HomeMy WebLinkAbout030265 RES - 08/26/2014 RESOLUTION
AMENDING FINANCIAL BUDGETARY POLICIES ADOPTED BY
RESOLUTION 029848 AND PROVIDING FINANCIAL POLICY
DIRECTION ON PREPARATION OF THE ANNUAL BUDGETS.
WHEREAS, the City of Corpus Christi has a commitment to citizens as expressed in its
Mission Statement: "Provide exceptional service to enhance the quality of life"; and
WHEREAS, financial resources are budgeted to fulfill this commitment; and
WHEREAS, it has been the City's goal to rebuild the General Fund balance to
acceptable levels, a goal which was expressly stated in past policies with targets for
accomplishing that goal; and
WHEREAS, the City Council adopted a Financial Policy in January 1997 by Resolution
No. 022828, reaffirmed the Financial Policy in June 1997 by Resolution No. 022965,
modified the Financial Policy in July 1997 by Resolution No. 022992, adopted a new
Financial Policy in May 1998 by Resolution No. 023319; reaffirmed the Financial Policy
in May 1999 by Resolution No. 023657; reaffirmed the Financial Policy in May 2000 by
Resolution No. 024044; reaffirmed the Financial Policy in May 2001 by Resolution No.
024455; reaffirmed the Financial Policy in May 2002 by Resolution No. 024863;
reaffirmed the Financial Policy in April 2003 by Resolution No. 025280; reaffirmed the
Financial Policy in April 2004 by Resolution No. 025737; reaffirmed the Financial Policy
in May 2005 by Resolution 026265; reaffirmed the Financial Policy in January 2006 by
Resolution 026605; amended the Financial Policy in April 2008 by Resolution 027683;
amended the Financial Policy in May 2009 by Resolution 028176; amended the policy
in May 2010 by Resolution 028609; amended the policy in July 2011 by Resolution
029128; amended the policy in May 2012 by Resolution 029521; amended the policy in
May 2013 by Resolution 029826; and amended the policy in June 2013 by Resolution
029848.
WHEREAS, as a result of those policies, the City achieved its previous goal for the
General Fund balance and desires now to articulate a new strategy to maintain a
revised General fund balance and to utilize any surplus balance to provide for enhanced
financial stability in future years, and also desires to establish similar goals for fund
balances of the Internal Service Funds, Enterprise Funds, the Combined Utility Reserve
Fund, and Debt Service Reserve Funds; and
WHEREAS, this policy provides an essential guide to direct financial planning and to
maintain and strengthen the City's bond rating; and
WHEREAS, it has been the City's practice to reaffirm its financial policy or to adopt new
or modified policy annually in conjunction with preparation of the budget.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
03021; 5
INDEXED
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The Financial Budgetary Policies adopted by Resolution 029848 are amended to read
as follows:
Section 1. Development / Effective Date of Financial Budgetary Policy. This
Financial Budgetary Policy reaffirms and amends the financial policies adopted each
year by the City Council since 1997. This Financial Budgetary Policy is made part of
the City Comprehensive Policy Manual. The City Manager is directed to prepare each
annual proposed budget in accordance with this policy. The City Council is prepared to
make expenditure reductions that may be necessary to comply with this policy. This
Financial Budgetary policy remains in effect and applies to future annual budget
preparation processes until amended by City Council resolution.
Section 2. Current Revenues Equal / Exceed Current Expenditures. Current
General Fund operating revenues will equal or exceed current budgeted expenditures.
Section 3. Committed General Fund Balance / Working Capital. To ensure that
current and future services or operations are not severely impacted by any economic
slowdowns, emergencies, natural disasters or other unforeseen circumstances,
adequate financial resources will be set aside in the General Fund committed fund
balance. Accordingly it is the goal of the City Council to build and maintain a reserve in
the General Fund committed fund balance which totals at least ten (10%) percent and
up to 25% of total annual General Fund appropriations, exclusive of any one-time
appropriations. At the end of the fiscal year, upon completion of the Comprehensive
Annual Financial Report, the amount calculated to be at least 10% up to 25% of total
annual General Fund appropriations will be Committed for Major Contingencies, and set
up in a separate account. The City Manager shall report on the status of compliance
with this twenty-five (25%) percent policy at least annually as part of the budget
process. Uncommitted fund balance in excess of the ten percent policy requirement
may be recommended for expenditure by the City Manager. Such expenditures shall be
subject to the normal appropriations and expenditure approval process applicable to all
other funds. Finally, it is noted that extraordinary situations may arise in which the
timing of external actions out of the City's control may require the use of the committed
funds. The City Manager shall note these situations to the City Council as soon as the
information is known.
