement of the qualitative nature of the material, product or service to be procured and, when necessary, must set forth those minimum essential characteristics and standard to which it must conform if it is to satisfy its intended use. Detailed product specifications should be avoided if at all possible. When it is impractical or uneconomical to make a clear and accurate description of the technical requirements, a brand name about:blank 15/21
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or equivalent description may be used as a means to define the performance or other relevant requirements of procurement.
The specific features of the named brand which must be met by offers must be clearly stated. d. Bids and proposals shall identify all the requirements which the offerors must fulfill and all other factors to be used in evaluation bids or proposals.
4. Methods of Procurement. In addition to the city's purchasing policy approval limits, one of the following methods should be used:
a. Micro-purchase: Purchases where the aggregate dollar amount does not exceed $3,000.00, or the current limitation set by the Federal Acquisition Regulation at 48 CFR Subpart 2.1, where this threshold is periodically adjusted for inflation.
b. Small purchase: Purchases up to the simplified acquisition threshold, which is currently $150,000.00.
Informal purchasing procedures are acceptable, but price or rate quotes must be obtained from an adequate number of sources.
c. Sealed bid: Purchases over the simplified acquisition threshold, which is currently $150,000.00. Under this purchase method, formal solicitation is required, and the fixed price (lump sum or unit price) is awarded to the responsible bidder who conformed to all material terms and is the lowest in price. This method is the preferred procurement method for construction contracts, if the following conditions apply:
i. A complete, adequate, and realistic specification or purchase description is available; ii. Two or more responsible bidders are willing and able to compete effectively for the business, and, ili. The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally based on price.
If this method is used, the following requirements shall apply:
i. The invitation for bids will be publicly advertised and bids must be solicited from an adequate number of known suppliers, providing them sufficient response time prior to the date for opening the bids;
ii. The invitation for bids, which will include any specifications and pertinent attachments, must define the terms or services in order for the bidder to properly respond; ill. All bids will be publicly opened at the time and place prescribed in the invitation for bids; iv. A firm fixed price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts will only be used in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and v. Any or all bids may be rejected if there is a sound documented reason. d. Competitive proposals: Purchases over the simplified acquisition threshold, which is currently $150,000.00. This procurement method requires formal solicitation, fixed-price or cost-reimbursement contracts, and is used when sealed bids are not appropriate. The contract should be awarded to the responsible firm whose proposal is most advantageous to the program, with price being one of the various factors. If this method is used, the following requirements apply:
i. Requests for proposals must be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals must be considered to the maximum extent practical;
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ii. Proposals must be solicited from an adequate number of qualified sources; ili. The methods for conducting technical evaluations of the proposals received and for selecting recipients may include, but not limited to: Oral interviews, references, past performance, availability to perform work, and certifications as determined by project scope. iv. Any response that takes exception to any mandatory items in this proposal process may be rejected and not considered;
v. Contracts must be awarded to the responsible firm whose proposal is most advantageous to the program, with price and other factors considered; and,
vi. Competitive proposal procedures may be used for qualifications-based procurement of architectural/engineering (A/E) professional services whereby competitors' qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and reasonable compensation. The method, where price is not used as a selection factor, can only be used in procurement of A/E professional services. It cannot be used to purchase other types of services, though A/E firms are a potential source to perform the proposed effort. e. Noncompetitive proposals: Also known as sole-source procurement, this may be appropriate only when one or more of the following criteria are met:
i. The item is available only from a single source;
ii. The public emergency for the requirement will not permit a delay resulting from competitive solicitation;
iii. The federal awarding agency or pass-through entity expressly authorizes noncompetitive proposals in response to a written request from the non-federal entity; or iv. After solicitation of a number of sources, competition is determined inadequate.
5. Contract Cost and Price. A cost or price analysis shall be performed in connection with every procurement action in excess of the simplified acquisition threshold ($150,000.00) including contract modifications. The method and degree of analysis is dependent on the facts surrounding the particular procurement situation, but as a starting point, independent estimates shall be made prior to receiving bids and proposals. a. Profit shall be negotiated as a separate element of the price for each contract in which there is a no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit, consideration must be given to the complexity of the work to be performed, the risk borne by the contractor, the contractor's investment, the amount of subcontracting, the quality of its record of past performance, and industry profit rates in the surrounding geographical area for similar work. b. Costs or prices based on estimated costs for contracts under the federal award are allowable only to the extent that costs incurred or cost estimates included in negotiated prices would be allowable for the city under Subpart E — Cost Principles of Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
c. The cost plus a percentage of cost and percentage of construction cost methods of contracting shall be used.
6. Federal Awarding Agency or Pass-Through Entity Review. a. The city shall make available, upon request of the federal awarding agency or pass-through entity, technical specifications on proposed procurements where the federal awarding agency or pass-through entity believes such review is needed to ensure that the item or service specified is the one being about:blank 17/21
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proposed for acquisition. This review generally will take place prior to the time the specification is incorporated into a solicitation document. However, if the city desires to have the review accomplished after a solicitation has been developed, the federal awarding agency or pass-through entity may still review the specifications, with such review usually limited to the technical aspects of the proposed purchase.
b. The city will make available upon request, for the federal awarding agency or pass-through entity pre-. procurement review, procurement documents, such as requests for proposals or invitations for bids, or independent cost estimates, when:
i. Procurement procedures or operations fails to comply with the procurement standards in this part; ii. The procurement is expected to exceed the simplified acquisition threshold ($150,000.00) and is to be awarded without competition or only one bid or offer is received in response to a solicitation; ill. The procurement, which is expected to exceed the simplified acquisition threshold, specifies a "brand name" product;
iv. The proposed contract is more than the simplified acquisition threshold and is to be awarded to other than the apparent low bidder under a sealed bid procurement; or v. A proposed contract modification changes the scope of a contract or increases the contract amount by more than the simplified acquisition threshold.
c. The city is exempt from the pre-procurement review in paragraph b. of this section if the federal awarding agency or pass-through entity determines that its procurement systems comply with the standards of this part.
d. The city may request that its procurement system be reviewed by the federal awarding agency or pass- through entity to determine whether its system meets these standards in order for its system to be certified. Generally, these reviews must occur where there is continuous high-dollar funding, and third- party contracts are awarded on a regular basis;
e. The city may self-certify its procurement system. Such self-certification must not limit the federal awarding agency's right to survey the system. Under a self-certification procedure, the federal awarding agency may rely on written assurances from the city that it is complying with these standards. The city must cite specific policies, procedures, regulations, or standards as being in compliance with these requirements and have its system available for review.
7. Bonding Requirements. For construction or facility improvement contracts or subcontracts exceeding the simplified acquisition threshold ($150,000.00), the federal awarding or pass-through entity may accept the bonding policy and requirements of the city provided that the federal awarding agency or pass-through entity has made a determination that the federal interest is adequately protected. If such a determination has not been made, the minimum requirements must be as follows:
a. A bid guarantee from each bidder equivalent to five percent of the bid price. The bid guarantee must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of the bid, execute such contractual documents as may be required within the time specified; b. A performance bond on the part of the contractor for 100 percent of the contract price. A performance bond is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract; and
c.
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A payment bond on the part of the contractor for 100 percent of the contract price. A payment bond is one executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the execution of the work provided for in the contract.
8. Contract Provisions. All federal funding source compliance provisions shall include the following:
a. Equal Employment Opportunity. All contracts, when funded in whole or partly by monies derived from the federal government (either directly or indirectly), shall contain a provision requiring compliance with Equal Employment Opportunity.
b. Davis-Bacon Act. Applies to construction contracts in excess of $2,000.00. It requires contracts to pay laborers and mechanics wages not less than the prevailing wage as determined by the Secretary of Labor and must be required to pay wages not less than once a week. Each bid solicitation published by the city must contain the current prevailing wage determination. Any award of the contract must be conditioned on contractor's acceptance of that wage determination and suspected or reported violations of this act shall be immediately reported to the federal awarding agency. c. Copeland "Anti-Kickback" Act. Applies to construction contracts in excess of $2,000.00. It prohibits kickbacks in construction contracts funded with federal monies. Contractors and subcontractors or subrecipients shall be prohibited from inducing any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he or she is otherwise entitled and suspected or reported violations shall be immediately reported to the federal awarding agency. d. Clean Air Act and Federal Water Pollution Control Act. Applies to contracts and sub grants in excess of $150,000.00. Contractor shall be required to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act and the Federal Water Pollution Control Act. Suspected or reported violations must be reported to the Federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA).
e. Debarment and Suspension. Contracts funded with federal grant monies may not be awarded to contractors that have been debarred or suspended from receiving federal monies pursuant to the System for Award Management (SAM).
f. Byrd Anti-Lobbying Amendment. Contractors that apply or bid for an award of $100,000.00 must certify that they will not and have not used federal funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any. federal contract, grant or any other award
9. Contracting with Small and Minority Business, Women's Business Enterprises, and Labor Surplus Area Firms.
All necessary affirmative steps will be taken to assure that minority business, women's business enterprises, and labor surplus area firms are used when possible. Affirmative steps include:
a. Placing qualified small and minority businesses and women's business enterprises on solicitation lists; b. Assuring that small and minority businesses and women's business enterprises are solicited whenever they are potential sources;
c. Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses and women's business enterprises; d. Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses and women's business enterprises; e.
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Using the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Minority Business Development Agency of the Department of Commerce; and f. Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in paragraphs a. through e. of this section.
(Ord. No. 505, 11-16-2019)
2.44.170 - Emergency expenditures.
In accordance with 9 20168 PCC, in the event of an emergency, the city council may pass a resolution by a four-fifths vote of its members declaring that the public interest and necessity demand the immediate expenditure of public money to safeguard life, or property. Upon adoption of the resolution, it may expend any sum required in the emergency without complying with s 20162 et sec PCC. If notice for bids to let contracts will not be given, the city council shall comply with chapter 2.5 (commencing with § 22050 PCC.)
(Ord. No. 505. 11-16-2019)
2.44.180 - Gifts and unauthorized purchases.
City employees, officers or officials are not entitled to any special consideration from vendors and merchants in their personal affairs nor are such city employees, officers, or officials to attempt to procure materials for the personal use of any other person. City employees, officers or officials shall not solicit or accept gifts except for those items that can be shared by all staff such as food and flowers. Except for emergencies or other authorized exemption, no purchases shall be made without specific authorization as outlined in this policy. The person ordering the unauthorized purchase may be held personally liable for the costs of the purchase or contract.
(Ord. No. 505, 11-16-2019)
Chapter 2.46 - INFORMAL BIDDING PROCEDURES
Sections:
2.46.010 - Informal bid procedures.
Public projects, as defined by the Act and in accordance with the limits listed in Section 22032 of the Public Contract Code, may be let to contract by informal procedures as set forth in Section 22032, et seq., of the Public Contract Code. (Ord. No. 421, § 1, 3-17-2009)
2.46.020 - Contractors list.
A list of contracts shall be developed and maintained in accordance with the provisions of Section 22034 of the Public contract code and criteria promulgated from time to time by the California Uniform Construction Cost Accounting Commission.
(Ord. No. 421, § 1, 3-17-2009)
2.46.030 - Notice inviting informal bids.
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7/18/24,12:15 PM lone, CA Code of Ordinances
Where a public project is to be performed which is subject to the provisions of this chapter, a notice meeting the requirements of Section 22034 of the Public Contract Code and inviting informal bids shall be mailed to all contractors for the category of work to be bid, as shown on the list developed in accordance with Section 2.46.020, and to all construction trade journals as specified by the California Uniform Construction Cost Accounting Commission in accordance with Section 22036 of the Public Contract Code. Additional contractors and/or construction trade journals may be notified at the discretion of the department/agency soliciting bids, provided however:
A. If there is no list of qualified contractors maintained by the city for the particular category of work to be performed, the notice inviting bids shall be sent only to the construction trade journals specified by the commission.
B. If the product or service is proprietary in nature such that it be can obtained only from a certain contractor or contractors, the notice inviting informal bids may be sent exclusively to such contractor or contractors. (Ord. No. 421, § 1, 3-17-2009)
2.46.040 - Award of contracts.
The city manager is authorized to award informal contracts pursuant to this section. (Ord. No. 421, § 1, 3-17-2009)
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RESOLUTION NO. 2018-18
A Resolution of the City Council of the City of lone Amending the City of lone Financial Policies and Procedures Handbook - June 2015 WHEREAS, the City of lone adopted a Financial Policies and Procedures Handbook - June 2015 to meet the requirements of the City Auditor; and WHEREAS, the Financial Policies and Procedures Handbook contains the City's Debt Policies; and
WHEREAS, the purpose of the Debt Policy is to establish guidelines and parameters for the effective governance, management and administration of debt and other financing obligations issued by the City of lone; and WHEREAS, the policies and procedures in the Financial Policies and Procedures Handbook need to be updated from time to time; and
WHEREAS, staff has provided an update to the City's Debt Policy that is consistent California Government Code Section 8855(i), which went into effect on January 1, 2017.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of lone hereby amends the City of lone Financial Policies and Procedures Handbook.
The foregoing recitals are true and correct.
2. The City's Financial Policies and Procedures Handbook: Section 1 X. Treasury and Debt Management, Paragraphs B, C and D are replaced with the language in Attachment A.
The foregoing resolution was duly introduced and adopted by the City Council of the City of lone at their regular meeting held on May 1, 2018 by the following vote:
AYES: Atlan, Epperson, Reed, Wratten, Lord
NOES: None
ABSTAIN: None
ABSENT: None
Dominic Atlafi, Mayor
Attesti
Janice Traverso, City Clark
Debt Issuance and Management Policy
City of lone
1. Introduction
On May 1, 2018 the City Council of the City of lone (City Council") revieved and City. This Debt Policy may be amended by the City Council as it deems appropriate from time-to- time in the prudent management of the debt and financing needs of the City of lone.
