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HomeMy WebLinkAbout2010-0104 Study Session PACKET CITY OF ASHLAND ~) 1ri,~d~~ht~iriUy' '~lrlZfii:: th~" C:6~n~:j:'6ri,ri,:~~i~g;i~~~1~t~~~':'~mifu - ~ ~ - l,t -', (t> l';.:'~ :,': *..,,:~:~\\'~~>'~;[:~~'.~:~<:~;;L~ <~'~:':~"7, . wr~ttemCOp1fnents, to ,the Counql_ 00l., ,,:.:,:.Rn,theAg~nd,a;?l.l~.!.~.~'~~)1,s:W~<~pbJ~ct.,'_~ . ,Except f6rpuDI;cJhe~1~gs> ~l!er~ lS_p ~:_j,~l,u,te'rig~t toAo}IiIly:~~~t,~!9~fq:)Un~j[o,b:' ,~..Prf~id,jng:p!fi9c:r~!riaY,_~~-l?,,)\_~?I,i~:s!,inr9~Y;.:ho:y~ver;, pu.?l!~~~,~et~n~~:,l~~>>:~~u~rapte~$'?n_ ;, Part~Clp~gP~;:1 (yo~, ~s~, t<?\sp~a~pl~_~e :fill,ou~!~eSp,eak~:~,R,~~pe_~~\X~fIl)loca~r:?iP The Gh~lr~ill:re,cognize YOll,andlpfoT'~hyo.u,as to,the;arnou,nt?flIIl1e:all(l~tcdtoyou-t , s~&1'e"~xteTIt,on the'nature Of:fhe:iterrir~nd~rdlscusslon,;th~' ntiriiBei:Sf;n'e~pic:who\\ij ..::t~'~\j:3:';:::>';:;~:SY~.:..i:'~ ~......':;~ ~;itg:;~:;jr!::\~il;;;,#,.t':;:<~ .~__~' :~,;' - -: ';::;,;Jr{;2:!~)J;;1.J,:~L'i:I:.'i' ;-~_' ","At' CITY COUNCIL STUDY SESSION AGENDA Monday, January 4, 2010 at 5:30 p.m. Siskiyou Room, 51 Winburn Way 5:30 p,m. Study Session 1 . Look Ahead Review 2, What changes should be considered for the Financial Policies used by the City? [90 Minutes] In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting. please contact the City Administrator's office at (541) 488-6002 (TTY phone number 1-800"735" 2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to the meeting (28 CFR 35,102-35. 104 ADA Title I). COUNCIL MEETINGS ARE BROADCAST LIVE ON CHANNEL 9 VISIT THE CITY OF ASHLAND'S WEB SrtE At WWW.ASHLAND.OR.lJS City of Ashland Council Meeting Look Ahead .....THIS IS A DRAFT AND SUBJECT TO CHANGE..... . S1'llllVISessiOn'[Gancell8cl ... ' Meetino Cancelled due to MLK. Jr. Holidav Reaular Council Meetina 1/19 1 Annual Sweat-shoo Free ourchasino renort Lee Finance CONS 2 TSP Uodate & Armroval of ODOT consultant Mike F.' PW CONS 3 Ground lease at airoort for Brim Aviation (Adam) Admin CONS 4 Approval of Mayors appointment of council liaisons for 2010 Admin Diana\ CONS 5 Approval of a Quit Claim Deed to terminate Sanitary sewer PW easement (Mike F, ) PH 6 Continuation of Imperatrice property alan (Mike F.) PW UNFIN 7 Council adootion of Values & Vision Statements (Ann) Admin UNFIN 6 Discussion regarding new fire fees relating to cost recovery for PH emeroencv responses (John/Lee) Fire Finance NEW . Discussion of Economic & Cultural Grant process and criteria Finance Lee) NEW 10 Approval of stewardship aoreement for AFR (John) Fire NEW 11 IGA for collection of school construction excise tax (Bim CD Leoal NEW 12 Update to Council Rules Ordinance regarding Boards and Legal Admin Commissions undates (Richard) QRD-2 13 Ordinance re: Housing and Airport Commission Resolutions Legal amendment (Richard) QRD-2 14 Fireworks Ordinance (John) Fire QRD-1 ORD-2 15 Ordinance update for living wage clarification (Don/Richard) Parks Legal , QRD-1 ORO-2 16 Three Ordinances establishing classes of Offenses (Richard) Legal ~tuaVISessiililf(inr$'iiKi-:OUi~Oomj~ QRD-1 QRD-2 ~l~,icldiIZ.~~ ~~;t,~ :~21,1i~ 17 Discussion of Laguna Beach model of homelessness Police assistance orooram (Terrv) 88 18 Discussion on Public ContractinQ amendments (Richard) Leoal 88 ,. Discussion of Come & Class StudY Results (Tina) Personnel 88 Page 1 of 3 12/29/2009 Re ular Council Meetin 20 Exec Session: Consult with Le al Council 21 Second Quarter Financial Re ort Lee 22 Update of approval of company working on the Stormwater Master Plan Mike F. 23 Resolution regarding payment in lieu of tree planting on new ro.ects Bill 24 Ordinance re: stopping the clock on appealed projects Bill/Richard 25 Ordinance re: recession extensions (Bill/Richard) 26 Ado tion of 6,Year CIP Mike F. 27 Discussion on allocation process for economic and cultural rants Lee 28 Ado tion of Administrative Pennant Polic Ann 29 Fireworks Ordinance John 30 Ordinance update for living wage clarification (Don/Richard) 31 Three Ordinance establishing classes of Offenses (Richard) City of Ashland Council Meeting Look Ahead .....THIS IS A DRAFT AND SUBJECT TO CHANGE..... Departments Responsible [;JOU[]]Q;J~ODWl;Ji 3~;JW[]J 4~;9 r 4~;~ 2/2 EXEC CONS CONS PH PH ORD-1 ORD-2 PH ORD-1 ORD-2 NEW NEW NEW ORD-2 ORD-2 Le al Finance PW Planning Legal CD Legal , CD Legal PW Finance Admin Le al Fire Parks Legal Legal Le al Fire Personnel Finance CD Legal CD Le al Le al Le al Finance Legal Legal Page 2 of 3 OR0-2 2/16 EXEC NEW NEW ORD-2 ORO-2 ORD-2 ORO.l ORD-2 ORO-l ORD-2 ORO-1 ORD-2 12/29/2009 City of Ashland Council Meeting Look Ahead .....THIS IS A DRAFT AND SUBJECT TO CHANGE..... Departments Responsible Re ular Council Meetin 42 Adoption of Croman Mill Plan (Bill) 43 Economic 0 ortunities Anal sis Ado tion Bill 44 Exchange of Right of Way around Reeder Reservior with the Forest Services Mike F. 45 Ordinance fa: Public Contracting amendments (Richard/Lee) 46 Ordinance establishing Fees and Charges for Municipal Court Administration Richard 47 Ordinance establishing minimum fines for Municipal Court Richard . 