HomeMy WebLinkAboutResolutions - No. 2003-08A RESOLUTION OF THE LODI CITY COUNCIL REVIEWING AND
ADOPTING THE FISCAL POLICIES AICD BUDGET FORMAT FOR
THE 2000-05 FINANCIAL PLAN AND BUDGET
WHEREAS, the City adopted its first two-year budget format with the adoption of the
1994-96 Budget`, and
WHEREAS, this two-year format includes a section containing formal statements of
financial policies; and
WHEREAS, the format tobe used ;fear the budget documentand the City's formal fiscal
policies are the vital foundation on Which the 2003-05 Financial Plan and Budget will be built,
and
WHEREAS, as such, the City Manager hereby recommends formal adoption of the
policies and format to provide for effective planning in the preparation and management of the
City's overafl budget.
NOW, THEREFORE, BE IT RESOLVED, that the Dodi City Council does hereby review
and adopt the attached fiscal pvficies and budget format (marked Exhibit A) for the 2003-05
Financial Plan and Budget.
Dated: January 15, 2003
hereby certify that Resolution No. 2003-06 was passed and adopted. by the City
Council of the City of Lodi in a r.egular meeting held January 15, 2003, by the following vote:
AYES: COUNCIL MEMBERS — Beckman, Hansen, Howard, and Land
NOES: COUNCIL MEMBERS -- Mayor Hitchcock
ABSENT: COUNCIL MEMBERS -- Nene
ABSTAIN: COUNCIL. MEMBERS — None
SUSAN J..BLACKSTQN
City Clerk
�► s
2003-2005 FINANCIAL PLAN AND BUDGET
OVERVIEW
The ovendl goal of the City's Financial flan and Budget is to establish and maintain effective
manage .m nt of the City's resources. Formal statements of budget policy and major, goals provide the
foundation for effective planning. Accordingly, this section describes the basic budget policies used in
guiding the preparation and management of the Laity's overall budget, This section is composed of the
following major units:
* Budget Management and Control Policies
* Major City Coals
Some of the benefits to establishing financial policy include:
1. Publicly d rt( p s t cents caintrabu gre Cy to r r c mil "ty of ind public confidence
in the City. For the credit rating industry and prospective investors, such statements show the
City's commitment to sound financial management and fiscal integrity.
I Established policy saves time and energy. Once decisions are made at the policy level, the issues
do not need to be discussed each time a decision has to be Heade.
3. The process of developing overall policy,directs the attention of staff and Council to the City's
total financial condition rather than singl6m1ssue.areas. Moreover, this process requires staff and
Council to think about linking long-term financial planning with day-to-day c rations.
4. As overall policies are developed, the process of trying to tie issues together can bring new
information to the suifice and reveal further issues that need to be addressed.
5. Developing financial policies reinforces the Council's policy role in maintaining goad financial
condition.
5. Setting financial policies can improve the City`s fiscal stability by setting a forward-looking
approach to planning.
7. Explicit policies contribute to continuity in handling the City's financial affairs.
BUDGET MANAGENW4 NT AND CONTROL POLICrES
The following policies guide the preparation and execution of the 2003-2005 Financial Ilan and Budget:
* Financial Plan Organization
* Budget Administration
' Gend.ral Revenue Management
* Recreation and Con= unity Center Fees
* Enterprise Fund Fees and Rates
* Other Fees and Rates
* Revenue
* .Appropriation Li .nation
* Fund Balance Design . ations and Reserves
* Investments
* Capital Financing and Debt Management
Capital Improvement Budget
Human Resource Management
* Productivity Reviews
* Contracting For Services
* Allocating Cost of Services
*
Carryover Policy
*
Fleet Policy
2ooxn0 FINANCIAL .PLANA ND.BUDGET
The involvement of the City ty Council in setting major City goals is essential to the budget process. These.
go . als provide short term and long terms direction to staff, determine the allocation of resources and
establish. priorities. Th - ese goal . s will provide focus to the organization -wide efforts of staff and ensure
that the most important, highest priority objectives
octives. are accomplished and, that these priorities are
communicated to the public.
The mkior City goals are provided in this part of the 2003-2005 Financial Plan and Budget.
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HUDG l A Ji OLIM
A. Through its financial plan, the City will:
1, Identify community needs far essential services
2: Cram e the activities iuid to provide these services.
3. Establish ;k policies and goals that define the nature and level of services required.
4. Identify ,'activities per�c�xrxaed hi delivering services..
5. Propose objectives for improving the delivery of services.
6. Icieritify an d appreapriate resources re uired to perform services and accomplish objectives.
7. Set standards to meas ire and evaluate the-
a, Output of activities.
b. A.cctii'ffp�islni of "objectives
C, Ekpen. iture of appropriations
B. The City will use a two-year financial plan and budget concept to emphasize long-range planning and
effective management of services. The benefits of a two-year financial plana and budget
are -
L Reinforces.long�rang ,planning
2. Concentrates on the development and budgeting for significant objectives
3. Establishes realistic sci edules for completing objectives
4. Provides for orderly and structured operations
5. Promotes orderly spending patterns
C. The two-year financial plan and. budget will establish measurable objectives orad allow reasonable
time to accomplish those objectives.