Purpose
The purpose of this Debt Policy is to establish guidelines and parameters for the effective governance, management and administration of debt and other financing obligations issued by the City of lone and its related entities (such as, but not exclusive to, the City-formed Community Facilities Districts and any entities for which the City Council serves as the governing board or legislative body). This Debt Policy is intended to improve and direct decision making, assist with the structure of debt issuance, identify policy goals, and demonstrate a commitment to long-term financial planning, including the City of lone's five-year Capital Improvement Program (the "Capital Improvement Program"). Adherence to a debt policy helps to ensure the City of lone's debt is issued and managed prudently in order to maintain a sound financial position and credit worthiness. When used in this Debt Policy. "debt" refers to all indebtedness and financing obligations of the City of lone and its related entities (together referred to as "City").
3. Debt Policy Objective
This Debt Policy is intended to comply with the requirements of Senate Bill 1029 (SB 1029), codified as part of California Government Code Section 8855(i), effective on January 1, 2017 and shall govern all debt undertaken by the City. The primary objectives of the City's debt and financing related activities are to:
A. Maintain the City's sound financial position:
Ensure the City has the flexibility to respond to possible changes in future service obligations, revenues, and operating expenses;
Ensure that all debt is structured in order to protect both current and future taxpayers, ratepayers and constituents of the City;
D. Minimize debt service commitments through efficient planning and cash management:
Protect the City's credit worthiness and achieve the highest practical credit ratings, when applicable; and
Ensure the City is in compliance with all relevant State and Federal securities laws and other applicable laws and regulations.
4. Acceptable Uses of Debt Proceeds
The City will consider the use of debt financing primarily for assets and capital projects only if the term of debt shall not exceed the assets) or project's useful life or will otherwise comply with Federal tax law requirements. An exception to this long-term driven focus is the issuance of short- term instruments, such as tax and revenue anticipation notes, which are to be used for reasonable cash management purposes, as described below. Bonded debt should not be issued to finance normal perating expenses. General Fund debt will not be issued to support ongoing operational costs unle uch debt issuance achieves net operating cost savings and such savings are verified by independe analysis.
A. Long-Term Debt.
Long-term debt may be issued to finance the construction, acquisition, and rehabilitation of capital improvements and facilities, equipment, and land to be owned and/or operated by the City. Long-term debt financings are appropriate when any of the following conditions exist:
(1) When the project to be financed is necessary to provide basic municipal services;
(2) When the project 1o be financed will provide benefit to the City's constituents over a duration of more than one year;
(3) When the total debt financing would not impose an unreasonable burden on the City and its taxpayers and/or ratepayers, as applicable; or
(4) When the debt is used to refinance outstanding debt in order co produce debt service savings or to benefit from debt restructuring. ii. The City may use long-term debt financings subject to each of the following conditions:
(1) The project to be financed has been or will be considered and approved by the City Council;
(2) The weighted average maturity of the debt for the portion of the debt allocated to the project) will not exceed the average useful life of the project to be financed by more than 20%;
(3) The City estimates that sufficient revenues will be available to service the debt. through its maturity: and
(4) The City determines that the issuance of the debt will comply with the applicable requirements of State and Federal law.
2 Short-term Debt. Short-term debt may be issued to provide financing for the City's operational cash flows in order to maintain a steady and even cash flow balance. Short-term debt may also be used to finance the City's short-lived capital projects, such as undertaking lease- purchase financing for equipment.
Financings on Behalf of Other Entities. The City may also issue debt on chalf of other governmental agencies or private third parties in order to further the public purpose:
of the City. In such cases. the City shall take reasonable steps to confirm the financial feasibility of the project to be financed, the financial solvency of any borrower, and that the issuance of such debt is consistent with the policies set forth herein.
5. Standards for Use of Debt Financing
The City recognizes that there are numerous types of financing structures and funding consider the overall long-term affordability of the proposed debt issuance by conducting an objective analysis of the City's ability to support additional debt service payments. The City will consider its long-term revenue and expenditure trends, the impact on operational flexibility and the overall debt burden on the taxpayers/ratepayers. The evaluation process shall include a review of generally accepted measures of affordability and will strive to achieve and/or maintain debt levels consistent with its current operating and capital needs
6. Types of Debt
In order to maximize the financial options available to benefit the public, it is the City's policy to allow the consideration of issuing all generally accepted types of debt, including, but not exclusive to the following:
Revenue Bonds/Certificates of Participation (COPs). Revenue Bonds and COPs are limited-liability obligations tied to a specific enterprise or special fund revenue stream where the projects financed clearly benefit or relate to the enterprise or are otherwise permissible uses of the special revenue. Generally, no voter approval is required to issue this type of obligation but in some cases, the City must comply with proposition 218 regarding rate adjustments.
Joint Powers Authority (JPA) Lease Revenue Bonds. As an alternative to COPs, the City may obtain financing through the issuance of debt by a joint exercise of powers agency with such debt payable from amounts paid by the City under a lease, installment sale agreement, or contract of indebtedness.
General Obligation (GO) Bonds. GO Bonds are suitable for use in the construction or acquisition of improvements to real property that benefit the public at large. The California Government Code, Division 4. Chapter 4, Article I commencing with section 43600 authorizes cities to finance certain municipal improvements through GO bonds when a city determines the public interest and necessity demands the acquisition, construction or completion of such municipal improvements, including property or structures necessary or convenient to carry out the objects, purposes, and powers of a city. Examples of projects include but are not limited to libraries, parks, and public safety facilities. All GO bonds shall be authorized by the requisite number of voters in order to pass.
D. Loans. The City is authorized to enter into loans. installment payment obligations, or other similar funding structures secured by a prudent source or sources of repayment.
Special Assessment/Special Tax Debt. The City will consider requests from developers for the use of debt financing secured by property-based assessments or special taxes in rder to provide for necessary infrastructure for new development under guidelines adopted by Ci ouncil, which may include minimum value-to-lien ratios and maximum tax burdens. Examples o this type of debt are Assessment Districts (ADs) and Community Facilities Districts (CFDs), also known as Mello-Roos Districts. In order to protect bondholders as well as the City's credit rating, the City will also comply with all State guidelines regarding the issuance of special tax or special assessment debt.
Tax Allocation Bonds. Tax Allocation Bonds are special obligations that are secured by the allocation of tax increment revenues that are generated by increased property taxes in the designated (now former) redevelopment project areas. Tax Allocation Bonds are not debt of the City. California Health and Safety Code, Division 24, Parts 1.8 and 1.85 limit the authority to issuance of tax allocation bonds only as to refunding of bonds properly and timely issued prior to January 1, 2011; such laws are referred to as the "Dissolution Law" and govern successor agencies to now dissolved redevelopment agencies.
Short-Term Debt. Short-term borrowing, such as commercial paper, Tax and Revenue Anticipation Notes (TRANS), and lines of credit, may be considered as an interim source of funding in anticipation of long-term borrowing and may be issued to generate funding for cash flow needs. The final maturity of the debt issued to finance the project shall be consistent with the useful life of the project. Short-term debt may also be used to finance short-lived capital projects such as lease-purchase financing for equipment.
Refunding Bonds. The City shall refinance debt pursuant to the authorization that is provided under California law, including but not limited to Articles 9, 10 and I1 of Chapter 3 of Part I of Division 2 of Title 5 of the California Government Code, as market opportunities arise.
Refundings may be undertaken in order:
(1) To take advantage of lower interest rates and achieve debt service costs savings;
(2) To eliminate restrictive or burdensome bond covenants; or (3) To restructure debt to lengthen the duration of repayment, relieve debt service spikes, reduce volatility in interest rates or free up reserve funds.
Generally, the City shall strive to achieve a minimum of 3% net present value savings. The net present value assessment shall factor in all costs, including issuance. escrow, and foregone interest earnings of any contributed funds on hand. Refundings which produce a net present value savings of less than 3% will be considered on a case-by-case basis. Upon the advice of the City Manager or the Finance Manager and with the assistance of a financial advisor and bond counsel, the 4 City will consider undertaking refundings for other than economic purposes based upon a finding that such a restructuring is in the City's overall best financial interest.
The City may from time to time find that other forms of debt would be beneficial to further its public purposes and may approve such debt without an amendment of this Debt Policy.
Debt shall be issued as fixed rate debt unless the City makes a specific determination as to why a variable rate issue would be beneficial to the City in that circumstance.
7. Relationship to Capital Improvement Program and Operating Budget The City intends to issue debt for the purposes stated in this Debt Policy and the decision to cur new indebtedness should be integrated with the City Council-adopted annual Operating Budg nd Capital Improvement Program Budget. Prior to issuance of debt, a reliable revenue source sha be identified to secure repayment of the debt and the annual debt service payments shall be included in the Operating Budget.
The City shall integrate its debt issuances with the goals of its Capital Improvement Program by timing the issuance of debt to ensure that projects are available when needed in furtherance of the City's public purposes.
8. Policy Goals Related to Planning Goals and Objectives This Debt Policy has been adopted to assist with the City's goal of financial sustainability and financial prudence. In following this Debt Policy, the City shall pursue the following policy i.
The City is committed to financial planning, maintaining appropriate reserves levels il. It is a policy goal of the City to protect taxpayers, ratepayers and constituents by tilizing conservative financing methods and techniques so as to obtain the hiehes practical credit ratings, if applicable, and the lowest practical borrowing costs ili. is a policy goal of the City to reduce the unfunded liabilities for employee pensi id other post-employment benefits (OPER
iv. The City will comply with applicable state and federal law as it pertains to the maximum term of debt and the procedures for levying and imposing any related taxes, assessments, rates and charges; and
v. When refinancing debt, it shall be the policy goal of the City to achieve, whenever possible and subject to any overriding non-financial policy, minimum aggregate ne present value debt service savings of at least 3% of the refunded principal amount
9. Internal Control Procedures
When issuing debt. in addition to complying with the terms of this Debt Policy. the City shall comply with any other applicable policies regarding initial bond disclosure, continuing disclosure, post-issuance compliance, and investment of bond proceeds.
The City will periodically review the requirements of and will remain in compliance with the following:
i. Federal securities law, including any continuing disclosure undertakings under SEC Rule 15c2-12;
Any federal tax compliance requirements including without limitation arbitrage and rebate compliance, related to any prior bond issues;
ili. The City's investment policies as they relate to the investment of bond proceeds; and iv. Government Code section 8855(k) and the annual reporting requirements therein.
The City shall be vigilant in using bond proceeds in accordance with the stated purpose at the time that such debt was issued. The City Manager, the Finance Manager or designee will monitor the expenditure of bond proceeds to ensure they are used only for the purpose and authority for which ine bonds were issued. Whenever reasonably possible, proceeds of debt will be held by a third-part trustee and the City will submit written requisitions for such proceeds. The City will submit requisition only after obtaining the signature of the City Manager or the Finance Manager.
10. Amendment and Waivers of Debt Policy
This Debt Policy will be reviewed and updated periodically as needed. Any amendments to this Debt Policy are subject to specific City Council approval.
While adherence to this Debt Policy is required in all applicable circumstances, on rare occasions there might be circumstances when strict adherence to a provision of this Debt Policy is not possible or not in the best interest of the City. If the City staff has determined that a waiver of one or more provisions of this Debt Policy should be considered by the City Council, it will prepare an analysis for the City Council describing the rationale for the waiver and the impact of the waiver on the proposed debt issuance and on taxpayers, if applicable. Upon a majority vote of the City Council, one or more provisions of this Debt Policy may be waived for a debt financing.
The failure of a debt financing to comply with one or more provisions of this Debt Policy shall in no way affect the validity of any debt issued by the City in accordance with applicable laws.
11. SB 1029 Compliance
SB 1029. signed by Governor Brown on September 12, 2016. and enacted as Chapter 307, Statutes of 2016, requires issuers to adopt debt policies addressing each of the five items below:
The purposes for which the debr proceeds may be used. Section 4 (Acceptable Uses of Debt Proceeds) addresses the purposes for which debt proceeds may be used. 6 information regarding the lypes of dobs that may be issued. The types of debt that may be issued. Section 6 (Types of Debt) provides The relationship of the debt to. and integration with, the issuer's copital improvement program or budgel, if applicable. Section 7 (Relationship to Capital Improvement Program and Operating Budget) provides information regarding the relationship between the City's debt and Capital Improvement Program and annual Operating Budget.
Policy gouls related to the issuer's planning goals and objectives. Section 3 (Debt Policy Objective) and Section 8 (Policy Goals Related to Planning Goals and Objectives) address some of the City's policy goals and how this Debt Policy has implemented them.
The internal control procedures that the issuer has implemented. or will implement, to ensure that the proceeds of the proposed debt issuance will be directed to the intended use. Section 9 (Internal Control Procedures) provides information regarding the City's internal control procedures designed to ensure that the proceeds of its debt issues are spent as intended.
This Debt Policy, as written, complies with and meets the requirements of SB 1029.
Agenda Item #
DATE: June 29, 2015
TO: lone City Council
FROM: Jon G. Hanken, City Manager
SUBJECT: City of lone Financal Policies and Procedures Handbook.
RECOMMENDED ACTION: There is no recommended action requested.
Motion:
FISCAL IMPACT: None
BACKGROUND: The City had a footnote in the past few audit reports requesting the City adopt financial policies and procedures to assist in achieving long-term stable and positive financial positions. Council adopted the proposed handbook at their June 16th meeting. However, staff was unable to provide Councilors with an advance copy of the document for them to review and make recommendations. The motion to adopt the financial policies and procedures was done to remove the footnote from the upcoming audit. Tonight, Council will have the opportunity to review this document in more detail and make any adjustments it deems necessary.