48 U date to Suildin Codes Ordinance Richard 49 Ordinance u dati" noise ordinance Richard . SWcliiISessiOilli iiiTSisKiVOlilROOrii 50 SOU Mater Ian U date? Bill Re ular Council Meetin 51 Ado tion of Croman Mill Plan Bill 52 U date to Buildin Codes Ordinance Richard 53 Ordinance u dati" noise ordinance Richard 54 Ordinance re: Stored Vehicles Richard . SWclVISessiOn1l iiiTSisKi .oulRoom Planning Plannin PW 3/2 PH ORD-1 PH ORD-2 NEW Legal Finance ORD-2 Legal ORD-2 Legal Le al Plannin Le ai ORD-2 ORD-1 ORD-2 ORD-1 ORD-2 _______13iJ5I 55 3/16 ORD-2 ORD-2 ORD-2 ORD-1 ORD-2 _________1r4TsII Re ular Council Meetin 55 Ordinance re: Stored Vehicles Richard 56 Ordinance u datin water curtailment ordinance Mike F. Ordinance updating business license ordinance (Richard) 57 Le al Police PW Legal 4/5 QRD-2 ORD-1 ORD-2 ORD-1 ORD-2 ___________1[4/,'91 SWclVISessiOilli iiiTSisKi .oUll~oom Re ular Council Meetin 58 Ordinance u datin water curtailment ordinance Mike F. 59 Ordinance u datin business license ordinance Richard PW Le al 4/20 ORD-2 ORO-2 Future To ics Not Yet Scheduled 1 Study Session with OSF Board 2 Com Plan Amendment re Economic 0 ortunities 3 Follow u on next ste s on TAP 4 Discussion re ardin urban renewal conce ts Page 3 of 3 12/29/2009 CITY OF ASHLAND Council Communication Study Session - Fiscal Stability and Financial Policies Discussion Meeting Date: January 4,20]0 Primary Staff Contact: Lee Tuneberg Department: Administrative Services E-Mail: tuneberl@ash]and.or.us Secondary Dept.: None Secondary Contact: None Approval: Martha Benne Estimated Time: 90 Minutes Question: What changes should be considered for the Financial Policies used by the City? Staff Recommendation: Staff asks Council to review the included information and consider changes proposed by staff. Background: The City last discussed fiscal stability on November 2, 2009. At that time Council requested staff return in January to review the City's existing Financial Policies. After review of these policies staff recommends Council begin updating the City's Fund Balance Policies, last updated in March of2005. Target fund balances are specified in the Financial Management Policies used to create the budget. These targets, and other elements of the policies like Contingency, debt guidelines and franchise payments, have served the City and the budget process well over many years. Staff believes healthy fund balances are to "fiscal stability." The City has many Financial Policies, and staff recommends Council prioritize their review of the other policies, after first tackling fund balances. Below are staff's recommended priorities for Council attention: Subiect A. General Fiscal Policies: I. Scope, 2. Objectives,. 3, Investments, 4. Accounting, 5. Operating Budget Policies Priority for Discussion First First Completed November 17, 2009 Fifth Second B. Fund Balance Policies: I. General Fund, 2. Special Revenue funds, 3. Capital Project Funds, 4. Debt Service Fund, 5. Enterprise funds: a. Water b. Wastewater c,. Electric First, including Contingencies First, including Contingencies First, including Contingencies First, including Contingencies First, including Contingencies First, including Contingencies First, including Contingencies First, including Contingencies Page I of2 r.l' CITY Of ASHLAND d, Telecommunications First, including Contingencies 6. Internal Service funds, a. Central Services b. Insurance Services c. Equipment i. Fleet 11. Purchasing/Replacement First, including Contingencies First, including Contingencies First, including Contingencies 7. Trust 8. Discrete Component Unit - Parks C. Revenues (and Assumptions) D. Expenditures E. Purchasing F. Capital G. Debt H. Risk Management I. Accounting Methods First First, including Contingencies Second (except TOT revenue) Fourth (except E&C granting) Fourth Third Third Fourth Fifth The Process Reviewing fund balance policies and targets are so important to the upcoming budget process and continued fiscal stability evaluations that getting tentative agreement on them first will help with subsequent discussions. After tackling these "first" priorities, the other areas can be grouped as deemed appropriate and then done in digestible bites. Some of the 2nd and 3rd priorities need to be handled soon. An example is the Transient Occupancy Tax projection and corresponding Economic & Cultural granting for FY 20 I 0-20 11, The timing for making desired changes to the amount to be granted, the desired impacts and basis for awards is such that Council will need to revise the existing resolution by early February to complete the process in time for the budget process and to allow the recipients to adequately prepare proposals and plan for their year. The attached document outlines our existing policies for the things staffrecommends we tackle in the first round. The "second" level priorities are also included in the event time allows. Related City Policies: City of Ashland Financial Management Policies, Budget Document Appendix Council Potential Motions: None, this is a study session. Attachments: Financial Management Policy work document Page 2 of2 ~~, Financial Management Policies Scope The Financial Management Policies apply to fiscal activities of the City of Ashland. Obiectives The objectives of Ashland's financial pOlicies are as follows: q To enhance the City Council's decision-making ability by providing accurate information on program and operating costs. o To employ revenue policies that prevent undue or unbalancedrellance on anyone source, distribute the cost of municipal services fairly, and provide adequate funds to operate desired programs. o To provide and maintain essential public programs, services, facilities, utilities, infrastructure, and capital equipment. o To protect and enhance the City's credit rating. o To ensure the legal use of all City funds through efficient systems of financial security and internal control. Investments All City funds shall be invested to provide-in order of importance-safety of principal, a sufficient level of liquidity to meet cash flow needs, and the maximum yield possible. One hundred percent of all idle cash will be continuously invested. AccountinQ o The City will maintain an accounting and financial reporting system that conforms to Generally Accepted Accounting Principles (GAAP) and Oregon