D. The status of major program objectives will.be reported to the Council.sezni-aranarally.
E. The. City Council will review and amend appropriations, if necessary, serni-annually.
BUDGE, T ADMINISTRATION
ON
X. City Connell
The City Council isultiinatcly,responsible to the public fo. r the delivery.and conduct o.f City
services and facilities. Accordingly, the Council appropriates funds to ensure the delivery of
services at the levels and in the prionity established by the Council.
W
aim
& City Manager
The City Manager. as the chief administrative officer provides the City Council and Staff with
general direcOn in the development and formulation of the staff's budget recommendation. This
includes: evaluating and assessing current and projected issues confronted by the City; determining
the demand for services and 'facilities; identifying the concems of the voters; assessing the current
and projected financial 'condition `of the City; and determining the final staff recommendation.
C. Finance Director/Treasurer.
The Finance Director as the chief financial officer is responsible for budget developme- nt and
administration. `his includes° developing and issuing the budget instructions and calendar; advising
the City Manager on budget policies, including recommended annual target funding levels for fleet
fonds; reviewing ]budget requests to ensure they are complete and accurate; preparing the preliminary
budget recommendation for review by the City Manager; and, publication of the approved budget.
D. lPubHc Works Director.
The public Works. Director is responsible for preparing the City's capital improvement budget (ClIB)
and the City'squipr cent Replacement Schedule (ERS). In this capacity, the Public Works Director
works closely with the Electric Utility Director to prepare an integrated CI and ER5 in recognition
of the unique responsibilities and scope of services offered by the Electric Department.
E. Department. Directors
Department Directors are responsible for preparing their operating budget requests and capital budget
requests in accordance with the City's budget instructions.
F. Fleet Committees
Fleet commttt s were established to serve the City Manager in all vehicle -related matter to ixnclude
budgeting, acquisition; disposition, assignments, vehicle operations, maintenance and insurance.
G. Failure to Adopt -Budget = , r
If the City Council fails to adapt the budget by July 1, the City Council may elect one of the
following course of action until passage of a budget and the appropriation of funds: (1) Provide the
City Manager with Continuing Resolution Authority to allow continued services at expenditure
levels not greater.than those levels approved in the prior year budget; or (2) Require staff to obtain
prior approval. for the expenditure (disbursement) of City funds.
H. Public Record
Copies of the adopted City budget shall be public records available to the public upon request.
GENE RAL REVE NUE MANAGEMENT
A. The City will seek to maintain a diversified and stable revenue base to protect it from short-term
fluctuations in any one revenue source.
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2003-2005 FINN TCI PLANAND BUDGET
W To emphasize and facilitate long-range planning, the City will project operating revenues for the
succeeding five years.
C. The City will make all current expenditures with current revenues, avoiding procedures that balance
current budgets by accruing future revenues, rolling over short term debt or borrowing reserves of one
fluid to another.
A. Recreation service cast recovery goals are addressed as an integral component of the City's annual
comprehensive user f60 analysis process. it is the City's goal that a mi imurrn of 0% of. the total cost
of the City's recreation and c6mmunity center.programs sho. uld be recovered through fees and charges
for recreation aCtfVltid3s'atid tli 'use cif City, facilities and equ pbcietit; lit achieving this overall cast
recovery goal, the f€allowing gw' delines will be used:
L Cost recovery for activities directed to adults should be relatively high.
2. Cost recovery for activities for youth should be relatively lova.
Although ability to pay my not be a concern for all youth and senior participants, these are
desired program activities, and the cast of determining need maybe greater than the cast of
providing a unifomd service fee structure to all participants. Furftr, there is a community
wide benefit to encourage high -levels of participation in youth recreation activities regardless
of fiinamial statics.
I For cast recovery activities of less than 100%, there shawl be a differential in rates between
residents and non-residents.
4. These policy guidelines acre sufficient. in themselves in providing direction for setting the
recreation and comm€inity enter fees. ,A.lth()Uh these targets may be internally useful in
administering recreation foes, the City's management should have as much flexibility as
possible in setting specific activity fees as long as they meet the objectives and criteria
provided above. owever, the Recreation Department and Community Center will prepare
and submit a sura �y of internal cast recovery targets to the City Manager for various
activity categot� s t least Annually.
13. Charges will be assessed for use of jroom.s, pools, gymnasiums, hall fields, special. use areas, and
recreation equipment for activities not sponsored or co-sponsored by the City. Such charges will
generally conform to the fee support categories listed above.
C. The Recreation Department and Community Center may waive fees with the approval of the City
Manager when it is determined that an undue hardship exists or when in the best interests of the City.
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2 FINANCIAL PLAN AWBUD.
e
A. The City will set fees and rates at levels
...... including operations, ca ital outlay and
electrical, water, sewer, and trans t.
which fully cover the total direct and indirect costs
debt service..... of the following enterprise programs,
B. The City will annually review and<adjust enterprise find fees and rates as required to erasure that they
remain appropriate and equitable; and to stem large rate increases.