This document provides a guideline to the Finance Manager and the City Treasurer on directing the day to day financial affairs and developing policy recommendations to the City Council. Staff will continue to revisit this document with Council every quarter to discuss any necessary changes. One suggestion that staff would like to recommend for Council consideration is incorporating Resolution No. 2015-25: A Resolution of the City Council of the City of lone Establishing Policies on Interfund Transfers, Consolidating Funds, and Eliminating Funds into the adopted Financial Policies and Procedures manual. By adding this information, staff will be able to maintain financial policies in one central location.
The Financial Procedures and Policy Manual is divided into 19 sections and covers the issues of accounting, auditing, financial reporting, internal controls, operating and capital budgeting, revenue management, expense control, debt management, and planning.
Staff wants to ensure that the City's financial position is presented in conformity to the Generally Accepted Accounting Principles (GAAP) and that we are in compliance with fiancé related legal and contractual issues as required by state and federal law.
Attachments: City of lone Financial Policies and Procedures Handbook. June 2015 Resolution No. 2015-25: A Resolution of the City Council of the City of lone Establishing Policies on Interfund Transfers, Consolidating Funds and Eliminating Funds. Adopted June 2, 2015
City of lone
CITY OF IONE
FINANCIAL POLICIES AND
PROCEDURES HANDBOOK
June 2015
City of lone
FOREWARD
This handbook provides information and guidelines to staff on the financial principles of the City of lone. It is intended to help the City achieve a long-term stable and positive financial condition. The document was developed with the assistance of the City's accountant and finance personnel.
As City Manager, I want to stress the importance of revisiting these guidelines every few months or so during the first year to ensure accuracy. After the first year, the document should be revisited annually to incorporate recommendations by the City Auditor and to update procedures to meet the objective of maintaining a positive financial condition.
This document will be used by the City Manager, Department Heads, the Financial Manager, and the City Treasurer in planning and directing the City's day to day financial affairs.
The scope of these procedures generally spans accounting, auditing, financial reporting, internal controls, operating and capital budgeting, revenue management, cash and investment management, expense control, and debt management.
Full participation, cooperation, and support of City personnel are vital to ensure sound fiscal activities.
June 16, 2015
Jon G. Hanken
City Manager
City of lone
TABLE OF CONTENTS
Section 1- FINANCIAL POLICIES AND PROCEDURES
1. Statement of Purpose..
II. General Implementation and Compliance Guidelines..
III. Accounting, Auditing, and Financial Reporting..
IV Operating Budget.
V. Revenue Management.
1 VI. Expense Control. 13
VIl. Asset Management. 14
VIII. Capital Expenses.. 15
IX. Financial Conditions, Reserves, and Stability Ratios. 17 X. Treasury and Debt Management. 17
XI. Internal Controls. 19
XII. Staffing and Training.. 9
Section 2- CASH CONTROL
1. Statement of Purpose...
20 I1. Policy Statement.
20 III. Basic Principles and Standards.
20 IV. Safeguarding Cash..
V. Guidelines for Handling Cash
VI. Guidelines for Handling Checks.. 22
VII. Returned Checks 23
VIlI. Cash Overages... 23
Section 3- ACCOUNTS RECEIVABLE
I. Policy Statement......
24 II. Receipt System...
24 III. Procedure.
2 5
IV. Automatic Debit/Credit Payment Procedure. 2 5
V. Posting Error Corrections 26
VI. Tenant/Wastewater Deposits... 26
VII. Accounts Other Than Wastewater. 27
Section 4- BANK ACCOUNTS
1. Policy Statement.
29 II. Bank Accounts.
2 9
III. Bank Deposits.
29 IV. Endorsements/ Checks...
30 V. Bank Reconciliation...
30 VI. Procedure.
30 VII. Bank Charges. 30
VIII. Bank Account Records.. 30
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Section 5- WARRANTS
1. Policy Statement
II. 32
Replacement of Cancelled Warrants.
32 III. Stop Payments.
IV. 32
Imprest Cash Fund (Petty Cash)
32 Section 6- AUTHORIZED SIGNATURES
1. Policy Statement.........
34 II. Authorization............
34 Section 7- CHART OF ACCOUNTS
1. Policy Statement 35
II. Fund Accounting. 35
lll. Account Code.. 35
IV. Use of Account Numbers.. 36
Section 8- FISCAL RECORDS RETENTION AND DISPOSITION
I. Policy Statement
37 Il. Retention Schedule of Financial Documents... 37
Section 9- FISCAL FORMS PREPARATION
1. Official Manual City Receipt..
39 II. Statement of Purpose.....
39 Ill. Preparation.
39 IV. Distribution...
39 Deposit Slip Books for Cash
40 Section 10- CLAIMS/ACCOUNTS PAYABLE/CASH DISBURSEMENTS
1. Policy Statement.....
41 II. Objective....
41 III. Procedure.
41 IV. Void Checks.
42 V. Vendor Setup..
42 VI. Requisition/Purchase Order Form- Request Form.
42 VII. City Credit Card Use.......
43 VIII. Travel Claim
44
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Section 11- BUDGET AMENDMENT RESOLUTION
1. Purpose 45
Il. Preparation.... 45
Section 12- PAYROLL PROCESSING
1. Purpose.. 46
Il. Preparation. 46
IlI. Procedure 46
Section 13- CALIFORNIA PUBLIC EMPLOYEE'S RETIREMENT SYSTEM REPORTING I. Purpose ................ 48
II. Employer Contribution Rates............... 48
... ..
III. Preparation.................. 48
Section 14- FINANCIAL SYSTEM 50
Section 15- DEVELOPER ACTIVITY 51
Section 16- YEAR END CLOSING AND FINANCIAL REPORTING 52 Section 17- CAPITAL ASSETS 54
Section 18- OTHER POST-EMPLOYMENT BENEFITS 55
Section 19- FUND BALANCE POLICY 56
GLOSSARY 58
City of lone
SECTION 1- FINANCIAL POLICIES AND PRODCEDURES
I. STATEMENT OF PURPOSE
This Financial Handbook is to enable the City of lone to achieve a long-term stable and positive financial condition. The watchwords of the City's financial management include integrity, prudent stewardship, planning, accountability, and full disclosure.
The more specific purpose is to provide guidelines to the Finance Manager and City Treasurer in directing the day-to-day financial affairs, and in developing recommendations to the City Manager and City Council.
The scope of these procedures generally spans, among other issues, accounting, auditing, financial reporting, internal controls, operating and capital budgeting, revenue management, expense control, debt management, and planning concepts in order to:
• Present fairly, and with full disclosure, the financial position and results of financial operations of the City in conformity to Generally Accepted Accounting Principles (GAAP), and
• Determine and demonstrate compliance with finance-related legal and contractual issues as required by state and federal law.
This directive is distributed to all City personnel.
II. GENERAL IMPLEMENTATION AND COMPLIANCE GUIDELINES
A. Implementation, compliance, accountability, and review The Finance Manager will be accountable for implementing these procedures and will, to the best of his or her knowledge make the City Manager aware of any variances in practice from these procedures or any other deviation from prudent financial practices in accordance with GAAP, federal laws, state laws, or ethics of the profession. Any variances will be presented as soon as the variance is determined.
B. Annual Review
The Financial Handbook will be reviewed annually and updated, if necessary.
City of lone
III. ACCOUNTING, AUDITING, AND FINANCIAL REPORTING
A. Accounting
The City is solely responsible for preparing its financial affairs, both internally and externally. The Finance Manager is responsible for establishing the Chart of Accounts and for properly recording financial transactions in the General Ledger.
Reconciliation
All balance sheets and revenue accounts are reconciled monthly.
B. External Auditing
Annual Audit
The City will be audited annually by external independent accountants (Auditor).
The Finance Manager will be the contracting officer technical representative for the annual audit. The Auditor will meet with the City's Finance Committee prior to starting the audit and when the draft audit report is prepared.
Auditor Reputation
The external auditor must be a CPA firm and must demonstrate that it has the breadth of experience and depth of staff to conduct the City's audit in accordance with generally accepted auditing standards and contractual requirements.
Schedule
The external Auditor's report on the City's financial statements will be completed within 180 days of the City's Fiscal Year end.
4. Management Letter
The external auditor will prepare and will jointly review the Management Letter with the Finance Committee, Finance Manager, and City Manager. Within 30 days of this receipt, the Finance Manager shall respond in writing to the City Manager regarding the auditor's Management Letter, addressing the issues therein. The City Manager, upon acceptance of the recommendations from the Finance Manager concerning the Management Letter, shall forward the Management Letter and the response to the City Council.
City of lone
5. External Auditor's Accountability to City Council
The external auditor is accountable to the City Council and will have access to the City Council members as the external auditor considers such communication necessary to fulfill its legal and professional responsibilities.
6. Rotation of External Auditor
The City does not require an external auditor rotation, but may circulate requests for proposal for audit services.
External Auditor Accountability to Staff
The following will be provided to City Staff by the external auditor:
Copies of all work papers, including diskettes and schedules, will be furnished to the City upon completion of the audit. Originals will be maintained at the auditor's office
Financial Reporting
External Reporting
a.
Scope. The City's basic financial statement shall be prepared in accordance with GAAP and the Governmental Accounting Standards Board (GASB).
Schedule- The City's basic financial statement shall be provided to the City Council within 180 calendar days of the City's Fiscal year end. The Finance Manager will inform the City Manager of any delay and the reasons therefore.
Internal Reporting
The Finance Manager will prepare internal financial reports sufficient to plan, monitor, and control the City's financial affairs.
a. Scope/ Format- The level of detail presented should be line item.
Information included should be current month budget and actual; budget and actual year-to-date; and variance from budget.
b. Schedule- On a monthly basis, the Finance Manager shall prepare a summary of the City's financial affairs. The report shall be submitted to the City Manager following the end of each calendar month for his or her review. Each such report shall accurately reflect the City's current cash position, revenue, and
City of lone
expense performance as well as any additional information that reflects the City's fiscal position:
C. Reconciliations- Reconciliation of all balance sheet and revenue accounts shall be performed monthly.
IV. OPERATING BUDGET
A. Preparation
Budgeting is an essential element of the financial planning, control, and evaluation process of the City. The City's "Operation and Maintenance Budget" is the City's annual financial operating plan.
1. Budget Scope and Format
The annual budget process shall begin by the City manager reviewing the current year's budget status, and any changes in policy requested by the City Council. A proposed budget shall be prepared by the City Manager and Finance Manager reflecting the guidelines set by the City Manager and City Council, with the participation of all the City's departments. The budget shall include three basic segments for review and evaluation. These segments are: (1) Financial Overview/Summaries of all Funds, including statements of operations, (2) Operation and Maintenance Program for the General Fund, Special Funds, and Enterprise Funds, and (3) Capital Maintenance and Improvement Program (CMIP). A five-column format should be used such that 2-years prior actual, prior year actual, current year adopted, current year estimate, and next year adopted are all clearly shown.
Basis of Budgeting
The basis of budgeting will conform to a full accrual basis, except where adjustments for capital expenses, work in process or other financial adjustments are involved. These adjustments will be accommodated at year-end financial reporting.
Budgetary Process
The budget is prepared by the City Manager based on guidelines outlined by the City Manager and City Council with the cooperation of all City departments. The budget is started by the Finance Manager using information compiled from prior year activity, current year, year-to-date activity, and information gathered for future projections. Departments are responsible for submitting budget requests including any capital purchases to be utilized in the preliminary budget
City of lone
preparation. The City Manager and the Finance Manager will review all budget details to assure compliance with City policy and will present the draft preliminary budget to the Finance Committee for its review and recommendations. The City Manager and Finance Manager will make any adjustments as recommended and will present the draft final budget to the City Council at a Public Hearing. The City Council will review the budget presented and make recommendations if any to staff. If recommendations are made the adjustments will be implemented and the final budget will be brought back for official adoption at the City Council's regular June meeting (or at a special meeting in the month of June if circumstances so require). The City Manager will inform the departments of the approval, denial, or modifications to their budget submissions.
Budget Adoption
Upon presentation of a proposed budget to the City Council, it is the goal that it can be acted upon and approved by the City Council in the month of June.
Budget Amendments
Any time during the fiscal year, the City Manager may recommend amendments to the adopted budget. Budget amendments are submitted to the City Council for approval and adoption.
Balanced Budget
It is intended that the operation and maintenance budget be balanced with current revenues, exclusive of beginning resources, greater than or equal to current expenses.
The City's share of net remaining revenue, depending on the fund, shall be transferred to the City's Capital Fund or General Fund Contingency for use in establishing the budget, for other capital expenses, or held in reserve.
Financial Plans
Before the start of the new fiscal year, the departments will prepare financial plans based on the approved Operation and Maintenance Budget. Financial plans will be updated quarterly or semi-annually to reflect changes in priorities as the fiscal year progresses. The Finance Manager will inform the departments of changes to their plans, including approvals, denials, and/or modifications to requested line items. The departments will track the execution of the Operation and Maintenance Budget using the latest approved revision to their financial plans.
Çity of lone
D. Reporting
Monthly budget to actual reports will be prepared to enable the departments to manage their budgets and to enable the City Manager to monitor and control the budget as authorized by the City Council. These reports will be presented to the City Council for review and comments at the second meeting of each month. Summary financial reports will be presented to the City Council annually. Such reports will be in a format appropriate to enable the City Council to understand the budget status at a level of summary executive detail.
Control
Operating Expense Control is addressed in Section 6.
Operating Position
The guidelines that the City should be following to assure fiscal stability are those outlined in Financial Conditions, Reserves, and Stability Ratios (Section 9).