Local Budget Law. The City will issue a Comprehensive Annual Financial Report (Audit report) each fiscal year. The Comprehensive Annual Financial Report shows fund expenditures and revenues on both a GMP and budget basis for comparison purposes. o An independent annual audit will be performed by a certified public accounting firm that will issue an official opinion on the annual financial statements and a management letter detailing areas that need improvement. o Full disclosure will be provided in financial statements and bond representations. D The accounting systems will be maintained to monitor expenditures and revenues on a monthly basis with thorough analysis and adjustment of the annual budget as appropriate. D The accounting system will provide monthly information about cash position and investment performance. D Annually, the City will submit documentation to obtain the Certificate of Achievement for Excellence in financial reporting from the Government Finance Officers Association (GFOA), OperatinQ BudQetalV Policies o The budget committee will be appointed in conformance with state statutes. The budget committee's chief purpose is to review the city administrator's proposed budget and approve a budget and maximum tax levy for city council consideration. The budget committee may consider and develop recommendations on other financial issues as delegated by the City Council. o The City will finance all current expenditures with current revenues. The City will avoid budgetary practices that balance current expenditures through the obligation of future resources. Staffs Initial comments and suggestions are in italics. A..J indicates no change proposed at this time. It should be made clear as to the applicability to Ashland Parks and Recreation Commission (APRC). If not 100% applicable it should be clear when it is or isn't. >I >I >I >I >I Definition of idle cash: Cash amounts beyond the level deemed necessary to provide adequate cash flow or coverage of outstanding charges as determined by the City Treasurer. Recently updated by Council on November 17, 2009. >I >I >I >I General accounting systems (software) cannot provide the level of investment performance identified here. This should be relegated to the City Treasurer's report. OK to agree upon but does it need to be a policy? Needs refining? Budget Committee reviews proposed budget to ensure it meets City Council objectives, provides essential services and provides a responsible spending plan. Propose a small revision: "current operating expenditures" o The City budget will support City Council goals and priorities and the long-range needs of the community. o In contrast to the line-item budget that focuses exclusively on items to be purchased (such as supplies and equipment), the City will use a program/objectives format that is designed to: 1)Structure budget choices and information in terms of programs and their related work activities, 2) Provide information on what each program is committed to accomplish in long-term goals and in short-term objectives, and 3)Measure the degree of achievement of program objectives (performance measures). o The City will include multi-year projections in the annual budget o To maintain fund integrity, the City will manage each fund as an independent entity in accordance with applicable statutes and with generally accepted accounting principles. o The City will allocate direct and administrative costs to each fund based upon the cost of providing these services. The City will recalculate the cost of administrative services each year to identify the impact of inflation and other cost increases. o The City will submit documentation annually to obtain the Award for Distinguished Budget Presentation from the Government Finance Officers Association. Fund Balance Policv General Fund; The General Fund accounts for all financial resources not accounted for in other funds. Resources include working capital carryover, taxes, licenses and permits, intergovernmental revenue, fines and forfeitures, charges for services, miscellaneous revenues, and inter-fund transfers. Expenditures are for Social Services, Economic and Cultural Development, Police Department, Municipal Court Department, Fire and Rescue Department, City Band, Cemeteries, and the Department of Community Development. This fund uses the modified accrual method of accounting. o The General Fund will maintain an unrestricted and undesignated balance of annual revenue of at least 10 percent. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. o No portion of the General fund balance is restricted for specific uses. O'The General fund was pledged in the issuance of the 1996 Limited Tax Improvement Bonds. Bond and interest payments may be paid from this fund or an additional tax levy imposed, provided assessment payments were inadequate. o The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. ..J ..J ..J ..J ..J ..J Annual recalculation of these internal service charges may not be possible but they should be reviewed annually and recalculated at least every three years. OK to agree upon but does it need to be a policy? Add to Resources Interest Income and Other revenue deemed necessary. Add to Expenditures those budgeted for Administration and Administrative Services (Finance) deemed necessary. Move Measurement Focus/Basis of Accounting (MFBA) to accounting methodologies in all funds if acceptable to auditor and GFOA Staff recommends the 10% target minimum EFB be increased to 12% plus 3% Contingency for a total of 15%. 