A. Ongoing Review
Fees and rates will be reviewed and updated on an.. ongoing basis to erasure that they are correct and
appropriate based on the changing riieeds of the com urd y, i.e. economic concerns, social issuds,
public safety.
13. General Concepts Regarding the Use of ' mice Fees and Rates
The use of fees and rags should be subject to the following general concepts:
Revenues normDy will not exceed the reasonable cast of providing the service.
2. Cost recovery goals should be based on the total cost of delivering the service, including
direct costs, departarzenta] administration casts, and organization wide cost such. as
accounting, personnel; date processing, vehicle maintenance and insurance.
3. The method of. assessing and collecting fees should be as simple as possible in order to
reduce the administrative cost of collection.
4 Rate ' structures should be sensitive to the "market" for similar, services .as well as to smaller;
infrequent users of the service and the influence rates and fees have on economic
development.
5. A unified approach should be used in determining cast recovery levels for various programs
based on the factors discussed above.
C. Low Cost Rec.O.Yery Services
Based on the criteria discussed. above, the. following types of .services should have very low cost
recovery goals. In selected eireumsta ces, there maybe specific activities within the broad scope of
services provided that should have user charges associated with there. However, the primary source
of funding for the operation as a whole should be general purpose revenues, not user fees:
1. Maintaining and developing. public facilities that are provided on a uniform, community wide
bads such as struts, parks and general purpose, buildings.
2. Delivery cal social servic.e programs and economic development activities.
M
1. Fee surveys should never be the sole or primary criteria in setting City fees. There are many
factors that affect how and why other communities have set their fees at their levels. For
example:
a. What level .of cost recovery is their fee intended to achieve compared with Lodi's cost
recovery objectives?
b. What costs have been considered in computing the fees?
c. When was the last time that their fees were comprehensively evaluated?
d. What level of service do they provide compared with Lodi's service or performance
standards?
e. Is their rate structure significantly different than Lodi's and what is it intended to achieve?
2. Surveys comparing. the City's fees to other communities is useful background in.fortnation in
setting fees for several remiss.
a. They reflect the "market" for these fees and can assist in assessing the reasonableness. of
the City's fees.
b. if prudently analyzed, they can serve as a benclunark for how cost effective the City
provides services.
These are difficult questions to address in fairly.q-valqating fees among diffemnt cities'..
The Council recognizes that .generally accepted accounting principles for local government discourage the
"earmarking"' of General Fun.d. revenues, and accordingly., the practice of earmarking general fund
revenues for specific Pms
rogra-should. be minir.n.ized. Approval of the following RevenueDistribution
policies for 2001 . -2003 does no . t prevent future Councils from directing General Fund resources to other
funds and activities as necessary.
ary.
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A. property Tax Alloca.tion
1. The City's property tax serves to provide for general municipal services as well as for debt
service, retirement obligations, public improvements and library purposes. The passage of
Proposition l3 ori June 6 1978, drastically changed the method of establishing and allocating
property to revenues for all local agencies in California. In addition. to limiting annual
increases in market value, placing a ceiling on voter approved indebtedness and redefining
assessed valuations, Proposition 13 established a max. mur°n County wide levy for general
revenue purposes of 1% of market value. Under subsequent state legislation which adopted
formulas for the distribution of this countywide levy, the City now receives a percentage sof total
property tax avenues.
2. -As discussed above, the City no longer controls the annount or distribution of its propeity tai. In
distributing property tax revenues between funds since the passage of Proposition 13, the
following rr inimunx ratios for special purposes have traditionally been used based on the tax
rates that were in effect prior to the passage of. Preposition 13:
scat Year 1978-79 Tax Rate Per $100 Percent
Special Municipal Purposes
Ubrary $ .30 17-86%
General Municipal Purposes 1.38 82.14%
TOTAL $ 1.68 100.000/0
3. For 2001-2003 property tax revenues .will be distributed proportionately to the following funds as
follows:
General Fund - _
capital Outlay Fuand - Central Fund
library Sand
TOTAL
L iL
2002-03
2003-04
50,E
50%
30%
30%
2%®%®
2130
100%
100%
4. The distribution of property tax received on land annexe4 to the City will be in accordance to the
agreennent with San Joaquin County.
F. All Gasoline Tax revenues will be. used for street maintenance and construction activities.
Pursuant to the San Joaquin County's local Transpoilation Sates Tax (Measure K), the City must
meet the "maintenance of Ef 'ort"'(v OE) requirement which is based on the annual average of the
City's street and roast expenditures funded by the General Aurid fixed on a three year period..
C. All Transportation. Development Act (TDA) revenues will be allocated to alternative
transportation programs, incI di regional and municipal transit systems, bikeway improvements
and other programs or projects designed to recluse automobile usage. it is expected that
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00 05 y. A a NU e N
alternative transpo Cation programs - in conjunction with other state and federal grants for this
purpose- will be self-supPoning from TDA revenues. As available, TDA funds will allo be used
for street maintenance projects.
A. Enterprise Fund Allocations to the General Fund
1. The goal of Preposition 4 is. to limit growth in appropriations of bath state and local
government to changes in the oast of living and population in order to control spending levels.