V. REVENUE MANAGEMENT
A. Characteristics
The City will strive for the following optimum characteristics in its revenue system:
Simplicity
The City, where possible and without sacrificing accuracy, will strive to keep the revenue system simple in order to reduce compliance costs and to make it more understandable.
Certainty
A thorough knowledge and understanding of all revenue sources increases the reliability of the revenue system. The City will understand its revenue sources and enact consistent collection procedures to provide assurances that the revenue base will materialize according to budgets and plans.
Equity
The City shall make every effort to maintain fairness in its revenue system structure. The City shall require that there be a balance in the revenue system; i.e. the revenue base will have the characteristic of fairness and neutrality.
Administration
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The benefits of a revenue will exceed the cost of producing the revenue. The cost of collection will be reviewed annually for cost effectiveness.
Diversification and Stability
In order to protect itself from extreme fluctuations in a revenue source due to changing economic conditions, variations in weather, or other external issues, the City will maintain a diversified revenue system which will provide a stable source of income with a goal of balancing.
B. Sources of Funds
The following considerations and issues will guide the City in its revenue policies concerning specific sources of funds:
Non-Recurring Revenues
One-time or non-recurring revenues will not be used to finance current ongoing operations. Non-recurring revenues should be used only for one-time expenses such as long-lived capital needs. They will not be used for budget balancing purposes.
2. Debt Collection Policy
a. Sewer Accounts- A 95 percent collection rate shall serve each year as a goal for current revenue collections. All delinquent accounts shall be aggressively pursued by the City. Accounts delinquent more than 90 days shall be considered in collection. A late charge, which shall include all collection costs or attorney's fees as permitted by applicable law and in accordance with the Municipal Code, shall be assessed on all revenues delinquent more than 30 days.
b. Transient Occupancy Tax (TOT) - A 95 percent collection rate shall serve each year as a goal for current concessions and other revenue collections. All delinquent accounts shall be aggressively pursued by the City. A late charge, which shall include all collection costs or attornev's fees as permitted by applicable law and in accordance with the Municipal Code, shall be assessed on all revenues delinquent more than 30 days.
Interest Income
Interest income earned from investment of available monies will be distributed to each fund proportionately.
Sewer Accounts
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Annually, the City will review and adopt rates and charges that will generate revenues required to fully cover operating expenses in the sewer, meet the legal restrictions of all applicable bond covenants, and provide for an adequate level of working capital needs. This policy does not preclude drawing down cash balances to finance current operations. However, it is recommended that any extra cash balance be used instead to finance capital projects.
Transient Occupancy Tax (TOT)
The City may contract with an outside auditor to audit revenues received for TOT to ensure that all covered operations are reporting as required.
6. Other User-Based Fees and Service Charges
For special services associated with a user fee or charge, the direct and indirect costs of that service will be offset by the fee where possible. There may be an annual adjustment of rates and charges to ensure that fees provide adequate coverage of costs of services as required in the City's Fee Study.
7. Grants
Any potential grants will be examined for matching requirements. These revenue sources should be used for one-time expenses or to initially start a program and replace the grant funding with a steady revenue source or eliminate program when grant funds are exhausted.
Revenue Monitoring
Revenues actually received will be compared regularly to budgeted revenues, and variances will be reviewed. This process will be summarized in the appropriate budget report. Any material discrepancy will be reported to the City Manager for further review.
VI. EXPENSE CONTROL
A. Funding Authorization
The level of budgetary control for the O&M program is the department budget. When budget adjustments between departments are necessary, they must be approved by the City Manager. Budget adjustments at lower levels of control shall be made in accordance with the applicable administrative procedures.
B. Central Control
Upon recognition of any significant O&M budgetary deficit or savings in a Department, it shall be reported to the Finance Manager for inclusion in the mid-year Budget Review
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Reports. Any reprogramming of recognized savings should be reviewed by the Finance Manager and the City Manager before the funds are recommitted.
Prompt Payment
All invoices approved for payment by the proper City officials shall be paid by the Finance department within thirty (30) calendar days of receipt, unless otherwise specified in the contract.
The Finance Manager shall establish and maintain proper procedures which will enable the City to take advantage of all purchase discounts. Where no payment discounts are offered, payment will be made by the earliest of the payment due date or 30 days from receipt of the invoice.
D. Equipment Financing
Equipment may be leased or financed if the cost advantages provide a clear and definitive benefit to the City.
E. Risk Management
Every opportunity will be aggressively pursued to conserve and protect the City's resources from accidents and loss exposures affecting its human, financial, natural, and physical resources. The goal shall be to minimize and uncover significant loss exposures which would threaten the City's assets. The Risk Management program will emphasize a proactive safety and loss prevention program and a comprehensive claims management program as an important part of the City's management.
All reasonable financing methods will be reviewed to provide sufficient funding to meet loss situations if and when they occur. Such options may include the purchase of insurance and self-insurance. Reserves for accident and loss exposures will be established by a combination of actuarial consultants, third party administrators, and the City Manager. The reserves will not be used for purposes other than for financing losses.
VII. ASSET MANAGEMENT
A. Investments
The City Manager or designee shall promptly invest available City funds in accordance with the provisions of the City's Investment Policy with the Local Agency Investment Fund or the City's investment broker.
At the end of each Fiscal Year, a report on investment performance will be provided to the City Council.
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All investments will be reconciled quarterly.
B. Cash Management
The City's cash flow will be managed to maximize the cash available to invest. Such cash management will entail the centralization of cash collections, where feasible.
The Finance Department shall, on payments authorized by the City, obtain the signature of the appropriate signing official.
The Finance Manager, or designee, may transfer funds via electronic transfer through written instructions to the City's Depository for investment purposes or for payment of any obligation of the City under the conditions applicable to Paragraph 7.2. Payment authorization shall be in accordance with criteria as defined in the current Bank Depository Agreement, stipulating the conditions and control procedures on such activity.
All cash accounts will be reconciled monthly.
C. Fixed Assets and Inventory
Fixed assets will be reasonably safeguarded and properly accounted for an prudently insured.
System Data Security
The Finance Manager shall provide for the security of its Financial Management system and data files.
VIII. CAPITAL EXPENSES
A. Scope
Capital expenses of the City may be budgeted in one of three categories:
Equipment and facility projects of limited scope are budgeted as line items in the O&M Budget (i.e., street sweeper, fire trucks, painting, rest room renovation).
2. The design and construction of major ongoing repair and rehabilitation work at the City facilities (i.e., road paving, roof replacement, construction of minor facilities, and design or planning of any facility and the planning, design and construction of major improvements at the City facilities are budgeted by separate projects. Revenue enhancement and enterprise projects designed to increase revenues are budgeted as separate projects (i.e., renovation of park facilities or sewer master plan implementation).
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3. The planning, design and construction of major improvements at the City facilities are budgeted, by project in the CCP budget (i.e., construction of new police station or reconstruction of roadway.)
Budget Preparation
The City's Budget will be prepared annually on a fiscal year basis, including one section for O&M expenses and capital expenses shown in one of the three categories identified in the preceding paragraph.
The budgetary requirements for the equipment and small facility projects referred to in Section VIII.A. 1 will be addressed in the preparation of the O&M Budget.
The CMIP and CCP Budgets will be prepared independently and included with the 0&M Budget with a notation of the source of funding for each project. Generally, funding for CMIP projects will be from fund revenues or reserve funds of the City while funding for CCP projects will be from debt financing and facility fees.
C. Budgetary Control
The City Manager must verify the availability of funds within the appropriate Budget before any equipment or capital facility project contract is presented to the City Council for approval.
D. Program Planning
The CCP Budget will be derived from the Engineering plans that will typically have a planning time frame of at least 5 years into the future. The budgetary requirements for replacement and maintenance of capital items should also be projected for the next 5 years. Future operation and maintenance costs will be considered, so that these costs can be included in the O&M Budget.
E. Financing Programs
Where applicable, sewer fees should include the debt service for capital projects which have a primary benefit to sewer infrastructure.
Any City funds expended should be recovered over a reasonable time period and include an amortization factor. When debt is issued, it will be used to acquire major assets with expected life that equal or exceed the average life of the debt issue. The exceptions to this requirement are the traditional costs of marketing and issuing the debt, capitalized labor for design and construction of capital projects, and small component parts which are attached to major equipment purchases. The full cost of debt should be recovered from the project's beneficiary.
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Equipment Maintenance and Replacement
The City recognizes that deferred maintenance and deferred replacement of equipment increases future capital costs. Therefore, a portion of the O&M Budget may be set aside each year to maintain the quality of the City's equipment.
G. Emergency Reserves
In addition to an on-going maintenance program as listed in Section VIIIF above, the City may establish Emergency Reserve Fund(s). The Emergency Reserve will be built from revenues and is to be used only in the case of a catastrophe occurring when the CMIP fund is depleted.
IX. FINANCIAL CONDITIONS, RESERVES, AND STABILITY RATIOS A. Operational Coverage (No Operational Deficits)
Deferrals, short-term loans, or one-time sources will be avoided as budget balancing techniques. Reserves will be used only for emergencies or non-recurring expenses, except when balances can be reduced because their levels exceed guideline minimums as stated in Section IX.B.
B. Liabilities
Procedures will be employed to maximize the realization of any discounts offered by creditors. Current liabilities will be paid within 30 days of receiving the invoice.
C. Receivables
Sewer account receivables are due monthly. Other accounts receivable procedures are targeted to begin at 30 days from the invoice date, with any receivables aged past 30 days to be considered delinquent. Concurrence from the City Manager is required to write-off uncollectible accounts that are delinquent for more than 120 days, if the proper delinquency procedures have been followed.
x. TREASURY AND DEBT MANAGEMENT
A. Cash Management
The City's cash flow position will be reviewed periodically to determine performance of cash management and investment policies. Detailed procedures will be followed with respect to Cash/Treasury Management. The guiding principle will be that idle cash will be invested with the intent to (1) safeguard assets, (2) maintain liquidity, and (3) maximize return. Where legally permitted, pooling of investments will be done.
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The City will adhere to the investments authorized in applicable bond indentures and Investment Policies and Guidelines. Such policies will clarify acceptable investment securities, brokers, terms, and other pertinent investment information.
B. Types of Debt
Short-Term Debt
No policy for short-term debt at this time.
Long-Term Debt
Long-term debt will not be used for operating purposes, and the average life of a bond issue will not exceed the average useful life of projects financed by that bond issue.
Special Facilities Debt
When appropriate and in the interest of the City, special facilities debt may be issued by the City. Revenues derived from use of the special facilities will be used to pay debt service in lieu of general revenues.
Analysis of Financing Alternatives
Before undertaking any financing, the City will explore all reasonable financing alternatives in addition to long-term debt, including leasing, grants and other aid, and use of reserves of current monies.
D. Disclosure
Full disclosure of financial operations will be made to the bond rating agencies and other users of City financial information. The City staff, with the assistance of its financial advisor, feasibility consultant, and bond counsel, will prepare the necessary materials for presentation to the rating agencies, will aid in the production of Official Statements, and will take responsibility for the accuracy of all financial information released.
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E. Legal Requirements
The City will maintain procedures to comply with grant requirements, arbitrage rebate, and State and Federal requirements.
XI. INTERNAL CONTROLS
A. Written Procedures
Wherever possible, written procedures will be established and maintained by the Finance Manager for all functions involving cash handling and/or accounting throughout the City. These procedures will embrace the general concepts of fiscal responsibility set forth in this financial handbook.
B. Department Head Responsibility
Each department is responsible for ensuring that good internal controls are followed throughout his or her department, that all internal controls are implemented, and that all internal control recommendations made by the internal and external auditors are addressed.
XII. STAFFING AND TRAINING
A. Adequate Staffing
Staffing levels will be adequate for the fiscal functions of the City to operate effectively.
As a general rule, overtime shall be used only to address temporary or seasonal demands that require excessive hours. Workload shedding alternatives will be explored before adding staff.
Training
The City will support the continuing education efforts of all financial staff including the investment in time and materials for maintaining a current perspective concerning financial issues. Staff will be encouraged and expected to communicate, teach, and share with other members all information and training materials acquired from seminars, conferences, and related education efforts.
C. Credentials and Recognition
The City will support staffs efforts which result in meeting standards and receiving exemplary recitations on behalf of any of the City's fiscal policies, practices, processes, products, or personnel. Staff certifications may include, but are not limited to Certified Public Accountant, Management Accountant, Certified Internal Auditor, and Certified Cash Manager.
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SECTION 2- CASH CONTROL
I. PURPOSE
The purpose of the Cash Management Policy and Procedures is to provide guidance to City staff on proper accounting for all aspects of cash handling, recording, and processing of transactions in order to safeguard the City's financial well-being. This section will identify various processes for providing adequate internal control over the receipt of funds and to formalize the procedures for cash receipt and billing operations. The Policy creates a general performance standard for City employees who collect and process cash and is to be used as a reference in the performance of their day to day tasks and responsibilities. The policies and procedures contained in this document are applicable to all City departments under the direction of the City Manager.
The Finance Department will provide assistance to City employees in performance of the procedures contained in this manual and the Finance Manager will be the interpreter of the policies and procedures contained herein.
POLICY STATEMENT
It shall be the responsibility of each department head to develop and implement the necessary procedures required to ensure that the provisions of these policies and procedures are complied with by his/her department in the control of cash.
III. BASIC PRINCIPLES AND STANDARDS
A. Employee personal funds shall not be co-mingled with City Funds.
B. Deposits shall be made by the City Treasurer or Finance department staff other than the person issuing receipts.
C. Bank accounts shall be reconciled monthly by the City Treasurer or Finance department staff other than the person who makes deposits.
D. The duties of cashiering and bookkeeping tasks shall be divided between two employees, neither of whom shall be permitted to have access to each other's records, unless restricted by the number of personnel working.