'The minimum EFB should be unrestricted. Staff recommends if EFB exceeds 20% of annual revenue after the audit, the amount over 20% should be transferred to a restricted reserve. Currently City has accepted legally restricted monies (grants and forfeitures) and imposed internal restrictions (parking and housing trust) limitations on the EFB. This debt has been paid off but other pledges for Full Faith & Credit financing (Airport, AFN. Water & Wastewater) remain and should be addressed here or in the Debt section of the policy removing this section from here. Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%level would be preferable. Appropriation transfers relate more to unanticipated expenditures not resources. Fluctuations in Resources are resolved through Supplemental Budgets or reductions in program expenditures. Special Revenue Funds - Special Revenue Funds account for the proceeds of specific sources that are legally restricted to expenditures for specified purposes. Special Revenue Funds account for transactions using the modified accrual method of accounting. Community Development Block Grant Fund. This fund was established in 1994-95. The fund accounts for the Block Grant and related expenditures. D A fund balance policy is not needed since this fund works on a reimbursement basis. D The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Street Fund. Revenues are from the state road tax, grants, franchise fees, charges for services and miscellaneous sources. Expenditures are for the maintenance, repair, and surfacing of streets, as well as the maintenance, repair and construction of storm drains. D The Street Fund will maintain an unrestricted and undesignated balance of annual revenue of at least 10 percent. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. D The System Development Charges for Transportation and Storm Drains are included in the Street Fund balance. This portion of the Street Fund balance is restricted and shall not be used in determining the minimum fund balance. D The City will budget a contingency appropriation to provide for unanticipated expenditures of a nonrecurring nature or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Airport. Fund. Revenues are from airport leases, and fuel sales. Expenditures are for airport operations. D The Airport Fund will maintain an unrestricted and undesignated balance of annual revenue of at least 16 percent. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. D No portion of the Airport fund balance is restricted for specific uses. D Many of the Airport assets have restrictions placed on them by the Federal Aviation Administration. None of the current revenues are pledged to outside lenders. Over the next 20 years, the Airport Fund is obligated to repay the Equipment Fund for the installation of fuel tanks through an equipment rental fee. D The City will budget a contingency appropriation to provide for unanticipated non.recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Capital Projects Funds. Capital Projects Funds are established to account for financial resources that are used for the acquisition or construction of major capital facilities (other than those financed by Enterprise Funds, Internal Service Funds, Special Assessment Funds, and Trust Funds). Capital projects funds use the modified accrual method of accounting. ..J ..J .J City guarantees projects through the General Fund. Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%level would be preferable. ..J Staff recommends the 10% target minimum EFB be increased to 12% or 15% plus Contingency. ..J Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%/evel would be preferable. ,..J Staff believes this is a little high and could be lowered to 10% or 12% but fund revenues should be adjusted to meet the target unless the City desires to guarantee Airport operations through the General Fund. ..J ..J The fuel tanks still have payments to be made. Capital projects and their funding have been moved to the CIP Fund. Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%/evel would be preferable. ..J Capital Improvements Fund. This fund accounts for revenues from grants, unbonded assessment payments, and other sources, and will account for the construction of special local improvements, usually streets, with revenues from short term borrowing and unbonded assessments. Expenditures are for construction, property and equipment acquisition and replacement, improvements and related purposes, and the repayment of short~term debt principal and interest incurred in financing improvements. D The purpose is to accumulate funds prior to a large construction project; therefore, there is no minimum fund balance. D The System Development Charges (SDCs) for Parks are included in the Capital Improvement fund balance. This portion of the Capital Improvements fund balance is legally restricted and shall not be used in determining the minimum fund balance. The City Council has established other restrictions on this fund, such as affordable housing and office space needs. D The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Debt Service Funds - Debt Service Funds account for the accumulation of resources for, and the payment of, general long-term debt principal and interest. Expenditures and revenues are accounted for using the modified accrual method of accounting. All bond issues and notes are separated in the accounting system. Debt Service Fund. This fund accounts for revenues from taxes, transfers and other revenues. D All of the monies within the Debt Service fund are restricted for Debt service until the specific debt is repaid in full. ORS prohibits cities from borrowing this money for any other purpose. D The Debt Service Fund will maintain an unrestricted and undesignated balance of annual revenue as required by the specific debt instrument. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. Enterprise Funds. Enterprise funds account for the following operations: (a) those that are financed and operated in a manner similar to private business enterprise, where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) those where the governing body has decided that periodic determination of revenues earned, expenses incurred, andlor net income is appropriated for capital maintenance, public policy, management control, accountability, or other purposes. Enterprise funds use full accrual basis of accounting for financial statement presentations. However, the enterprise activities use a modified accrual basis of accounting for budgetary purposes. This assures budgetary compliance with such expenditures as capital construction and acquisition, as well as debt principal transactions. Water Fund. This fund accounts for water operations. Revenues are from sales of water, other charges for services, and miscellaneous sources. Expenditures are for operations, conservation programs, capital construction, and retirement of debt. ,. Facilities (an internal setvice) is now located in this fund so a minimum EFB (5% to 10%) based on this program's activities would be appropriate. , Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%level would be preferable. , , , , , , , o The Water Fund will maintain an unrestricted and undesignated balance of annual revenue of at least 20 percent. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. o The Water System Development Charges and reserved debt service fund balances are included in the Water Fund balance. These portions of the Water Fund balance are restricted and shall not be used in determining the minimum fund balance. o The net revenues of the Water Fund were pledged in the issuance of the 1994 Water Revenue Bonds used to finance the upgrade to the water treatment plant. o The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Wastewater Fund, This fund accounts for wastewater treatment and collection. Revenues are from charges for services. Expenditures are for operations, capital construction, and retirement of debt. o The Wastewater Fund will maintain an unrestricted and undesignated balance of annual revenue of at least 15 percent, but no less than required by the Wastewater Treatment Plant loan. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. o The Wastewater System Development Charges are included in the Wastewater Fund balance. This portion of the Wastewater Fund balance is restricted and shall not be used in determining the minimum fund balance. o The net revenues of the Wastewater Fund that were pledged in the issuance of the 1998 Clean Water State Revolving Fund (CWSRF) Loan used to finance the upgrade to the treatment plant are included in this fund. o The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Electric Fund. The Electric Fund accounts for the distribution of purchased electricity according to standards set forth by the Federal Energy Regulatory Commission. Revenues are from sale of electricity and other charges for services and intergovernmental grants. Expenditures are for related operations. Utility operations include wholesale power purchases, operating expenses, energy conservation incentives, capital outlay, retirement of debt, franchise tax, and related purposes. OThe Electric Fund will maintain an unrestricted and undesignated balance of annual revenue of at least 12 percent. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. o No portion of the Electric Fund balance is restricted for specific uses. o The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. >I >I Staff recommends this be reworded to recognize that net revenues are pledged for all revenue bonds issued by this fund for capital improvements. Staff recommends the Contingency be calculated only on Operating Expenditures. A S%/evel would be preferable due to the potential of increased treatment costs despite restricted (curtailment) water sales. >I >I >I >I Staff recommends the Contingency be calculated only on Operating Expenditures. A 5%level would be preferable due to the potential of increased treatment costs to meet standards. >I >I >I Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%level would be preferable. Telecommunications Fund. The Telecommunications Fund accounts for the revenues and expenditures of the Ashland Fiber Network. o No fund balance policy has been established. Internal Service Funds Internal service funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost reimbursement basis. Internal service funds use full accrual accounting methods for financial statement presentations. However, the internal service funds use a modified accrual basis of accounting for budgetary purposes. This assures budgetary compliance with such expenditures as capital construction and acquisition as well as debt principal transactions. Central Services Fund. This fund is divided into Administration, Computer Services, Finance, City Recorder, and Public Works Administration/Engineering, and Maintenance. Expenditures are for personnel, materials and services and capital outlay for these departments. These functions are supported by charges for services by all direct service departments and divisions. o The Central Services Fund will maintain an unrestricted and undesignated balance of annual revenue of at least 3 percent. This is the minimum needed to maintain the City's credit worthiness and to adequately provide for economic uncertainties and cash flow needs. o No portion of the Central Services Fund balance is restricted for specific purposes. DThe City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Insurance Services