Proposition 4 further describes the difference between "tax proceeds" and fees. Tax proceeds
are the revenue from regulatory licenses, user charges and user foes to the extent the revenue
exceeds the cost of.p1rovidilig the regulation, product or service. (Tris includes transfers from
an enterprise fund to the extent those funds exceeded the cost of providing the services).
2. As discussed above, the funds transferred from the City's enterprise funds to the City's ,general
fund are "Irl -lieu of Taxes" to the. extent they exceed the cost of services provided by general
services (accounting, personnel, legal, insurance, etc.). These taxes will be levied based can
prior year revenues as follows:
200 2023-04
Ira4jeu of Tax - Electric 1.21 12%
1n -lieu of "Tax -`Water 12%. 12%
in -lieu of "Tax d Sower 12% 12%
Special Revenue Allocations to the General Fund
Revenues the City receives for specific services (ie. vehicle tow charges) will not be designated
for use by an iradividui l department unless required by statute or approved by the City Council.
When required by statute (i.e. asset seizure), these funds will be first allocated to the purchase of
'necessary and essential equipment and/or • services prior to purchase with General Fund resources.,:.:
F. Grants and Donations
Council must approve applications for grants or acceptance of donations containing, restrictions
that may have an impact on the bud&L
G. USE OF COMNIUN TY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS
Each year, the U.S. Depa ment of. Housing. and Urban Development (HM) awards cities
grants to catty out a number of community development activities in an effort to revitalize
neighborhoods, foster economic development and improve community facilities and services.
Lodi receives those grant funds in a formula -based allocation to use to address identified
community development needs.
CDBG fronds may be used for activities that include, but are not limited to:
2003-2405 l"ICAI P1 i .
BUDGET POLICEES
• Acquisition of realproperty; ® Public Services, within certain limits
• i.elocatior, or demolition Activities relating to energy conservation and
« Rehabilitation of residential and non-residential renewable energy resources; and
structures; Providing assistance to profit -motivated
• Construction of new public facilities and businesses to carry out economic development
improvements, such as water. and sewer and job creaitinglretention activities.
facilities, streets, neighborhood centers, and the
conversion of school buildings for eligible
purposes;
C BG funds must.also be used to meet one of the following national objectives:
Provide bene it" to low- and -moderate income' persons; which includes the handicapped and
elderly,
* Prevent or eliminate slums. or. blight-, or
d Meet a specific urgent treed because of existing conditions, which pose a serious and immediate
threat to the health or welfare of the community where other financial resources are not
available.
The following local objectives. are identified for the allocation. of CUBE funds:
1. With. the exception of certain administrative casts, each proposed use of CDBG funds is
categorized as either a public .service or a capital "irnproverxint/bricks and mortar project; It
is the intent of this Budget Policy togive priority in funding to eligible capital improvement
projects over public service -related `funding requests.
2. 1.1i;M has established guidelines that require that funds be allocated and expended in a
timely manner. It. is the intent of this Budget. Policy. to require that any proposed funding
ry
request -meet a readiness criterion to ensure thatthefunds will be used: in the program year:
that they are awarded, thereby allowing the City to remain in compliance with BUD
regulations.
A, The Council will annually adopt a resolution establishing its appropriation limit calculated in
accordance with. Article XIM of the Constitution of the State of. California, Section 7900. of the
State of California government Cade, and any other voter approved amendments or state
legislation that affect the City's appropriation limit.
B. The City will strive to develop revenue sources, both new and existing, which are considered non -
tax proceeds in calculatingits approphations subject to limitation.
C. The City will annually review. user fees and charges and report to the Council the amount of
program subsidy, if any, that is being provided by the General Fund or Enterprise Funds.
B_l0
A. The City should maintain fund balances of at least.. 15% of operating expenditures in the General
Fund as well as the Electric, Sewer, and 'mater Funds. This is considered the rniniim mai "level,
necessary to maintain the City's credit worthiness and to adequately provide for:
1. Economic uncertainties, local disasters, and other financial hardships or downturns in the
local economy.
2. Contingencie for unforeseen operation or capital needs.
3. Cash flow requirements.
B. The City will establish and maintain an Equipment Fund to provide for tine timely replacement of
vebicl&s and capitalequipzneht: This Includes items with ah individuail replace lent east bf
$3,000" or more. Theminimum, fund balance in the Equipment Mand should allow for annual
fluctuations in expenditures wl-dIt.m.aintaining a level annual transfer and allow for emergency
replacement purchases. Til annual contribution to the Fund will generally be based on the annual
„rase allowance" which is determined based on the estimated life of the vehicle or equipment and
its original purchase cost. Interest earnings and sales of surplus equipment as well as any related
damage and insurance recoveries will be credited to the Equipment Fund.
C. The Council may designate specific fund balance levels for future development of capital projects
which it has determined to be in the best long -tom interests of the City.
D. in addition to the desi nations rioted above, fund balance levels will be sufficient to meet funding
requirements for projects approved in prior years which are carried forward into the. new year;
debt service reserve requirements; reserves for encumbrances; and other reserves or designations
required by contractual obligations, state law, or generally accepted accounting principles.
EVWSTMEENTS
A. investments and cash management will be the responsibility of the City Finance
Director/Treasurer or. designee.