E. Departments may accept payments in the form of cash, personal checks, bank checks and drafts, express and post office money orders, traveler's checks and cashier's checks. Wire transfers to the City's bank account will also be accepted with proper documentation supporting the wire transfer. Other methods of acceptable payment are credit cards, debit cards, and ACH transactions (Automated Clearing House).
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F. When a payment is received in more than one form (check, money order, and currency) only one receipt shall be issued for the total payment. A memo notation shall be made on the receipt indicating the different forms of payment and the corresponding amount.
G. When a check or money order is received covering payments on account for more than one person, a separate receipt must be issued for each.
H. Nationally recognized traveler's checks may be accepted for payments subject to approval by the department head. Traveler's checks accepted in excess of the amount due shall also be notated on the receipt.
I. Checks drawn against foreign banks, including Mexican and Canadian banks should be refused, including those drawn on U.S. dollars.
All checks and money orders etc. shall be stamped with "Date Received" upon receipt.
IV. SAFEGUARDING CASH
The department head or official in charge shall ensure that all cash received is adequately safeguarded until given to the City Treasurer or Finance department for deposit with the bank.
A. Large amounts of cash shall not be allowed to accumulate. Frequent deposits shall be made by the City Treasurer, Finance department, or authorized employees to avoid large amounts of cash on hand.
B. All cash held overnight shall be kept in the locked safe.
Safe combinations shall be restricted to as few employees as possible preferably memorized. When a written safe combination has to be maintained, it must be kept in a secure place.
D. The Finance department shall ensure that combinations to safes are changed when an employee who has knowledge of the combination terminates City employment.
During business hours, cash must be kept in a secure drawer or cash box not accessible to unauthorized persons. Cash drawers or cash boxes must be closed when not in use.
F. It is recommended that offices be locked during nonworking hours and office door keys are restricted to as few responsible employees as possible.
G. It is recommended that a record of office keys and other items issued be maintained and the department head should ensure that all items listed are returned by terminated employees.
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V. GUIDELINES FOR HANDLING CASH
Employees shall exercise extreme care when handling cash. Losses of cash through careless handling of money are losses of money belonging to our citizens, and may be violation of the law.
The following precautions shall be observed to guard against cash losses:
A. Keep the cash drawer neat at all times.
B. Arrange currency neatly and attached to the corresponding receipt if any.
C. Do not keep excess cash in the drawer.
D. When making change, first count out the coins to the nearest dollar, then count the bills.
E. Count the cash twice before paying out; once when removing it from the cash drawer and again as it is given to the customer.
F. Concentrate on each transaction. Do not permit any distraction while handling money.
If the transaction is interrupted for any reason, it should be started over.
G. Always keep cash secure and out of site in the cash drawer.
H. Handle new bills with care as they have a tendency to stick together.
1. At the close of each business day all cash is locked in the City's safe.
VI. GUIDELINES FOR HANDLING CHECKS
Accepting checks in payments for amounts due is a convenience; however it can create costly problems and losses if bad checks are inadvertently accepted. The majority of all sewer customers pay their monthly sewer bills by check either at the front counter or by mail. The best way to keep bad check losses to a minimum is to follow sound and sensible practices and always use caution and common sense whenever accepting a check.
The following precautions shall be observed to guard against losses in accepting checks:
A. The check must always be made payable to The City of lone.
B. Checks must be from a local or state bank.
C. The check writers name and address must be printed on the check.
D. Checks should only be written for the amount accepted; no cash or change shall be given in return for a check written over the amount that is due.
E. Date must be current and not postdated
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The check must have a bank I.D. number or routing number that runs across the bottom of the check along with the writers account number. These numbers are used to identify the transaction and resolve payment issues.
G. When checks are received through the mail for payment, staff opening the mail will ensure the required information is on each check, otherwise contact the payer by phone to obtain missing information before authorized staff deposits the check.
H. All checks must be stamped with the date stamp and the City's endorsement stamp at time of receipt.
VII. RETURNED CHECKS
The most common reason for checks to be returned by a bank is due to insufficient funds. The procedure for processing returned checks shall be as follows:
A. A copy of the returned check and returned check notice from the bank is made once notice of a returned check is received and confirmed through the City's bank. These copies will be kept in a file in the Finance department for audit and bank reconciliation purposes.
All returned checks will be entered on a log showing date received, name of check writer, amount of check, action taken, and date paid.
C. The amount of the check, if written for waste water service, is charged back to the waste water account along with a $15.00 non-sufficient funds fee. If check was written for City services other that waste water, the check writer is invoiced for the returned draft amount and $15.00 non-sufficient funds fee.
D. If the funds have not been repaid in 30 days, the returned check file is turned over to the City Police Department for prosecution through the District Attorney's Office.
VIll. CASH OVERAGES
A. Where cash overages occur and the reason for the overage cannot be determined, the custodian of the cash shall issue a receipt for the overage and deposit to the "Miscellaneous" revenue in the appropriate fund, with the amount clearly identified as an overage so it can later be identified if necessary.
B. If it is determined who paid the overage, the proper credit shall be issued to the customer's waste water account or a refund shall be made by submitting a claim form to Accounts Payable authorizing a refund be made from the same account as the original deposit.
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SECTION 3- ACCOUNTS RECEIVABLE
1. POLICY STATEMENT
The majority of payment transactions received through the City are for monthly waste water fees. The Finance department bills all sewer customers on the first of each month which creates an accounts receivable record in the financial system. In addition, the Finance department also invoices contractors, governmental agencies or individuals for other services which also creates an accounts receivable record in the financial system.
RECEIPT SYSTEM
The receipting system designed by the Finance department shall not be changed without prior approval of the Finance Manager. The Finance department must determine that the receipt form is adequate for the support of deposits, audit purposes and receipt control. Receipting systems used are front office receipt books in triplicate and post reports created in the City's financial software, Blackbaud's The Financial Edge.
A. WASTE WATER PAYMENTS & RECEIPTS
PURPOSE
The majority of cash payments made at City Hall are for waste water utility services.
PREPARATION
a. When a payment is received through US Mail or over the counter by check, the check is date stamped by front office staff, the account number is written on the face of the check, and then put in envelope in a secured drawer in mid lobby away from the front counter. If the check payment is received in person and the customer requests a receipt, a receipt is written from a triplicate receipt book. The account owner is given the white copy of the receipt, yellow stays with the check, and pink stays secured in the book. b. When a payment is received in cash, it is logged in the triplicate receipt book listing the appropriate account number, account owner, and amount paid.
The account owner is given the white copy of the receipt, yellow stays with the cash, and pink stays secured in the book. The cash is then placed in an envelope in a secured drawer located mid lobby away from the front counter.
C. When a payment is made via credit or debit card, office staff will list the cardholder's information on a credit card transaction slip. The credit card transaction slip must include the cardholder's name, waste water account number, card number, expiration date, three- digit security code located on the
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back of the card, and the customer's telephone number. A receipt is issued from the receipt book and the customer is given the white copy and the credit card transaction slip is secured in the corresponding envelope in the secured drawer with the checks and cash. Credit or debit card transactions are received over the phone in the same method using the credit card transaction slip. All credit card transaction slips are to be destroyed after credit card information is entered into the electronic credit card terminal. All checks, cash, and credit card transaction slips/receipts are locked in the safe nightly.
III. PROCEDURE:
A. Credit card transaction slips are ran through the credit card software Authorize.net partnered with Wells Fargo by the Finance department. This produces a printed, secure receipt; then the original transaction slips are then shredded. If the credit card transaction was declined the account owner would be notified by phone. The printed credit card receipts, checks and cash are then batched individually by the Finance department for posting. Each different tender is deposited separately where payments are balanced to the total in the City's Accounting Software, Financial Edge. Once transactions are balanced and posted by the business date they were received, a post report is generated and filed chronologically with the printed, secure receipts attached.
B. Cash is paired with a triplicate deposit slip and sealed in a night drop security bag. One deposit slip stays with the cash deposit, one with the post report filed chronologically, and one in the deposit book. Authorized City employees make night drop cash deposits during business hours throughout the week at the Jackson Wells Fargo branch.
C. Checks are placed in the treasurer's drawer in the safe until the Treasurer scans them through the Wells Fargo desktop check processer by deposit batches prepared by the Finance department which turns them into ACH transactions. After the checks have been scanned successfully, a deposit receipt is printed and filed with the corresponding post report, and the checks filed by date in the City's safe. Cancelled checks are kept for a period of three months, and then shredded. The City keeps these cancelled checks for 90 days in an effort to troubleshoot possible posting errors.
IV. AUTOMATIC DEBIT/CREDIT PAYMENT PROCEDURE
Account owners have the option to sign up for automatic payment via credit/debit card that draws on the 15th of every month. The customer fills out the Credit Card Authorization Form listing their name, service address, waste water account number, contact information & necessary credit card requirements. All forms are entered in a template located in the credit card software, Authorize.net partnered with Wells Fargo. On the 14th of every month all automatic credit/debit card clients' balances are verified, the template approved for payment, and the cards charged at midnight on the 15th. The next business day a confirmation email is
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sent to the credit card software administrators with an attachment of successful and unsuccessful transactions. The successful transactions are then uploaded in to the accounting software with an effective date of the 15th, which posts to the appropriate accounts and generates a post report to be filed chronologically. Customers are notified via phone or mail if they had unsuccessful transactions. The file containing all Credit Card Authorization Forms is kept in the City's safe and locked nightly. The Client can stop the automatic payment at any time by notifying the City. The original authorization form is then shredded. Since Finance staff is limited, the automatic debit/credit payment procedure is performed by the Account Tech Il and is periodically reviewed by the Finance Manager.
V. Account owners have the option to sign up for automatic payment via checking account that draws on the 20"h of every month. The customer fills out the Direct Payment Authorization Form listing their name, service address, waste water account number, contact information & necessary bank information. The form is then uploaded to a template through an Automated Clearing House provided by Wells Fargo. On the 19'h of every month all Direct Payment client's balances are verified, the template approved and schedule to pull funds on midnight of the 20th . The next business day an ACH status of successful and unsuccessful transactions is accessed through Wells Fargo online and a detailed summary of transactions is uploaded into the City's financial software. The transactions then post to the client's account, which generates a post report that is filed chronologically. The file containing the Direct Payment Authorization forms is kept in the City's safe and locked nightly. The Client can stop the automatic payment at any time by notifying the City. The original authorization form is then shredded.
VI. POSTING ERROR CORRECTIONS
Occasionally there will be a posting error in waste water accounts receivable that is typically found in the monthly bank reconciliation. In the event of a posting error the affected accounts are adjusted accordingly, with any interest and late penalties applied in error reversed. The account owners are then notified in writing of the adjustments.
VII. TENANT/OWNER WASTE WATER DEPOSITS
A. PURPOSE
Property owners can have the City bill their tenant directly for waste water services.
B. PROCEDURE
A Renter/Owner Waste Water Agreement needs to be completed with the tenant's name, property address, billing address, contact information and property owner's signature. A property management company may sign for the owner of the property.
This form must accompany a refundable deposit equivalent to three months sewer service charges. Once the form is submitted with the deposit, the waste water account
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billing name and address is changed to the renter's name. The deposit is posted to the appropriate fund line item. When the tenant is ready to move from the property he/she notifies the Finance department. Finance staff checks the waste water account balance. If a balance is due it is deducted from the original deposit and the difference is then refunded to the tenant. If no balance is due, the full deposit of three months of waste water service charges is refunded to the tenant. The refund is processed by the Account Tech II via memo and given to Accounts Payable where the Finance Manager reviews request prior to payment. The billing name and address is then changed back into the property owner's name.
C. COLLECTION OF DELINQUENT WASTE WATER CHARGES
PURPOSE
Any waste water account with more than three months of unpaid charges are considered past due. Past due waste water accounts are verified and collected by way of a property lien through the Amador County Tax Roll. The delinquent account balance is rounded to an even dollar amount so it will be divisible by two property tax installments. The list of delinquent accounts by parcel number is prepared by the Account Tech II which is verified by the Finance Manager and is agenized at a regularly scheduled City Council meeting where it is approved by resolution or denied. Once approved, the parcel list, resolution, and letter of intent signed by the Mayor or Vice Mayor is sent to the Amador County Auditor's Office and placed on the upcoming roll. The delinquent dollar amount is then removed from the City's accounting software and tracked separately by the Finance department.
The Account Tech I prepares the tracking spreadsheet and reconciles it periodically to the financial software, Financial Edge. All transactions on the tracking spreadsheet are reviewed by the Finance Manager. When a property tax installment is paid, the county sends payment along with a spreadsheet broken down by parcel number. The tracking spreadsheet is adjusted at that time to reflect the balance due if any.
3. When a property owner pays the balance in full at City Hall, they must pay the delinquent amount and a County imposed removal fee of $25.00 per parcel. The Finance department contacts the County in writing requesting the removal of the delinquent waste water lien. The tracking spreadsheet is then adjusted to reflect the balance as zero.
VII. ACCOUNTS RECEIVABLE PROCESSING OTHER THAN WASTE WATER As soon as balances owed to the City for reasons other than wastewater are identified (such as for developer reimbursements), the Finance Department will set up a receivable in the
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accounting system and generate an invoice. On a monthly basis, the Finance Manager will review an aging or other outstanding balance report for these non-wastewater receivables and generate delinquent invoices for unpaid balances. Balances over 120 days past due will be referred to the City Manager, who may refer them to the City Attorney or a collection agency for follow up action.