Fund. Revenues in this fund are from service charges from other departments, investment income, and insurance retrospective rating adjustments. Expenditures are for insurance premiums, self-insurance direct claims, and administration. o The Insurance Services Fund will maintain an unrestricted and undesignated balance of $350,000 as recommended in the June 1993 Risk Financing Study. This balance will be increased annually by the Consumer Price Index (CPI) to account for inflation. This is the minimum needed to maintain the City's insurance programs and provide for uninsured exposures. o No portion of the Insurance Services Fund balance is legally restricted for specific uses. o The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Equipment Fund. This fund is used to account for the maintenance and replacement of the City fleet of vehicles. Revenues are from equipment rental charges. Expenditures are for personnel, materials and services, and capital outlay. This fund is divided into two functions: equipment maintenance and equipment replacement. The purpose of the equipment replacement function is to accumulate adequate funds to replace equipment. This replacement schedule is updated annually. o No minimum fund balance is recommended. -I Council set an EFB minimum balance of 20% of operating revenues in FY 2006.2007. A contingency of 4% of operating revenues should be established. -I .J Updates titles of departments and divisions. A minimum EFB (5% to 10%) based on this program's activities would be appropriate. Any EFB over 10% would result in reduced charges to the departments ;n the following fiscal year. -I Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%level would be preferable. -I The original amount set in 1993 is inadequate for this fund and the City's current exposures, even when adjusted by the CPl. Staff recommends a minimum EFB of $1,000,000, growing each year by CPI or a minimum of 3%. -I Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%/evel would be preferable. -I .J City guarantees shop operations through the Fleet sinking fund. o No portion of the Equipment fund balance is legally restricted for specific uses. The City has a pOlicy of renting equipment at rates that include the replacement cost of the specific piece of equipment. o The City will budget a contingency appropriation to provide for unanticipated non-recurring expenditures or shortfalls in projected revenues. The minimum contingency will be maintained at not less than 3 percent of annual revenues. Trust and Agency Funds - Trust and agency funds account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, or governmental units, and/or other funds. These include (a) expendable trust funds. (b) non, expendable trust funds, (c) pension trust funds, and (d) agency funds. Cemetery Trust Fund. The Cemetery Trust Fund is a non- expendable trust fund that uses the accrual basis of accounting. Revenues are from interest income and perpetual care service charges on cemetery operations. Expenditures are for the repurchase of plots and transfers of earnings to the cemetery fund for operations. o No minimum fund balance policy is recommended. Discrete Components Unit Parks Parks and Recreation Fund. (Special Revenue Fund) Revenues are from property taxes, charges for services, and miscellaneous sources. Expenditures are for parks, recreational, and golf course operations. Parks Capital Improvements Fund. (Capital Projects Fund) This fund is used to account for resources from grants and inter-fund transfers that are to be expended for equipment purchases and major park renovations. ..J Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%level would be preferable. ..J Cemetery Operations are paid for in the General Fund and only interest earnings are transferred from the trust Annually, the General Fund transfers $500 to the trust. Revenue from General Fund, Cemetery Operations are split with 60% going into the trust. EFB balance in the trust is approximately $800,000. Staff recommends that this relationship be reviewed for change so that less in general revenues in the General Fund are used to subsidize cemetery operations. It should also be determined whether the $800,000 could be legally borrowed or reduced in favor of other City needs. Parks is using a 20% EFB policy although the City's Financial Policies do not address that Staff recommends the Contingency be calculated only on Operating Expenditures. A 4%/evel would be preferable. .J No EFB policy or Contingency policy exists. Revenues o The City will estimate its annual revenues by an objective, analytical process. Because most revenues are sensitive to conditions outside the City's control, estimates will be conservative. o The City will make every effort to maintain a diversified and stable revenue base to protect its operation from short- term fluctuations in anyone revenue source. D With the exception of grants, charges for services, and earmarked donations, the City will not earmark revenue for specific purposes in the General Fund. o The City will establish charges for enterprise funds that fully support the total cost of the enterprise. Utility rates will be reviewed annually. Rates will be adjusted as needed to account for major changes in consumption and cost increases. o The City will charge user fees to the direct beneficiaries of City services to recover some or all of the full cost of providing that service. All user fees will be reviewed biannually to insure that direct and overhead costs are recovered in the percentage approved by City Council. . aTo the extent practicable, new development shall pay necessary fees to meet all identified costs associated with that development. a