Overview of Budgetary and Financial Policies
• Provide an overview of the City’s budgetary and financial policies and current status• There are 22 policies, last updated in the FY 23 Budget• No changes or updates are being recommended Agenda and Overview
2O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s Policy1. The Budget will be Structurally Balanced
3 • The General Fund budget will be structurally balanced for the fiscal yearStatus• Currently the General Fund has a budgetary structural imbalance but has been balanced with one-times since the pandemic with funds made available through the Long Beach Recovery ActO v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy2. Multi-year Financial Projections
4 • The proposed annual budget should include a three-year General Fund surplus/(shortfall) projection at minimum Status• Budget includes four-year projection (FY 24 – FY 27) O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy3. Budget Process is an Annual Cycle
5 • The budget process develops annual service priorities and changes are minimizedStatus• The City works to make as few changes as feasible other than technical changes, new grants, etc.
O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy4. User Fees to be Set at the Cost of Service
6 • Fees fully recover costs, except where there is greater public benefit through use of a lower feeStatus• A multi-year citywide fee study in progress. Fees are generally set at cost of service, except where City Council approves exceptions.
O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy5. One-time Resources are for One-time Uses
7 • One-time resources not used to fund ongoing operations• Five percent of one-time revenues are set aside for unfunded liabilities Status• One-time resources are generally used for one-time purposes, except for recent years post pandemic to help balance General Fund• Five percent of General Fund funds available is set aside for unfunded liabilitiesO v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy6. Capital Projects Budgeted for Both One-time and Ongoing 8 • Before approving any capital expenditure, both the capital (one-time) and operation (ongoing) costs will be considered Status• Where known, the fiscal impact of capital items includes estimates of normal operating costs.
O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy7&8 Emergency and Operating Reserves Will Be Maintained 9 • Emergency reserves: 8% min (of expenditures), 10% target• Operating reserves: 2% min, 7% max• Other reserves may be established Status• Reserves have been maintained at the minimum levels or higher.
O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy9. Adequate Reserves for All funds
10 • Financial Management will develop and recommend reserve policies for each City fundStatus• Review is in process O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy10. Revenue Projections will be Reasonably Expected 11 • Revenue projections are to be objectively prepared using a reasonably expected approach, so that there is an equal chance of coming in higher or lower than projection Status• Projections are following this guideline
O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy11. Stable Revenue Sources will be Used to Fund Operations 12 • Any revenue which has highly variable component may have only a portion of it, or none of it, budgeted for operations• Oil revenue will be budgeted at a price likely to be lower than the actual price Status• Oil has been budgeted in this manner and has protected the City from more serious budget impacts O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy12. Fiscal Impact Statements Required
13 • Fiscal impact statements are required for proposed City Council actions, including revenues, expenditures, financial position, and economic impact Status• This policy is being followed and fiscal impact statements are provided O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy13. Current Year Costs will be Funded or Explanation Provided 14 • The Budget will include funding for all costs of operation for the current year or will discuss those costs where full funding is not provided Status• The City funds most annual costs in the proposed budget except for deferred maintenance and retiree health costs O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy14. Financial Reporting Will Use Generally Accepted Standards 15 • Annual financial statements will use Generally Accepted Accounting Principles (GAAP) and will include a reconciliation of budgetary funds available to GAAP Status• The City’s financial reports are in accordance with GAAP. Reconciliation to budgetary funds available is done for key funds O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy15. Financial Status will be Reported
16 • The City’s Annual Comprehensive Financial Report (ACFR) will be available and there will be periodic reporting on the budgetary status of the City Status• Reports are prepared in accordance with policy
O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy16. Financial Status of Major Funds will be Reviewed 17 • The City Manager will annually present a brief report discussing the high-level financial status of each major fund and the report may be incorporated as a component of the budget’s Fund Summary Status• The financial status is contained in the budget document, in periodic performance reports, and in the year-end report for funds that have significant issues or are of interest O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy17. Appropriate Grants will be Sought
18 • The City will seek grants that address City priorities and provide substantial net benefit. Appropriate grant support levels will be maintained Status• This policy is being followed
O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy18. Debt Maintained at Appropriate Levels
19 • Debt will not fund operations and debt limits will be adopted. Capital leases for vehicles will be part of a comprehensive strategy• A separate debt policy will be adopted Status• This policy is being generally followed. While there is no formal policy for capital leases, they are watched closely for conformance with budget • A separate debt policy has been adopted by City CouncilO v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy19. Investments will be Conservatively Managed
20 • Investments are managed with the priorities of (in order): safety of principal, liquidity (availability of cash), and yield (income)• A separate investment policy is to be adopted Status• This policy is being followed • A separate investment policy has been adopted by City Council O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy20. Long-Term General Financial Plan will be Maintained 21 • A long-term general financial plan will be adopted that includes general approaches on revenues, economic growth, control and management of costs and method of service delivery Status• The City does not have a formal plan, but instead prepares a three or four-year outlook and the issues and ramifications of that outlook are discussed as part of the annual budget process O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy21. Financial Policies will be Reviewed
22 • Financial policies will be reviewed every three years and the City Manager will report annually on any non-compliance Status• This was last reviewed as part of the FY 23 Budget O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Policy22. Administrative Procedures to be Consistent with Policy 23 • Administrative procedures shall be consistent with the adopted City Council budgetary and financial policies Status• Administrative procedures are consistent with City Council financial policy O v e r v i e w o f B u d g e t a r y a n d F i n a n c i a l P o l i c i e s
Questions
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