The process for payments received other than for waste water services is processed similar to processing waste water payments. Payments received by front office staff are date stamped, placed in a separate envelope in a secured drawer in mid lobby of City Hall. The next business day the checks are batched and processed by the Finance department and dated the day they were received. The appropriate fund line item from the chart of accounts is identified to credit the payment in the Cash Receipts module of the City's accounting software. Once the payments are posted, a post report is generated, printed, and filed chronologically. Various payments are often received electronically from the State of California and the Federal Government. The sending party mails a notification to City Hall, once the electronic payment has been verified through Wells Fargo; it is posted individually according to the appropriate fund line item. A post report is generated, printed and filed chronologically.
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SECTION 4- BANK ACCOUNTS
1. POLICY STATEMENT
The Finance department and other authorized employees of the City make all deposits to the City's designated bank account as provided for in the agreement with Wells Fargo Bank.
II. BANK ACCOUNTS
A. Wells Fargo Bank - The City's main bank account which was established as a clearing account for depositing collections received by all City departments through conducting of official City business and disbursements from City funds.
B. American River Bank-Savings
C. American River Bank-Checking
D. Local Agency Investment Fund (LAIF)
IlI. BANK DEPOSITS
All monies collected shall be deposited with the City's bank not later than 2-5 business days.
Large sums of money shall not be held overnight, or over the weekends. All funds are deposited by scanning the check items through the desk top deposit scanner provided by the City's bank Wells Fargo. Cash deposits are made at least weekly by the Finance department or other authorized City employees in the night depository at the local Wells Fargo branch.
It is essential that deposits to the City's bank account consist of the same checks and/or money orders and currency as indicated in each deposit's receipts. No changes can be made to a deposit once it is prepared and awaiting deposit to the City's bank account. The amount of each cash deposit shall be the same as the total amount of the receipts issued during the period covered by the deposit.
The bank deposit slips must show the amount of the paper currency, coins, and each check and money order must be listed in the space provided. In some cases, scanned copies of checks and money orders have been approved. Prepare deposit slips in triplicate and distribute the copies as follows:
A. Original-Bank Copy
B. Duplicate-To serve as the official record of the deposit which is attached and filed with the corresponding receipts and post reports in the Finance department by the employee in charge of bank account records.
C. Triplicate-Retained in the deposit book to assist in establishing accountability in the event a deposit is lost or needed in the bank reconciliation.
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IV. ENDORSEMENT/CHECKS
All checks will be endorsed with the City's endorsement stamp at the time of receipt.
Restricted endorsement ACH presentation stamps are printed on the reverse side of each "ELECTRONICALLY PRESENTED-DATE". check automatically by the desktop deposit scanner. The ACH presentation reads, V. BANK RECONCILIATION
The Finance department must keep track of bank account disbursement and receipt activity by using Blackbaud's Financial Edge accounting software or other acceptable software. The bank accounts must be reconciled to the monthly bank statements. A copy of each month's bank reconciliation must be kept with the bank statement for audit purposes. All bank statements, deposit slips, and cancelled checks are retained by the Finance department.
VI. PROCEDURE
The procedure for reconciling the bank accounts is as follows:
The City Treasurer along with the Finance department reconciles the bank statement monthly as part of the Treasurer's Report provided to City Council. All credit card transactions are verified and balanced by date and amount using the daily reports generated through Authorize.net, partnered with Wells Fargo. All EFT, and draft deposits are verified and balanced with the chronological post reports generated from the City's accounting software throughout the month. All issued drafts are balanced by date and amount as well as electronic debits. All payroll EFT are compared to the payroll reports from the City's payroll vendor, Paychex. A listing of outstanding checks is prepared indicating the check number, amount, and total of all checks outstanding. The reconciled balance must agree with the bank statement balance to maintain accuracy in deposits and withdrawals and must also agree with the General Ledger's cash in bank in the City's accounting software system. This balance shall be calculated by totaling the cash in bank accounts from all funds as of the date of the reconciliation. All bank accounts are reconciled every month.
VII. BANK CHARGES
The City's bank charges for returned checks, credit card service fees and wire transfers are charged directly to the City's bank accounts. The Finance department will make a journal entry at the end of each month for bank charges appearing on the City's bank statements.
VIII. BANK ACCOUNT RECORDS
A.
Cancelled checks can be accessed through the Wells Fargo on-line banking service for up to six months after they are presented for payment. All checks are retained by the bank and copies can be requested as part of the fiscal audit or as needed. Bank
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statements for all accounts and bank account reconciliations are retained for a minimum of five years.
Voided checks must be voided in the City's financial system and marked with the word "VOID" on the face of the check. In addition, the signature line and account numbers at the bottom of the check will be clipped of the check. The remainder of the voided check is then kept in a file for audit purposes. A separate folder must be maintained for all records pertaining to each bank account.
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SECTION 5- WARRANTS
1. POLICY STATEMENT
In accordance with good governmental accounting and auditing practices, City warrants shall be voided and cancelled by the Finance department if not presented for payment within six months from the date of issuance.
II. REPLACEMENT OF CANCELLED WARRANTS
If a warrant is returned to the Finance department after it has been mailed to the payee, the Finance department shall notify the department that requested the warrant. The department shall instruct the Finance department of the disposition of the returned warrant. All efforts will be made to contact payee to re-send the warrant to the proper address.
Ill. STOP PAYMENTS
If a warrant is not received by the payee, he must notify the department issuing the claim. The department in turn contacts the Finance department to see if such warrant has cleared the bank. If the warrant has not cleared the bank, the department must submit a memo requesting a stop payment on the warrant and initiate a new warrant.
IV. IMPREST CASH FUND (PETTY CASH)
An authorized Imprest Cash Fund shall be used by a department for payment of services or expenses on charges incurred in the conduct of official City business, subject to the following limitations:
A. The Imprest Cash Fund shall not be used for payment of any single item of expenditure in excess of $50.
B. No disbursements shall be made for purchases of items available through the regular purchasing process or on contract of blanket purchase orders.
C. Regardless of the amount, no disbursement shall be made for employee travel expenses unless expressiy authorized by the Finance department.
D. All disbursements shall be covered by voucher supported by a receipt, approved by a responsible employee, and signed by the person receiving the cash. The vouchers shall be made out in permanent ink and the dollar amount clearly written out.
Expenditures in excess of one dollar must have a receipt before reimbursement is made. The receipt shall be signed by an authorized employee.
E. The custodian of the fund must be able, at all times, to account for the fund in the form of cash or vouchers on hand or a combination of both. Upon demand of the Finance Manager or the City Manager, the custodian entrusted with the fund shall give an
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accounting of the fund. F. At any time, the Finance department may perform a surprise audit of a department's imprest cash fund to verify the fund is in balance.
G. Any shortage in the fund shall be reported to the Finance Manager for the purposes of internal control. The Finance department shall review the circumstances concerning the shortage and make recommendations to the City Manager as to the final disposition of the case. Overages in the fund shall be deposited into miscellaneous revenue by issuing a receipt and depositing the amount as is done for other collections.
H. The Imprest Cash Fund shall never be co-mingled with cash receipts of any other kind.
1. The fund shall be replenished as often as required and prior to the end of each fiscal year. This will allow the recording of expenditures in the year in which they are incurred. The request of replenishment shall be made to the Finance Manager by preparing and submitting a claim form. The paid vouchers must be segregated by the type of expenditure, and the total of each expenditure code entered on the claim form.
The paid vouchers must be attached to the claim. To avoid problems cashing the warrant at the bank, the claims payee should be stated as, "Petty Cash." J. The warrant should not be cashed by the department by substituting the warrant for cash in the deposit to the City.
The Finance Manager shall process the claim for replenishment and issue a warrant payable to the custodian. Upon receipt of the warrant, the custodian must cash the warrant and replenish the fund.
City of lone
SECTION 6- AUTHORIZED SIGNATURES
1. POLICY STATEMENT
The City Clerk shall provide the Finance Manager with a form that lists and contains specimen signatures of the employees whom she has deputized to sign specifically designated forms on their behalf. This list of signatures is passed via City Council meeting by way of ordinance in January of every year following the appointment of the mayor. The signatures are valid at all City used financial institutions.
Il. AUTHORIZATION
A. Only authorized signatures approved by ordinance are allowed to sign the following:
Accounts Payable Claims/Checks
2. Requisitions
3. Contracts
4. Resolutions
B. No single employee should be given authority for all aspects of a transaction. For example, one employee should not prepare a claim, approve it as department head, and pick up the warrant. • These duties should be segregated between at least two employees.
C. Claims prepared by one department employee must be approved by a different employee, preferably someone in a position of authority within the department.
D. Temporary help employees cannot be authorized to pick up warrants.
E. Exceptions to this policy must be approved by the Finance Manager.
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SECTION 7 - CHART OF ACCOUNTS
I. POLICY STATEMENT
All City Funds are accounted for and controlled by type of fund, budget unit or department code, account type classification, and project code.
FUND ACCOUNTING
Governmental accounting systems are organized on a fund basis, funds being defined as a separate and distinct entity for tracking financial resources and uses for specific activities in accordance with government regulations and restrictions. The types of funds used are as follows:
A. Governmental Funds:
• General Fund
• Special Revenue Funds
• Capital Project Funds
• Debt Service Funds
• Permanent Government Funds
B. Proprietary Funds:
• Enterprise Funds
• Internal Service Funds
C. Fiduciary Funds:
• Trust Funds
• Agency Funds
IlI. ACCOUNT CODE
A. The Chart of Accounts is developed to provide uniform accounting codes for classifying funds, and account codes. The Chart of Accounts is divided into four sections as follows:
B. Funds - Lists the assigned code numbers for all Funds in the City. A Fund is a separate and distinct entity for accounting purposes. Fund numbers are four digits.
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C. Department Code - Identifies a department or division within a department and is also known as an organization key. Department Codes are two digits.
D. Account Codes - Classifies all balance sheet, revenue, and expenditure codes into categories. Account Codes are also known as Object Codes and are four digits.
E. Project Codes - Identifies a specific project, program, grant, or other identifying source needed to be tracked. Project codes are four digits.
IV. USE OF ACCOUNT NUMBERS
All documents sent to the Finance Manager for processing must contain a valid accounting code. The accounting code must contain 10 digits at a minimum, the fund (4 digits), the Department Code (two digits), and the account code (4 digits).
If a department is using a specific project, special program, or grant with a specific project number, the account number may also have 4 digits after the account code.
The process to create a new Fund in Financial Edge is as follows:
1. In the General Ledger Module, click on Administration
2. Click on Set up General Ledger
3. Click on Create Fund
4. Click on New Fund at top of page
5. Screen will pop up, enter new fund number and description
6. Click Save and Close
To create a new Account Code in Financial Edge the same process above is followed except click on Create Account Code with the following exception:
1. At the bottom of the screen in the Attribute tab drop down to Financial Group
2. Click on description that pertains to account
City of lone
SECTION 8 - FISCAL RECORDS RENTENTION AND DISPOSITION
I. POLICY STATEMENT
All City departments under the direction of the City Manager, except those which may be bound by special legal requirements, such as elected officials, shall retain their financial records in accordance with the City Clerks' Association of California Local Government Records Retention Guidelines. Some basic guidelines are as follows:
1I. RETENTION SCHEDULE OF FINANCIAL DOCUMENTS
Title Retention Period
Accounts Payable, invoices, check copies, supporting docs AU + 4 Utility Billing Journals CU + 2
Business License paid and reports T + 4
Employee Timesheets AU + 6
Requisitions/Purchase Orders AU + 4
Resolutions/Ordinances P
Annual Financial Reports (Audits) L
Utility Billing Records AU + 2
Legend for Records Retention
AC=Active
AD=Adoption
AU=Audit
CL=Closed/Completion
CU=Current Year
E=Election
L=Life
P=Permanent
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S-Supersede
T=Termination
Note: As a general rule, records which are duplicates of an original on file with the Finance department should be retained for at least 2 years. If there are doubts regarding the retention period, contact the Finance Manager before disposing of documents.
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SECTION 9 - FISCAL FORMS PREPARATION
I. OFFICIAL MANUAL CITY RECEIPT
A. Form Title
Book-type official City receipts, pre-numbered, original and 2 copies.
II. PURPOSE
To acknowledge receipt and account for all monies received.
III. PREPARATION
All the necessary information shall be completed in the spaces provided for in the forms:
A. Date the receipt is issued
B. Name of the person making the payment
C. Amount of the payment, both written out and in figures.
D. Nature of fee or payment, i.e. fines, fees, parking permit.
E. Method of payment, ie. cash, check or money order.
F. GL account code into which the payment will be deposited in the City's accounting system
G. Signature of the employee authorized to accept payment.
In the event a receipt is spoiled in preparation and consequently must be voided, draw one straight horizontal line through the amount (do not obliterate it), and write "VOID" in large letters across the face of the original and all copies: The voided original receipt and the yellow copy must accompany the copies of valid receipts which are for monies included in the next deposit to the Finance department.
One transaction per receipt. Receipt must be issued at time monies are received.
IV. DISTRIBUTION:
A. Original to the person making the payment
B. Copy (Yellow) to the Finance department, attached to the deposit slip.
C. Copy (Pink) retained in the receipt book
D. When receipt book is full it is retained by the Finance department.
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V. DEPOSIT SLIP BOOKS FOR CASH
A. Form Title:
N/A
Deposit Slip Forms:
Standard Bank Deposit Slip Books provided by the City's bank.
PURPOSE:
The City of lone's Cash Policy and Procedures requires that all monies collected by a City in the conduct of their official duties be deposited with the Finance Manager unless permission has been obtained from the Finance Manager to deposit the funds in the City's bank account or a separate bank account. Each deposit must be authorized by the Finance Manager. The Deposit Slip Form serves as the authority to deposit money with the Finance department and/or the City's authorized banking institution and the Deposit Slip serves as the receipt for money deposited
PREPARATION:
a. Deposit Slips can be handwritten, providing all numbers are legible.