The City will work aggressively to collect all delinquent accounts receivable. When necessary, collection procedures will include termination of service, submission to collection agencies, foreclosure, and other available legal remedies. The followina cateaories are for future discussion: Expenditures D The City will provide employee compensation that is competitive with comparable public jurisdictions within the relative recruitment area. D Estimated wage increases and changes in employee benefits will be included in the proposed budget under Personal Services. o The City is committed to maintaining and improving the productivity of its staff by providing a proper working environment, adequate equipment and supplies, and appropriate training and supervision. o A Social Service appropriation will be included in the proposed General Fund Budget. This appropriation will increase or decrease relative to the overall General Fund revenues. a An Economic and Cultural Development appropriation will be included in the proposed General Fund Budget. This appropriation will increase or decrease relative to the overall Transient Occupancy Tax Revenues. Purchasinq o The City will purchase materials, supplies, and equipment through a competitive process that provides the best product for the least cost. oj oj ..J Needs to be revised. oj ..; The City has not been able to review all charges every two years so this policy should be addressed. oj oj Capital OThe City will provide for adequate maintenance of equipment and capital assets. The City will make regular contributions to the Equipment Replacement Fund and the City Future General Capital Improvements Account to ensure that monies will be available as needed to replace City vehicles and facilities. DThe City will update its five-year Capital Improvements Program biannually, identifying capital needs and potential capital funding sources. The Capital Improvements Program will reflect the priorities of the City Council and the long-range needs of the community. o Future operating costs associated with new capital improvements will be projected and included in the long- term budget forecast. o The City will determine and use the most appropriate method for financing all new capital projects. o Special accounts dedicated for capital improvements will be segregated in the accounting system and used only for the intended capital purposes. o The Capital Improvement Plan will encourage a level capital replacement schedule. Debts o The City will not use long-term borrowing to finance current operations. o Capital projects, financed through bond proceeds, will be financed for a period not to exceed the useful life of the project. o Whenever possible, enterprise debt will be self-supporting. Regardless of the type of debt issued, the City will establish a one-year reserve for all self-supporting debt. o The City will seek to maintain and improve its bond rating to minimize borrowing costs and to ensure its access to credit markets. o The City will keep the final maturity of general obligation bonds at or below 20 years, with the exception of water supply and land acquisition that will be limited to 30 years. o The City will maintain good communications with bond rating agencies about its financial condition. o The City will not issue general obligation debt, which combined with all other overlapping jurisdictions, will exceed the medium affordability index. Risk Manaaement OThe City will provide an active risk management program that reduces human suffering and protects City assets through loss prevention, insurance, and self- insurance. Accounting Methods General Fund This fund accounts for all financial resources except those accounted for in anotherfund. Resources include worKing capital carryover, taxes, licenses and permits, intergovernmental revenue, fines and forfeitures, charges for services, miscellaneous revenues, and inter-fund transfers. Expenditures are for Social Services, Economic and Cultural Development, Police Department, Municipal Court Division, Communications, Fire and Rescue Department, Community Development, Planning Division, and the Building Division. This fund uses the modified accrual method of accounting. Special Revenue Funds Special Revenue Funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Special revenue funds account for transactions on the modified accrual method of accounting. Community Development Block Grant Fund. This fund was created in 1994-95. The fund accounts for the Block Grant and related expenditures. Street Fund. Revenues are from the state road tax, franchise fees, charges for services and miscellaneous sources. Expenditures are for the maintenance, repair, and surfacing of streets, as well as maintenance and construction of the storm water runoff infrastructure. Airport Fund. Revenues are from airport leases. Expenditures are for maintenance of airport facilities. Capital Projects Fund Capital improvement funds are established to account for financial resources that are used for the acquisition or construction of major capital facilities (other than those financed by enterprise funds, internal service funds, special assessment funds, and trust funds). Capital projects funds use the modified accrual method of accounting. Capital Improvements Fund. This fund accounts for revenues from grants, nonbonded assessment payments, bond proceeds, and other sources, and will account for the construction of special local improvements, usually streets, with revenues from short-term borrowing and nonbonded assessments. Expenditures are for construction, property and equipment acquisition, improvements and related purposes, and the repayment of short-term debt