2026-2027 Consolidated Financial Management Policy
POLICY PURPOSE:
The purpose of this Consolidated Financial Management Policy is to establish a single, consistent framework forthe City of Marysville's budget development, financial planning, fund balance and reserve management, grant administration, rates andfees, debt management, and ongoing financial reporting. This policy is intended to:
• Maintain a financially viable City capable of providing quality municipal services to residents, businesses, and visitors;
• Align annual appropriations and financial decisions with the City of Marysville 2050 General Plan and City Council priorities;
• Promote balanced budgets, conservative revenue forecasting, disciplined expenditure control, responsible reserve use, and long-term planning;
• Clearlydistinguish recurring and one-time resources, restricted and unrestricted funds, and current and long-term obligations;
• Establish consistent oversight for grants, debt, utility rates, fees, reserves, and budget amendments; and
• Supporttransparency, accountability, legalcompliance, and informed decision-making by the City Council and the public.
GUIDING PRINCIPLES:
The City shall prepare and manage its financial affairs in accordance with the following principles:
• Current recurring revenues should support current recurring operating expenditures. • One-time revenues should be used for one-time expenditures, reserves, capital needs, transition costs, or other nonrecurring purposes.
• Revenue estimates should be objective, analytical, and conservative, particularly for economically sensitive or volatile sources.
• Restricted resources shall be used only for legally or contractually authorized purposes. • The long-term cost of staffing, pensions, insurance, contracts, utilities, equipment, facilities, deferred maintenance, and capital improvements shall be considered before new commitments are made.
• Essential services and public safety shall be preserved while maintaining adequate reserves for emergencies, economic uncertainty, and organizational transitions. • Fees, rates, grants, debt, investments, andreserves shall be coordinated within the City's overall financial plan.
• Financial results and material variances shall be reported periodically to the City Council and the public.
POLICY:
The annual operating budgetis the City's primary financial plan, operations guide, policy document, and communication tool. The budget and all related financial activities shall be developed, adopted, administered, monitored, and amended in a manner that supports responsible service delivery, fiscal sustainability, and compliance with applicable laws, agreements, and grant requirements.
Budget Development and Adoption
• The City shall adopt a balanced budget by June 30 of each year. • The budget shallinclude all governmental, enterprise, specialrevenue, capital, grant, debt service, and other funds requiring appropriation.
• Revenue estimates shall consider historical trends, current economic conditions, known policy changes, development activity, grant timing, salestax activity, cannabis activity, and professional judgment.
• Departments shall provide sufficient justification for material changes in revenues, expenditures, staffing, programs, equipment, and capital requests.
• New programs, staffing changes, service expansions, and capital commitments shall identify both the immediate and ongoing fiscal impact and a sustainable funding source. • The City shall evaluate equipment replacement, technology, facility maintenance, deferred maintenance, and capital projects as part of long-term financial planning.
Budget Administration and Amendments
• The City Manager and Finance Director shall administer the adopted budget within the authority granted by the City Council.
• Administrative transfers may be made when permitted by the adopted budget resolution and City policy, provided totalfund appropriations are notincreased and Council direction is not materially changed.
• City Council approval is required for amendments that increase total fund appropriations, use additional reserves, create or eliminate authorized positions, establish ongoing obligations, or materially alter Council-approved programs or priorities. • Budget performance shall be monitored throughout the fiscal year, and material revenue or expenditure variances shall be reported to the City Council.
Revenues, Rates, and Fees
• General Fund revenue projections shall be conservative because of sensitivityto localand regional economic conditions and volatility in salestax, cannabis tax, development-related revenue, grants, reimbursements, and state or federal actions.
• Userfees, utility rates, and service charges should be reviewed periodically to determine whether they recover the full direct and indirect cost of services, unless the City Council determines that a subsidy is in the public interest.
• Enterprise rates and fees should support operating costs, indirect costs, depreciation, debt obligations, capital needs, and appropriate reserves.
• Rate and fee actions shall comply with applicable public notice, hearing, and legal requirements.