Dollars must be written in the proper format on the Deposit Slip.
C. Type of deposit must be included on the Deposit Slip Form. d. Amount must be listed and agree with the deposit total. e. Total in the "Amount" column should agree with the dollar amount at the top of the Deposit Slip and must balance to the total receipts. f. Coin/Currency/Checks must be listed on the Deposit Slip. 3 DISTRIBUTION:
a. Original to the Finance department or City's banking institution, if being deposited directly.
b. One copy to the Finance department, if directly deposited to the bank.
C. Second copy is the Depositor's Receipt.
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SECTION 10 - CLAIMS/ACCOUNTS PAYABLE/CASH DISBURSEMENTS
1. POLICY STATEMENT
It is the policy of the City that the recording of assets or expenses and the related liability is performed by an employee independent of ordering and receiving. The amounts recorded are based on the vendor invoice for the related goods or services and are in accordance with good governmental accounting and auditing practices. This policy is in place to provide guidelines for the proper processing of accounts payable in a manner that will safeguard the assets of the City.
11. OBJECTIVE
The primary objective for accounts payable and cash disbursements is to ensure that:
Disbursements are properly authorized.
• All the required documentation is included.
• Invoices are processed in a timely manner.
• Vender credit terms and operating cash are managed for maximum benefits.
III. PROCEDURE
A. Accounts payable should normally be processed twice a month, unless special circumstance arise and is authorized by the City Manager.
B. All invoices are date stamped the day they are received, coded to the necessary expenditure account number, and approved by each department head. The account number indicates the fund, department code, appropriate account code, and project code if applicable.
C. Invoices are entered into the City's accounting software by the Account Tech I or Finance Manager detailing the vendor name, address, invoice number, invoice date and brief description of products or services rendered.
D. All invoices and back up documentation such as packing slips and purchase orders are attached to a copy of each printed check in a packet and kept in the Finance department.
E. A processing report is printed detailing the payable batch activity and filed in the Finance department.
F. The City Manager reviews all checks with backup documentation with the Finance Manager and signs accordingly. The City Manager, City Clerk, City Treasurer, Mayor, and Vice-Mayor are authorized signers. Two signatures must be on each check to make valid.
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G.
they will be mailed the next business day. All checks will be mailed the day they are signed unless after 4:30pm where in that case H.
The check register report or "Warrant List" generated at time of processing from prior scheduled meeting. month will be presented to the City Council for their review and approval at a regularly IV. VOID CHECKS
There are times when a check would need to be "voided" out of the system. Once approval from the Finance Manager is obtained, the void check process is posted in the accounting the check is filed with the voided checks and a copy is put in the monthly bank reconciliation system. After clipping off the signatures block and account coding at the bottom of the check, folder.
V. VENDOR SET UP
A. PURPOSE
numbers in the City's accounting software or to change/add the name or address of an existing To request establishment of a vendor number for vendors not already assigned vendor vendor.
PREPARATION
Complete vendor name.
2. Complete remittance address.
Complete phone number and fax number, if applicable.
A Form W-9 is requested from each vendor to establish 1099 status.
5. The social security number or federal tax ID number is entered into accounting system for 1099 reporting.
VI. REQUISITION/PURCHASE ORDER FORM-REQUEST FORM
A. PURPOSE
This form may be used for materials and supplies, airfare, professional services and any other type of purchase transaction. Requisitions/Purchase Order forms are used for department purchases directly from vendors.
PREPARATION
1. Date of Order
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The department requesting the purchase order.
The vendor information: Vendor name, address, phone & fax number, and email address.
4. Ship To.
The description, quantity, and unit price of the commodity to be purchased must be completed by the department prior to receiving approval from the City Manager and Finance Manager. The total item cost for each item must be computed and total of all items being ordered must be completed with correct sales tax, shipping, and total amount of the purchase listed at the bottom of the Purchase Order Request Form. The department authorized signature and date must appear on the form.
The form is sent to the Finance department for processing. A purchase order is created and approved by signature of the City Manager.
After the department receives the items order, the proper documents, including invoice and shipping receipt, are given to the Finance department and attached to a copy of the Purchase Order, and filed. Copies of this packet are also paired with the invoice awaiting payment in accounts payable.
Note: Requisition/Purchase Orders should not cross fiscal years, unless the purchase is related to a major capital project.
VII. CITY CREDIT CARD USE
A. PURPOSE
At times, small purchases and travel reservations can be made by authorized employees on the City's credit card.
B. PROCEDURE
An authorized employee requests to use the credit card from the Finance department.
The credit card is kept in the City's safe and given to the employee.
After the purchase is made, the employee fills out the Credit Card Use Form and attaches all receipts to the form.
4. The Form is submitted to the Finance department after it has been approved by the employee's department head.
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5. The credit card is collected from the employee and returned to the City's safe.
VIll. TRAVEL CLAIM
A. PURPOSE
The purpose of the travel claim is for employee reimbursement of approved travel, conference, or meeting reimbursements for related expenditures. All travel and meal expenses require prior approval and authorization per the Travel Expense Reimbursement Policy for City Employees.
The Travel Expense Claim form must be completed and fully signed by employee and department head.
B. PREPARATION
Once the travel is complete the employee or elected official traveling on behalf of the City must complete the Travel Expense Claim form, which must be signed by the employee or elected official and submitted to the City Manager for approval. In signing the Travel Expense Claim form for reimbursement, the employee and the department head agrees that all expenses are valid City expenditures.
Any travel expenses that an employee needs to have prepaid, must be submitted with proper supporting documentation on a standard claim form. These prepaid expenses must be deducted from the total expenses incurred to calculate the net amount to be reimbursed
The completed Travel Expense Claim form and all backup must be sent to the Finance department. Claims for travel shall be submitted timely. Reimbursement and substantiation of expenses shall be within 30 days of travel.
Note: At the April 21, 2015 City Council Meeting, the following daily stipends were approved that may be paid in advance to an employee while traveling or attending meetings or conferences which must be approved by Department Head prior to payment.
• Breakfast - $10
• Lunch - $15
• Dinner - $25
City of lone
SECTION 11- BUDGET AMENDMENT RESOLUTION
1. PURPOSE
The budget amendment resolution is used to adjust or change the final adopted budget.
The Budget Amendment Resolution is used to:
• Increase/decrease estimated revenue and appropriations in a budget unit. • Establish new funds.
• Transfer from fund balances.
• Transfer from other funds.
II. PREPARATION
Resolutions to increase/decrease estimated revenue and appropriations shall identify the specific accounts to be adjusted by the full 10-digit account string for each account as well as the account names. All budget adjustments that increase/decrease total appropriations must identify an equal amount of offsetting increase/decrease in either total estimated revenues or fund balance available.
Departments wishing a budget amendment will submit the draft budget amendment resolution to the Finance Department. The Finance Manager will review the draft resolution to ensure that:
• The resolution properly reflects the numbers and names of the specific accounts to be adjusted and that the accounts designated appear appropriate given the justification for the budget amendment.
• Any impact on the estimated revenues appears reasonable and realistic.
If approved, the Finance Manager will sign the Budget Amendment Resolution and forward it to the City Manager for review. The City Manager will determine whether the amendment is appropriate and consistent with the City's priorities and, sign the resolution if approved, and submit with the Agenda through the City Clerk who provides the agenda to City Council and the general public.
Upon approval by City Council, the resolutions will be signed and will be distributed to the originating department and the Finance department. The City Clerk will keep the original resolution on file for the permanent record.
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SECTION 12- PAYROLL PROCESSING
1. PURPOSE
The purpose of this document is to define the guidelines, policies and procedures governing the responsibilities of payroll personnel staff. These guidelines are to ensure accuracy and consistency of City-wide payroll procedures among payroll personnel staff to strengthen internal controls, facilitate more timely access to payroll information; and enable department personnel staff to address employees' payroll concerns more efficiently.
II. PREPARATION
Timesheets are due from each City department to Finance on Monday following the end of each bi-weekly the pay period. Each timesheet must be signed by the employee and the department head approving the hours worked. All timesheets are reviewed by the Finance department Accounting Technician who re-calculates all hours and checks for any other errors.
Any questions are directed to either the employee or department head, and any changes to timesheets are to be initialed by employee or department head.
III. PROCEDURE
After all the timesheets have been reviewed, payroll is ready to be entered into the Paychex software, the City's payroll processing vendor who also processes quarterly payroll tax reports and employee W-2 forms at the end of the year.
A. The Finance department Accounting Technician prints an employee history of accruals report showing the balances for each individual employee as of the last pay period. Any accruals used or earned are notated in the margin of the report and retained with the timesheets and supporting documentation. This report is also used to verify that all accrual adjustments from the prior period are accurately posted.
B. Any changes to an employee's payroll record are made such as elected re-occurring earning and deduction changes and/or pay rates.
C. Each employee's hours are entered from the timesheets for the new pay period. All employees on a salary have been pre-set into the payroll system and will automatically pay.
D. A register prior to processing report is printed and given to the Finance Manager with the timesheets to verify that all hours are entered correctly, and to review any changes made to pay rates, or any other modifications.
E. Once the Finance Manager has reviewed payroll and changes made, if any, payroll is transmitted online to Paychex by the Account Tech I where a successful transmittal receipt is printed from the system and kept with the timesheets and supporting
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documentation. Payroll timesheets are also reviewed by the City Manager after payroll has been submitted.
F. Fire Department officer pay and elected official stipends are included in the last pay period of each month. Planning Commissioner Stipends are issued quarterly.
G. Payroll is delivered by courier to City Hall within 24 hours after submitted to Paychex.
After the payroll packet is reviewed by the Finance Manager, paychecks and direct deposit payment stubs are distributed the morning of payday.
The final payroll register, included in the packet of payroll checks, is reviewed by the Finance Manager and payroll amounts are recorded. All payroll reports are filed in binders by pay period.
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SECTION 13 - CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM REPORTING
1. PURPOSE
All full-time City employees are enrolled in the California Public Employee's Retirement System (CalPERS) where employees are assigned a retirement plan. These plans are based on CaPERS regulations, plan and benefit options adopted by resolution of the City Council, and employee's date of employment with the City. All employee compensation subject to retirement benefits must be reported to the State via the CaPERS website at www.calpers.ca.gov.
EMPLOYER CONTRIBUTION RATES
Annual CaPERS actuarial valuation reports can be downloaded from the CaPERS website during the month of October. These reports contain the City's Employer Contribution Rates for the next fiscal year beginning July 1 and a projected rate for the next fiscal year. Following are the City's current plans:
A. Miscellaneous:
• First Level 2.5% at 55 Member Rate
8.0%
• Second Level 2.0% at 60 Member Rate
7.0%
• PEPRA-New 2% at 62 Member Rate
6.25%
Safety - Fire:
• First Level 2% at 55 . Member Rate
7.0%
• PEPRA-New 2.7% at 57 Member Rate
9.5%
C. Safety - Police
• First Level 3% at 50 Member Rate
9.0%
• Second Level 3% at 55 Member Rate
9.0%
• PEPRA-New 2% at 57 Member Rate
11.5%
IlI. PREPARATION
A.
A spreadsheet is prepared after each pay period listing compensation for all employees.
The spreadsheet has a section for all full-time employee compensation, and a separate section for all other employees including retired annuitants. Reportable compensation for full-time employees is as follows:
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• Regular earned wages for 80 hours or 84 hours Police
• Longevity pay
• Education/Post incentive pay
• Uniform allowance
• K-9 Officer pay
• Holiday pay
• Special assignment pay
The total of listed amounts on the spreadsheet should agree with the same totals for the above categories on the final payroll register for the pay period.
After each pay period, the payroll for all full-time employees is entered into the CaPERS reporting module at www.calpers.ca.gov and into the section marked "My CalPers/Reporting". Detailed instructions for entering payroll into the reporting section are located in the "My CalPERS" binder.
C. Retired Annuitants
Hours worked per pay period and amount earned must also be reported for retired annuitants. These amounts can be included in the same report for full-time employees for the same pay period.
D. CaPERS Supplemental Income 457 Plan
All full-time employees are eligible to join the CaPERS Supplemental Income 457 Plan.
This Plan is a voluntary savings program that allows the employee to defer any amount, subject to annual limits, from their paycheck on a pre-tax basis. The employee's contributions and earnings, if any, are not taxable until the employee withdraws the contributions usually in retirement. The employee can elect to withdraw a set amount or percentage of earned income which is deducted from their bi-weekly paycheck. A separate check for all employee contributions is made out to CaPERS 457 Plan and is included in the packet received from Paychex (the City's payroll processing vendor) along with the employee's paychecks.
The contributions by employee are reported in the My CaPERS/Reporting section under CaPERS 457. Once employee contributions are entered by pay period, a report is generated that must be mailed along with the check to CaPERS. Detailed instructions for CaPERS 457 reporting are located in the "My CalPERS" binder.
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SECTION 14 - FINANCIAL SYSTEM
The City uses a comprehensive financial system (currently The Financial Edge) to maintain its books of account. Maintaining the security of this system is important to ensuring the accuracy of the City's accounting and financial statements.
ACCESS
Access to the financial system will be limited to the Finance Department staff, the City Treasurer, and the City Manager. Access by other individuals will be approved in writing on a case-by-case basis by the Finance Manager, based on the need to access the information. The Finance Manager will ensure that access to post or edit information in the financial system is limited to those with a need to do so, and will also ensure that access is terminated when an individual's relationship with the City terminates.
To the greatest extent possible, journal entries should be initiated by other individuals and approved for posting by the Finance Manager.