principal and interest incurred in financing improvements. Debt Service Fund The Debt Service Fund accounts for the accumulation of resources to be used for payment of the debt incurred for the acquisition or construction of major capital facilities (other than those financed by proprietary funds, and trust funds). Expenditures and revenues are accounted for on the modified accrual method of accounting. Bancroft Bonds revenues are from Bancroft (Local Improvement District) bonded assessments. These are expended for the retirement of local improvement district bonded debt principal and interest until such debts have been fulfilled, General Bonds revenues are from property taxes that are expended for the retirement of general obligation debt principal and interest Notes, Contracts, and Liens revenues derived from operating transfers from other funds are used to repay long-term contracts that are not bonded. Enterprise Funds Enterprise funds account for the following operations: (1) those that are financed and operated in a manner similar to private business enterprise, where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods and services to the general pUblic on a continuing basis be financed or recovered primarily through user charges; or (2) those where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriated for capital maintenance, public policy, management control, accountability, or other purposes. Enterprise funds use full accrual basis of accounting for financial statement presentations. However, the enterprise activities use a modified accrual basis of accounting for budgetary purposes. This assures budgetary compliance with such expenditures as capital construction and acquisition, as well as debt principal transactions. Water Fund. This fund accounts for water operations. Revenues are from sales of water, other charges for services, as well as property taxes dedicated to the retirement of general obligation bonds. Expenditures are for operations, conservation programs, capital construction, and retirement of debt. Wastewater Fund. This fund accounts for wastewater treatment and collection. Revenues are from charges for services. Expenditures are for operations, capital construction, and retirement of debt. Electric Fund. This fund accounts for the distribution of purchased electricity according to standards set forth by the Federal Energy Regulatory Commission. Revenues are from sale of electricity and other charges for services and intergovernmental grants. Expenditures are for related operations. Utility operations include wholesale power purchases, operating expenses, energy conservation incentives, capital outlay, retirement of debt, and franchise tax. Telecommunications Fund. This fund accounts for telecommunications operations. Revenues are from cable TV, Internet connections, and high speed data. Expenses are for operations maintenance, capital construction, and debt service. Internal Service Funds Internal service funds account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost reimbursement basis. Internal service funds use full accrual accounting methods for financial statement presentations. However, the internal service funds use a modified accrual basis of accounting for budgetary purposes. This assures budgetary compliance with such expenditures as capital construction and acqUisition as well as debt principal transactions. Central Services. This fund is divided into the following Divisions: Elected Officials, Administration, Administrative Services, Legal, Customer Services, Accounting, Purchasing, Public Works Administration, Engineering, Maintenance, Computer Services, and the City Recorder. These Divisions fall under the umbrellas of the Administration, Finance, Public Works, and the Electric Departments. These functions are supported by charges for services by all direct service divisions and departments. Insurance Services Fund. Revenues in this fund are from service charges from other departments, investment income, and insurance retrospective rating adjustments. Expenditures are for insurance premiums, self-insurance direct claims, and administration. Equipment Fund. This fund is used to account for the replacement and maintenance of the city's fleet of vehicles. Revenues are from equipment rental charges. Expenditures are for personal services, materials and services, and capital outlay. Trust and Agency Funds Trust and agency funds account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, or governmental units, and/or other funds. These include (a) expendable trust funds. (b) non,expendable trust funds. (c) pension trust funds. and (d) agency funds, Cemetery Trust Fund. The Cemetery Trust Fund is a non-expendable trust fund that uses the accrual basis of accounting. Revenues are from interest income and perpetual care service charges on cemetery operations. Expenditures are for the repurchase of plots and transfers of earnings to the general fund for operations. Discrete Component Unit Parks Parks and Recreation Fund. (Special Revenue Fund) Revenues are from the parks and recreation portion of the property tax levy, charges for services, and miscellaneous sources. Expenditures are for parks and recreational purposes as well as department operations. Ashland Youth Activities Serial Levy Fund. (Special Revenue Fund) Revenues are from a three-year Ashland Youth Activities local option property tax levy. Expenditures are for community and youth activities and recreation. Parks Capital Improvements Fund. (Capital Projects Fund) This fund is used to account for resources from grants and inter-fund transfers that are to be expended for equipment purchases and major park renovations.