General Fund Balance and Reserve Management
Fund balance shallbe reported in accordance with Governmental Accounting Standards Board Statement No. 54 as nonspendable, restricted, committed, assigned, or unassigned. This policy primarily addresses unrestricted fund balance and the City's Catastrophic and Economic Contingency Reserve.
Catastrophic and Economic Contingency Reserve
• The City shall maintain a committed Catastrophic and Economic Contingency Reserve equal to at least 20% of ongoing General Fund operating expenditures, excluding one-time expenditures. • The City's long-term goal is to attain and maintain a reserve equal to 30% of ongoing General Fund operating expenditures.
• The reserve may be used for disasters, catastrophic events, significant revenue shortfalls, temporary maintenance of essential service levels, or one-time actions that produce future efficiencies or structural savings.
• Use of the committed reserve requires City Council approval. • When the reserve falls below the 20% minimum, the City Council shall adopt or direct preparation of a replenishment plan generally covering one to five years.
Committed, Assigned, and Unassigned Fund Balance
• The City Council may commit fund balance for specific purposes through formal action. Such amounts may not be used for another purpose unless the commitment is changed or removed through equivalent formal action.
• The City Manager is authorized to assign fund balance for specific purposes, including budget carryovers, capital projects, insurance obligations, or other identified needs, consistent with Council direction and financial reporting requirements. • Other committed, assigned, restricted, and nonspendable balances shall not be counted toward compliance with the contingency reserve target unless they are specifically available for that purpose.
• Year-end operating surpluses above the reserve requirement may be allocated, subject to City Council approval, to reserve replenishment, projected deficits, intergovernmentalimpacts, capital needs, or other one-time nonrecurring purposes.
Grant Management and Accounting
• The City shall pursue grants that are consistent with adopted goals and for which sufficient administrative, financial, and operational capacity exists. • Before applying, departments shall evaluate the grant's purpose, required match, indirect costs, staffing demands, ongoing obligations, compliance requirements, cash-flow needs, and closeout responsibilities.
• Grants requiring unbudgeted matching funds, new regular staffing, additional appropriations, or ongoing City obligations shall require City Council authorization unless authority has otherwise been delegated.
• Departments are responsible for programmatic administration and performance of the grant scope; the Finance Department is responsible for financial oversight, budgeting, accounting, reimbursement support, reporting coordination, and Single Audit compliance. • Grant revenues and expenditures shall be recorded in appropriate funds, accounts, or project codes and reconciled before reimbursement requests are submitted. • Indirect and administrative costs shall be recovered to the maximum extent permitted. • Grant files shall include award documents, budgets, contracts, procurement records, reimbursement requests, reports, correspondence, monitoring records, and closeout documentation.
• Conflicts of interest shall be identified and managed in accordance with applicable law, grant conditions, and City policy.
• Departments shall complete grant closeout, ensure final reimbursement, resolve findings, and retain records for the period required by the grantor and applicable law.
Debt and Interfund Financing
Short-Term Debt
• Short-term debt may be used onlyfor temporary or emergency cash-flow needs and shall require City Council approval before final commitment.
• Interfund loans may be used when the lendingfund has sufficient available resources and the loan will not adversely affect its operations. The City Council shall approve the amount, purpose, interest rate, and repayment terms.
Long-Term Debt
• Long-term borrowingshould generally be limited to capital improvements and long-lived assets that cannot reasonably be financed from current revenues. • The City should consider special assessments, revenue bonds, lease financing, or other self- supporting mechanisms before relying on unrestricted General Fund resources. • Long-term debt proceeds shall not be used for ongoing operating costs.
Financial Reporting, Review, and Compliance
• The Finance Director shall maintain accounting records and internal controls sufficient to support accurate financial reporting, budget monitoring, grant compliance, cash management, and annual audits.
• Financial policies, reserve calculations, grant procedures, and materialfinancial assumptions shall be reviewed at least annually as part of the budget process. • The City shall complywith applicable accountingstandards, California law, bond covenants, grant terms, labor agreements, and other contractual obligations.
The City Council may revise this policy by resolution. Nonsubstantive formatting, numbering, cross- reference, grammar, and typographical corrections may be made administratively without changing the policy's substantive requirements.