B. The City's Primary investment objective is to achieve a reasonable rate of return while minimizing
the potential for capital. losses arising from market charig�s pr issuer default. Aceordiri ly, the
following. factors will be considered in priority order in determining individual investment
placements,
1. Safety
2. Liq iciity
3. Meld
C. The City will strive to keep idle cah balances wily invested through daily projections of cash
flow rNuiremernts. Toavoid forced liquidations and lasses of investment eamin�;s; cash flow and
future requirements will be the primary consideration when selecting maturities.
D. As the market and the City's iDvestnnent portfolio change, care will be taken to maintain a healthy
balance of investment types and matu:ritie .
E. The City will invest only. in those instruments authorized by the California Government Code
Section 53601. The Citywill not invest in stack, will ,got speculate, anti will not deal in futures or
options. The investment market is highly volatile and continually offers new and creative
opportunities for enhancing interest eamin s. Accordingly, the City will thoroughly investigate
aq new invi estrnent vehicles prior to committing City funds to them.
R Current financial statements will be maintained for each institution in which cash is invested.
lrnvestrxne;nts will be limited to 20 percent of the total net worth of any institution and may be
reduced farther or refused altogether if an institution's financial situation becomes unhealthy.
C. in order to maximize yields from its overall portfolio, the City will consolidate cash balances from
all funds for investment purposes, and will allocate investment earnings to each fund in
accordance with generally accepted accounting principles.
H. Ownership of the city's investment securities will be protected through third -party custodial
safekeeping.
The City Finance Director/Treasurer will develop and maintain a comprehensive, well
documented invest=nt reporting system which complies with Government Cade Section 53607.
This system will provide the City Council.with appropriate investment performance inft s a on.
J. The. City Finance Director/Treasurer will develop and maintain an Investment Management Plan
which addresses the City's administration of its portfolio, including investment strategies,
practices, and procedures.
Capital Financing
A, The City will consider the use of debt financing only for orae -tune capital projects and only under
the followiniz circumstances:
1. when theproject's useful life will ex teed the term of the financing.
2. When project revenues or specific resources will be sufficient to service the long-term debt.
5-12
LO lFINANCIAIGn.. ,.
B. Debt .financing will not be considered appropriate for any recurring purpose such as current
operating and maintenance expenditures, The issuance of abort -term instruments such as revenue,
tax, or bond Anticipation nates is excluded from this limitation.
C. Capital improvements will be financed primarily through user fees, service charges, assessments,
special taxes, or developer agreements when benefits can be specifically attributed to users of the
facility.
D. The. City will use the following criteria: to evaluate pay -as -yon -go versus long-term financing in
funding capital improvements:
Pay -As -you -Go
When current revenues and adequate fiend balances are available or when project phasing can be
accomplished...
2. When debt levels adversely affect the City's credit rating.
3. When market conditions. are unstable or present difficulties in marketing.
Long -Tern Dancing
1. When revenues avaailable for debt service are deemed to be .sufficient and reliable so that long
tem financinLY can be marketed with in stment. grade credit ratings.
2. When. the project securing- the financing is of the t pewhich will support an investment grade
credit rating.
3. When market conditions present favorable interest rates and demand for City financing.
4. Whein a project is mandated by State or Federal requirements and current revenues and available
fund balances are insufficient.
S. When the prgjecUs-required to meet or relieve service,'requirenjents.
b. When the life of the project or asset financed is 10 years or longer.
Debt Management
F, The City will not obligate the General Fund to secure long-term financing except when the
marketability can be srgnific.antly enhanced.
F. No more than 60% of all capital projects other than Enterprise Fund projects will be funded from
long-term financing, and direct debt will not exceed Flo of the City's assessed valuation.
G. A feasibility analysis. will be prepared for each long -terse financing to assess debt service on
current and future operations. This will also include an analysis on the reliability of revenues to
support a debt service.
H. The City will generally conduct. debt financing on a competitive basis. However, :negotiated
financing may be used due to market volatility or the use of an unusual € r complex: financing or
security structum.
1. The, City will seely investment groderatln.gs. (Baa/13BB or grater) on any direct debt and will seek
credit enhancements such as letters of credit or insurance when necessary for mar% etin purposes,
availability and cost-effectiveness.
S. The City will monitor all forms of debt annually coincident with the budget process.
K. The City will diligently monitor its compliance with bond covenants and ensure its adherence to
federal arbitrag.e regulations.
L. The City will maintain good ,communications with bond rating agencies about_ its financial
condition. The City will follow a policy of full disclosure on every financial report and band
prospectus (Official Statement).
CAPITAL IMPROVEMENT BUDGET
A. Construction projects and _capital purchases (other than vehicles,. equipment and major .computer
software acquired through the Equipment Fund and projects funded by an Enterprise Fund] which.
cost more the $109000 will be included in the Capital ImprovemenBudget (ClB)q trainer capital
outlays of $101000 or less Will be. included with the operating activity budget& Enterprise Fund
projects and major equipment purchases will be based on the capitalization practices of the
Enterprise.