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SECTION 15 - DEVELOPER ACTIVITY
DEVELOPER DEPOSITS
Developers make upfront deposits with the City for various purposes in connection with their development activity. Any portion of these deposits that does not represent current revenue to the City and will be used later should be recorded as a separate liability account for that developer in the financial system. As expenses are paid by the City that are chargeable to the developer accounts, the Finance staff will verify that sufficient deposit remains in the developer's account to pay those invoices. If the balance is low, the City Manager should be notified of the deficiency immediately.
The City Manager may direct city staff and contractors to cease all work for that developer until the deficiency has been resolved. On a periodic basis, independent of the accounts payable process, the Finance Manager or designee will review the balances of developer deposit accounts and notify the City Manager of any deficiencies. After review, negative balances will be immediately converted to receivables and treated according to the process described in the Accounts Receivable section of this policy.
DEVELOPER AGREEMENTS
The Finance Manager will maintain summaries of the provisions of developer agreements currently in effect that impact the City's finances and accounting. The Finance Manager will review these summaries on a periodic basis to ensure that revenue is recognized and invoices are generated when appropriate according to the provisions of the agreements.
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SECTION 16 - YEAR END CLOSING AND FINANCIAL REPORTING
For a period of two months following the end of the fiscal year on June 30, Finance Staff will review both incoming payments that are not posted to accounts receivable and all cash disbursements to determine whether the transactions related to events that occurred prior to June 30. Copies of any such items identified will be made and placed in the Finance Manager's accrual file and an entry will be made to add the items to the accrual list. After August 31, the Finance staff will post a journal identified in the preceding two months. The Finance Manager will then review the budget to actual entry to the financial system to record the accounts payable and receivable at June 30 for all items report after posting this entry and confer with the City Manager to identify any additional amounts that Manager will also continue to monitor cash receipts and payments until approximately two weeks are expected to be either paid or received that are related to the preceding fiscal year. The Finance prior to finalizing the trial balance for audit and post any adjustments as necessary.
The Finance Manager or designee will then review the City's various balance sheet accounts to determine that the appropriate, most up-to-date balances are reflected. Although changes in applicable accounts occur from time to time that impact what procedures will be required, the following represents a partial list of suggested procedures:
• Ensure that the beginning fund balance for each fund matches the audited ending balances displayed in the previous year's audit.
• Ensure the cash balances have been reconciled to the bank statements, including the cash balances held with the fiscal agent.
• Prepare an analysis calculating the new liability for other post-employment benefits. • Prepare an analysis updating the pension liability.
• Review cash receipts and disbursements after year end, as noted above, to ensure amounts related to the prior fiscal year are properly adjusted. • Review developer deposit accounts, as noted elsewhere in this policy. • Reconcile liabilities owed between funds to ensure that the amounts owed equal the amounts receivable. Post interest if required.
• Ensure that any interfund reimbursements are posted.
• Ensure that interfund transfer and reimbursement accounts balance to zero among all funds. • Review each of the city's loan and other long-term liability balances to ensure that they have been reduced by the proper amount of current year principal payments and that interest expense has been properly calculated. Principal payments should be posted against the loan balance in enterprise funds (such as the sewer) and in a principal expenditure account in governmental
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funds. A government-wide adjustment should be prepared and given to the auditor to reflect the correct principal balance for governmental fund long-term liabilities. • Review the compensated absences (vacation and comp time) balances and post an adjustment to ensure the liability is correctly recorded in the enterprise funds for these. Prepare government- wide adjusting entries to furnish to the auditor for the portion of the liability that relates to governmental funds.
• Reconcile total payroll expenses to the amounts shown on the City's 941 payroll tax forms or PayChex payroll registers and to the amounts reported to CaPERS. • Review payroll liability balances to ensure that they properly reflect the amounts owed by the City at June 30.
• Compare balances to budget and prior year figures to identify any odd or unusual differences. • For cost reimbursement grants, compare the expenditures on the grant during the fiscal year to the revenues received and post a receivable for any outstanding balance, where appropriate. • Ensure that deferred revenue has been recorded in governmental funds for receivables that will not be received by the City within 60 days of June 30.
• Ensure that any capital assets (items or projects with a useful life extending beyond one year and an initial cost exceeding $5,000 per asset or project) are reflected in capital outlay accounts in governmental funds or are added to the appropriate capital asset account in enterprise funds. • Add any new assets acquired during the year to the depreciation schedule, reconcile to the previous year financial statements and the current year capital asset balances in the enterprise fund, and compute current year depreciation.
Update schedules on CDBG loans receivable to show interest earned on the loans for the current year and account for any repayments. Prepare and post a journal entry to record any activity not yet recognized and agree the balances to the loans receivable schedules.
City of lone
SECTION 17 - CAPITAL ASSETS
DEFINITION
The City defines capital assets as those assets with a useful life exceeding one year and a cost (or fair market value at the time of receipt if received from an outside party) in excess of $5,000. Except for significant collections of like items, the $5,000 limit applies per individual asset, but expenditures for various items that all become fixed portions or components of a single item and cannot be easily separated are treated as a single item, such as expenditures for engineering work and materials that become part of a single building.
Capital assets include those assets with physical substance as well as those lacking physical substance that are nonfinancial in nature and used in operations, such as computer software and water rights. Financial instruments, investments, and derivatives, are considered financial in nature and are NOT considered capital assets.
ACCOUNTING
In governmental funds, purchases of capital assets are recorded in capital outlay expenditure accounts only. In enterprise funds (sewer), purchases of capital assets are recorded as expenses during the year and then a journal entry is prepared at year-end to reduce expenses by the cost of any capital assets and add to the capital asset values in the general ledger.
The Finance Manager maintains a detailed capital asset listing in excel. During the audit process, the Finance Manager reconciles the total asset value on this schedule to the enterprise fund capital asset accounts and computes depreciation for the year. The Finance Manager will then approve a journal entry to post depreciation expense to the enterprise funds and provide a government-wide adjusting entry to the independent auditor for posting in the City's financial statements.
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SECTION 18 - OTHER POST-EMPLOYMENT BENEFITS
The City adopted a GASB 45 - Other Post Employment Benefits (OPEB) at the regularly scheduled City Council meeting on June 12, 2014. The policy reads as follows:
Policy Statement:
it shall be the policy of the City of lone to establish a pay-as-you-go approach toward the contribution requirement of post-employment health insurance plan members approved by the City Council, which may be amended from time to time. The City's funding policy is to contribute an amount sufficient to pay the current year's retiree premium and plan expenses. For fiscal year 2012-13, the City contributed $27,941 to the plan, all of which were premium payments for retiree insurance made directly to [Health Plan]. Plan members receiving benefits contributed $9,197, or approximately 25- percent of the total premiums.
City of lone
SECTION 19 - FUND BALANCE POLICY
The Governmental Accounting Standards Board (GASB) Statement 54 requires that all governmental agencies adopt a fund balance policy to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. The City Council adopted the following Fund Balance Policy at the June 12, 2015 Council Meeting.
Fund Balance Policy - GASB 54
1. PURPOSE:
The purpose of this policy is to establish procedures for reporting both restricted and unrestricted fund balance in the financial statements. The Governmental Accounting Standards Board (GASB) Statement No. 54 "Fund Balance Reporting and Governmental Fund Type Definitions" requires fund balance to be reported using five major classifications based on the extent to which the City is bound by the constraint on resources reported in the funds. The policy also authorizes and directs the Finance Director/Manager to prepare financial reports showing fund balance classifications as required by GASB Statement No. 54.
Il. CLASSIFICATIONS:
Fund balance must be classified into one or more of the five following categories in conformance with GASB 54:
a. Nonspendable fund balance
b. Restricted fund balance
c. Committed fund balance
d. Assigned fund balance
e. Unassigned fund balance
III. DEFINITIONS AND REPORTING:
Fund Balance - All financial assets less liabilities normally expected to be liquidated with current financial resources. The following are new categories and related definitions to be used for describing the components of fund balance:
a. Nonspendable Fund Balance - Includes amounts that cannot be spent because they are not in an expendable form, or legally or contractually required to be maintained intact. This would include prepaid expense, inventories, or capital assets. b. Restricted Fund Balance - Amounts are constrained to specific purposes by the providers such as creditors, grantors, contributors, or laws and regulations of other governments. This
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would generally include amounts in bonded capital projects funds, debt service funds, and program funds funded with federal program dollars.
c. Committed Fund Balance - Amounts constrained by limitations imposed at the highest level of decision making, such as the City Council, that require the same formal action at the same level to remove or modify. Resources in this category may include those that are committed for a specific purpose and/or future initiatives, funding designated for legally enforceable contracts but not yet spent, or resources committed as a local match for programs or projects. d. Assigned Fund Balance - Amounts that are intended by the City to be used for specific purposes, but are neither restricted nor limited. The City Council can delegate this authority to the City Manager or Finance Director/Manager depending on the situation.
1. Resources in this category may include appropriation of a portion of existing fund balance sufficient to eliminate a projected deficit in the subsequent year's budget.
2. Resources assigned to a specific program or project for which the City has an approved plan or budget.
3. Resources approved by the Council for a long range financial plan. e. Unassigned Fund Balance - Includes any remaining amounts after applying the above definitions. Planned spending in the subsequent year's budget would be included here and can no longer be described as "designated" unless formally committed or assigned.
For the General Fund, these are amounts not classified as nonspendable, restricted, committed or assigned. No funds should report a negative amount for restricted, committed or assigned fund balance.
IV. FUND BALANCE SPENDING ORDER
Unless legal requirements disallow it, the City will spend the most restricted dollars before less restricted in the following order:
1. Nonspendable
2. Restricted
3. Committed
4. Assigned
5. Unassigned
This policy is in place to comply with GASB Statement No. 54. No other policy or procedure supersedes the authority and provisions of this policy.
City of lone
GLOSSARY
City Council: The current elected officials of the City as set forth in the City's Municipal Gode.
Bank Depository Agreement: A contract between a municipality and a depository negotiated and entered into in accordance with the specifications of which sets forth the agreements between the parties regarding banking services.
Budget: The document containing separate budgets for General Fund, the Special Revenue Funds, Enterprise Funds and Capital Improvement Plan of financial operations embodying an estimate of proposed expenses for the fiscal year and the proposed means of financing them.
CAR: An annual financial report that includes financial statistics and related notes prepared in conformity with GAAP. Supplemental statistical and narrative information regarding activities is also included.
Capital Improvement Plan (CIP) Budget: A plan recommended by the City Manager, and approved by the City Council, for design and construction of major new facilities and improvements of facilities in the City.
Capital/Major Project Expense: An expense which results in the acquisition or addition of a fixed asset or the improvement to an existing fixed asset.
Chart of Accounts: A chart detailing the system of general ledger accounts.
Current Operating Expense: An obligation of the City as a result of an incurred expense that is due for payment within a 12-month period.
Current Revenue: The revenues or resources of the City other than bond proceeds convertible to cash within a 12-month period.
Debt Service Coverage: The margin of safety for payment of debt service, reflecting the number of times (e.g., 125 percent coverage) by which annual revenues net of operating expenses exceed annual debt service.
Emergency: An unexpected occurrence, i.e., damaging weather conditions, that requires the unplanned use of City funds.
Equity: See fund balance.
Expense: Decreases in net financial resources for the purpose of acquiring goods or services.
Finance Director/Manager: The person appointed by the City Manager who is responsible for recording and reporting the financial activities of the City and for making recommendations regarding fiscal policies and procedures.
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Fiscal Year: A 12-month budget period, generally extending from July 1 through the following June
30. Fixed Assets: Assets of a long-term nature which are intended to be held or used, such as land, easements, building, improvements other than buildings, machinery, equipment and other items of personal property.
Fund: An independent fiscal and accounting entity with a self-balancing set of accounts recording cash and/or other resources together with all related liabilities, obligations, reserves, and equities which are segregated for the purpose of carrying on specific activities or attaining certain objectives.
Fund Balance (Equity): The excess of fund assets over liabilities. Accumulated balances are the result of an excess of revenues over expenses during some period. A negative fund balance is a deficit balance.
GAAP: See Generally Accepted Accounting Principles.
GASB: See Governmental Accounting Standards Board.
General Ledger: The collection of accounts reflecting the financial position and results of operations for the City.
Generally Accepted Accounting Principles (GAAP): Uniform minimum standards of and guidelines to financial accounting and reporting as set forth by the Government Accounting Standards City Board (GASB).
GOA: Government Finance Officers Association of the United States and Canada.
Governmental Accounting Standards Board (GASB): The authoritative accounting and financial reporting standard-setting body for government agencies.
Investments: Securities held for the production of income in the form of interest.
Long-Term Debt: Obligation of the City with a remaining maturity term of more than 1 year.
Management Letter: A written report from the independent auditors to the City Council reflecting observations and suggestions as a result of the audit process.
Net Remaining Revenue: For any fiscal year, the total of revenues and transfers less (a) operation and maintenance expenses, including any lease payments; (b) debt service; (c) _: and (d) required deposits to maintain the operation and maintenance reserve and the emergency reserve.
Non-Recurring Revenues: Resources recognized by the City that are unique and occur only one time or without pattern.
Office: Department Head level reporting to City Manager or City Council; for example, the Finance Office.
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Official Budget: The budget as recommended by the City Manager and adopted by the City Council. of City Council policies and day-to-day activities of the City. City Manager: The individual appointed by the City Council who is responsible for the implementation for a specific future use. Reserves: An account used to designate a portion of the fund balance (equity) as legally segregated Revenue: An increase in assets due to the performance of a service or the sale of goods. Revenues are recognized when earned, measurable, and reasonably assured to be received within 60 days.
Risk: The liability, either realized or potential, related to the City's daily operations.
Self-Insurance: Appropriating sufficient funds in advance to meet estimated losses, including enough to cover possible losses in excess of those estimated.
Short-Term Debt: Obligation of the City with a maturity term of less than 1 year.