B'. The purpose of the Cllr is to systematically plan, schedule, and finance capital acquisitions to
.,emsure' ost�e ea vetiiess 8-�ic-11, a nformance with established policies. The G.illbe a
four -yeas plan Organized into the same functional groupings used for the operating budget. The
Cit will reflect a balance between capital replacement projects which repair, replace, or enhance
existing facilities, equipment or infrastructure; and capital facility projects which significantly
expand or add to the City's existing fixed assets.
C. Every capital project will have a project manager tubo will preps the project proposal, ensure
that required phases are completed oil schedule, authorize all project expenditures, ensUre ghat all
regulations and laws are observed, and periodically report projmt status.
D, A ClB Coordinating Conurnittee, chaired by the Directors of Public Works and the .Electric Utility
Department, ent; vuill review project prpposals, detorniirie project phasing, recomi mend project
managers, review and evaluate the draft capital budget plan, and report project status at least
annually to Council. The Committee should be made up of representative of each Department.
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2003-20{ 5 FiNA CIA:L PLAN Alm BUDGET
BUDGET POLICIES
E. The Capital Irnprovement . Budget will emphasize project planning, with projects progressing
through at least two and up to six of the following phases:
• DESIGNATED - Set aside funding for future project development under "pay-as-you-go"
financing.
• STUDY - Includes concept design; site selection, feasibility analysis, schematic design,
environmental detern nation, property appraisals, scheduling, grant application, grant approval,
and specification preparation for equipment purchases.
• ACQUISI'T'ION - Includes equipment purchases and property acquisition for projects, if
necessary.
* DESIGN d Includes final design, plan and specification preparation, and construction cost:
estimation.
• CONSTRUCTION - Includes bid administration, construction, project inspection "and
management, aid closeout.
• DEBT SERVICE Installment payments of principal and interest for completed projects funded
through debt financing.
Generally, it will become more. difficultfor a project to move from one pbase to the next. As such, more
projects will be studied than will be designed, and more projects will be designed titan will be constructed
or purchased..
F. Funding and related appropriation to a project account will only. be made uponi approval of each
phase by the City Council. Accordingly, project approp iations for acquisition and construction
will generally be approved when contracts are awarded.
G. Project phases will be listed as objectives in the program narratives of the Activity responsible for
the project.
H. Funding set aside for;designated projects will lapse after three years if the project has not made
significant movement throe b the phases, or if the project has not been revalidated. This will
ensure funds are not tied up and are available for the timely completion of active projects. The
projects where funding set aside has lapsed will have to be resubmitted for consideration in the
next budget cycle.
A. regular authorized staffing will be fully budgeted and funded.
B.. Staffing and contract service budget ceilings will lin-Lit total expenditures for regular employees,
temporary einploy es, overtime and independent contractors hired to provide operating and
maintenance services.
OR
20032005 FINANCIAL PLAN AND BUDGET
C. Regular employees will be the core. work force and the preferred means to staff ongoing, year-round
activities rater than independent contractors. The city will strive to provide fair compensation and
benefit schedules for its aut.hori ed regular work force. Each regular employee will:
1. Fill an authorized regular position.
2. lie assigned to an appropriate bargaining.unit or representative group.
3. Receive salary and benefits consistent with labor agreements or other compensation plans
D. To manage the growth of the regular work force and overall staffing costs, the City will follow these
procedures.-
j.
rocedures:
1. The City Council will authorize all regular positions except in the case of the Library which is
governed by the Library Board.
2. The Human Resources department will coordinate the firing of all employees and evaluate the
reallocation of existing positions.
3. All requests for additional regular positions will include an evaluation of;
a. The necessity, terra, and expected results of the proposed position.
b. Staffing and :material casts including sorry, benefits., equipment, uniforrns, clerical support,
and facilities.
G. The :ability of private industry to provide the proposed service.
d. Additional revenues or cost savings which may be realized.
4. Periodically, and'or to any request for additional regular positions, programs will, be evaluated
to determine if they can be accomplished with fewer regular employees under a "productivity
review".
E. Temporary employees _ are employees other than regular employees, elected officials, and:
volunteers budgeted inlours. ourss. Teinporary employees Will augment regular City staffingonly as
limited'term employees, seasonal employees,emergency, intermittent, cTantract employees, and
interns. The City bale ager will encourage the use of temporary employees to meet peal: workload
requirements, fill into in vacancies, and accomplish tasks where less than regular, year-round
staffing is required.
F. Contract employees will be dei ed as temporary employees with. written contracts approved by
the City li ana er who may receive approved benefits depending on l c urly requirements and flue
length of their. contract. Contract employees will generally be used for medium-term (generally
between six. months -and two year's) projects, programs, or activities requiring specialized or
augmented levels of staffing for a specific period o.f time. The services of contract employees will
be discontinued upon completion of the assigned project, program or activity. Accordingly,
contact employees will not be used for services that are anticipated to be delivered on an Tangoing
basis,
B -l6
1. Short terra, peak workload assignments to be accomplished through the use of personnel
contracted through an outside crnploy€rieht agency.. M. placements through an outside
employment age y will be coordinated through the Human Resources Department and
subject to the approval of the Human Resources'Director.
2. Construction of public works projects and the provision of operating, maintenance, or
specialized professi.oni l services not routinely performed by City employees. Such services
will be providedvithout close supervision by City staff, and the required methods, skills, and
equipment will ene�ra]ly be determined and provided by the contractor.
The City will constantly monitor and view its methods of operation to ensure that services continue to
be delivered in the most cost-effective manner possible. This review process encompasses a wide range
Of issues, including.
A. Maintaining a decentralized approach in managing tine City's services. Although scamp level of
centralization is neecessary for review and control purposes, decentralization supports productivity
by:
o Encouraging accountability. by delegating authority to the. lowest passible level.
o Stimulating creativity, inzttavat tin, and individual initiative.
o Reducingthe adtxtirsistiative east of c pe anon by eliminat ng unnecessary review procedures.
o hn r ving the organization's ability to respond to changing needs and to identify and
implement cost saving programs.
• .Assigning responsibility for.effective operations and citizen responsiveness to the department.
B. Analyzing systems and procedures to identify and remove unnecessary review requirements.
C. .Evaluating the ability of new technologies and related capital investments to improve
productivity.
D. Investing in the City's most valuable asset - personnel staff - by developing the skills and abilities
of ail City employees, with special emphasis on first-linp, supervisors.
E. Implement annual performance reviews and appropriate methods of recognizing and rewarding.
exceptional employee performance.
F. Evaluating local market servico providers and ether government agencies to determine whether
the service is available at a lower cost than Provided by City staff.
G. Periodic formal review of operations on a systematic, ongoing basis.
B-17
2003-.2005 F.l`NANCUL PLAN AND BUDGET .
BUDGET POLICIES
CONTRACTING FOR ' CES
A. General. Policy Guidelines
L Contracting with the private sector and other government agencies for the delivery of
services provides the City with the opportunity .for cost containment and productivity
enhancement. As' such, the .City is coir mitted to using private sector resources in
delivering rnunicipal services as a key element in our continuing efforts to provide cost
effective services.
2. Private sector contracting approaches under this policy include construction projects,
professional services, outside employment agencies, and ongoing operation and
maintenance services.
3. In evaluating the costs of private sector contracts compared with in-house performance of
the service, indirect, direct and contract administration costs of the City will be identified
and considered.
4. Whenever private sector providers are available and can meet established service levels,
they will be seriously considered as viable service delivery alternatives using the
evaluation eritteria outhned below.
5. For programs. and activities currently provided by City employees, conversions to contract
services will gerkerally be trade through attrition, reassignment or absorption by the
contractor.
B, Evaluation Criteria
—Withinthe enter l pati r gut l nes <stated abtsve, tine cost-effectiveness of contract services- iia--:
meeting established service levels will be determined can a case-by-case basis using the following
criteria:
1. Is a sufficient private sectormarket available to deliver this service?
2. Can the contract be effectively and efficiently adnninistered?
3. What are the consequences if the contractor fails to perform, and can the contract
reasonably be written to compensate to City for any such damages?
4. Can a private sector- contractor better respond. to expansions, contractions,. or special
requirements of the service?
5. Can the work scopebe sufficiently defined to ensure that competing proposals can be
fairly and Bally evaluated; as well as the contractor's performance after bid award?
6. Does the use of contract services provide the City with an opportunity to redefine service
levels?
7. Will the contract limit the City's ability to deliver emergency or other high priority
services?
MW
fi Q45 FINANCIkl�PLA :: 1
8. overall, can the City successfully delegate the performance of the service but still retain
accountability and responsibility for its delivery?
ALLOCATING THE COST OF SERVICES
A. General Policy Guidelines
1, The City is committed to achieving efficiency by centralizing general administrative
,services tea the extent th y serve the needs of the City as a whole and provide for mater
cost efficiency. Accordinly general and administrative services will be charged to those
activities not financed by the General Fund by use of a cost allocation plan.
2. The City will develop a cost allocation plan for general government services provided the
City'.s enterprisefund and special revenue fund activities in accordance with accepted cost
allocation methodology.
3. The cost of general government services will be financed by operating transfers
established in the cost allocation plana and transferred to the. genera: fund annually at the
dime the City budget is adapted.
4. The Finance Director will perforin periodic reviews of. the City's cost allocation plan to
ensure the distribution of costs are made in accordance with accepted practices of the City.
The results will be lased to project annual operating transfers.
5. The City will develop a cost allocation plata in accordance with Federal and State policies
to ensure the. maximum.allowably return to the City of indirect/overhead costs.
B. Cost Allocation Criteria..
L Costs will be allocated considering the following criteria:
Cause and effect - the identification of output in proportion to the. service
provided,
Benefits received - the allocation of cost in relation to the benefits received.
Fairness and equity .. the allocation must be mutually satisfactory to the parties
affected,
* .Ability to beat' - the allocation of cost must consider the ability to pay and the
impact can the services provided.
2. Costs will be allocated to activities when the overall service benefits the City as a whole
but a particular cost benefit can not be shown.
3. Tine criteria far allocating costs will be included in the City budget to allow for evaluation
of the cost distribution criteria.
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KIT"11111MMIZIWIRM
° . r
1
UDGET POLICIES
cARRYOVERPOLICY
The Two year Financial Plan and ]budget used by the City provided the City Council and staff with the
opportunity to ct mimit operating funds to services over a Mics -year time frame rather than the traditional
one-year period. Under a one-year budget, appropriations lapse at the. end of the fiscal year, and favorable
budget balances are no longer available for operating expenditures except when encumbered under
contractual agreements. The two .yeas financial plan and budget allows for the unexpended operating
budget balances to be carried forward to the second year of the Financial Plan. To ensure fund balance
projections remain on target, any unexpended operating balances will be reduced if the actual revenue
received is materially less than the estimated revenue projected in the Financial Plan.
The use of carryover funds from the first year into the second year of the Financial Plan recognizes that
the delivery of neve or enhainced services often require more time to staff, equipment, organize and
implement than may be. possible in a one year time period. Carryover funding for operating programs into
the second year provides std` With the opportunity and flexibility to improve service and maintain current
operations without significant. dislocation or disruptions in service delivery systems. Under this concept,
the following carryover policy will be followed:
A. All operating budget appropriations lapse at the end of the second year of the two-year financial plan
and budget except for funds encumbered udder contractual agreement (which includes cornrnitxmnts
made through purchase order) fear goods and services which are essential to the operation of the City
in the year for which they encumbered.
B. Operating budgets maybe encumbered to ensure adequate funding for goads and services required to
conduct City operations in the year in which they are encumbered. Encumbrances must be evidenced
by a binding contractual agreement (ixicl ding purchase orders) between the City and the party
required to deliver the goods and services. Under- special conditions, requests for carryover may be
made by memorandum detailing the need for carryover of fiends, and such a request may be
,,considered as an encumbrance at the discretion of the- Finance Director.. Fer-;=yoven inter. the.,;.
subsequent year, all such contracts, purchase orders, or special request must be submitted by June 15
of each fiscal year.
C. The City Manager is authorized to carry forward the unexpended and unencumbered operating
budget balances from the first year to the second year of the City's Financial Plan and Budget and to
program these balances for re -appropriation under the following conditions:
1. The budget balances were unexpended for reasons beyond the control of the operating
department.
2. Re -appropriation of budget balances is required to ensure full funding of programs and services
approved by the City Council:
3. The expenditure of these funds will promote innovation, efficiency, and effectiveness in the
delivery of City services and programs.
BE
D. The total of all favorable variances regardless of type (personnel, utilities, supplies, services, or minor
capital) are available for carryover with the approval of the City Manager, and will be aggregated at
the fund level by department. Under this approach, program overages within the department may be
offset by program shortfalls. However, in no case may departmental overages in eine fund be offset
by departmentalsavings in another.
E. The budget carryover will be accounted for in a non -departmental control account established by the
Finance Department.
F. The Finance Department will provide Department Meads with a formal balance of operating funds
available for carryover by the end of the second quarter of the second fiscal year. Departments will
be able to determine a t ntative•baiance of their carryover funds. prior to that.date by reviewing the
June 30 Financial Reports However, these are unaudited numbers which are subject to chane and,
as such, the carryover balances are not official until published by the Finance Department.
C. Department Heads may. request through a Special Allocation .Request that the unexpended budget
balanus of their first year operatin budget be reappropriatcd irttcs the second year of the two-year
financial plan. All requests must -justify the need for the funds in the second year and explain why the
funds were not expended or encumbered in the year they were budgeted.
H. when carryover requests are approved by the City Manager, the Finance Department will transfer the
funding to the designated line itern(s) of the Department Budget as provided on the Special
Allocation Request form.
In 1997.Council adopted the Fleet Policies and procedures which are to govern the management,
operation acquisition andl disposition-,of,�,vo-hi0es and equipment-owued-and-leased-by the City of Lodi.
Under these adopted policy guidelines, the City organ izedCity vehicles into two fleets: General Fund
and Enterprise Fund. Fleet committees were established to serve -the City Manager in all vehicle -related
matters to include budgeting, acquisition, disposition, assignments, vehicle operation, maintenance and
insurance.
Under the budget process, replacement vehicles are generally budgeted and funded in the General Fleet
Fund or Entcrprtse Fleet Funds. Eased on prejected replacement needs, the City Manager and.Finance
Director recommend d an annual target funding level as paft of the budget process. This target funding
level helps to establish a minimum fund balance in the appropriate Fleet Funds.
M]
General Find based on historical replacement needs
Water <Fun .d based. can replac anent requests
wastewater Hired based can replacement requests
Electric Fund based on Historical replacement. needs
The target funding does riot authorize, specific replacements. Vehicles will be replaced based on target
funding if the r plac ent is justified and approved by the appropriate Fleet Management d�a�air�itt .
The recommendation of the Fleet Management Committee to replace existing vehicles costing $50,000
or less per vehicle is contingent on the approval of the Clef: All replacement vehicles costing more
than $50,000 require budgetary and sub equent procurement approval by the City Council.
in addition, requests to increase the size of the City fleet will be included in the regular Capital
improvement Budget neat the Capital Improve imnt Budget for Replacement Vehicles.
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