Amounts that can be used for specific purposes pursuant to constraints imposed by
formal action of the City Council will be reported as committed fund balance. Those
committed amounts cannot be used for any other purpose unless the City Council
removes or changes the specified use by taking the same type of action it employed to
previously commit those amounts. Committed fund balance will also incorporate
contractual obligations to the extent that existing resources in the fund have been
specifically committed for use in satisfying those contractual requirements.
Section 4. Other Committed Fund Balances.
4.1 Internal Service Funds. To ensure that current and future services or operations
are not severely impacted by any economic slowdowns, emergencies, natural disasters
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or other unforeseen circumstances, it is the goal of the City Council to build and
maintain a reserve in each Internal Service Fund of at least three percent (3%) of the
annual Internal Service Fund appropriations, exclusive of any one-time appropriations.
This subsection only applies to the MIS Internal Service Fund; Stores Internal Service
Fund; Engineering Services Internal Service Fund; and Maintenance Services Internal
Service Fund.
4.2 Group Health Plans. It is a goal of the City to maintain a fund balance in the group
health plans to (1) pay any associated administrative costs and claims run-out based
upon the most recent actuarial study in the event the plan ceases or a change in the
third party administrator is made; and to (2) cover any differences between revenues
budgeted to cover projected claims expense for the fiscal year and the attachment point
calculated at 110% of projected claims expense as a catastrophic reserve.
4.3 General Liability Fund. It is a goal of the City to maintain a fund balance in the
General Liability Fund (1) to fund long-term liabilities, incurred but not reported
expenses (IBNR), and a risk margin for the adverse development of claims as
determined by the actuarial recommendation and reflected in the Comprehensive
Annual Financial Report; (2) to provide additional protection against significant
unexpected claims experience in the fiscal year as a catastrophic reserve equaling 25%
of the average incurred costs of claims experience over the prior five-year period; and
(3) to protect against significant cost increases in the fiscal year for purchased
insurance coverage premiums equaling 25% of the cost for purchased insurance over
the prior year.
4.4 Worker's Compensation Fund. It is a goal of the City to maintain a fund balance
in the Worker's Compensation Fund (1) to fund long-term liabilities, incurred but not
reported expenses (IBNR), and a risk margin for the adverse development of claims as
determined by the actuarial recommendation and reflected in the Comprehensive
Annual Financial Report; and (2) to protect against significant unexpected claims
experience in the fiscal year as a catastrophic reserve equaling 25% of the average of
incurred costs of claims experience over the prior five-year period.
4.5 Enterprise Funds. To ensure that current and future services or operations are
not severely impacted by any economic slowdowns, emergencies, natural disasters or
other unforeseen circumstances, it is the goal of the City Council to build and maintain a
reserve in each of the Enterprise Funds of at least twenty-five percent of the annual
Enterprise Fund appropriations, exclusive of debt service and any one-time
appropriations. This subsection only applies to Water, Wastewater, Gas, Stormwater,
Airport, and Marina fund balances.
4.6 Debt Service Reserve Fund. The City will strive to maintain a debt service fund
balance for bonds, certificates of obligation, tax notes, and other debt instruments of at
least two percent (2%) of the annual debt service appropriation(s) for the fiscal year;
provided, however, this requirement shall comply with the provision of Treasury
Regulation 1.148-2(f) which limits the amount of reserve funds that may secure the
payment of debt service on bonds.
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Section 5. Property Tax Rate for Operations and Maintenance. Each proposed
annual budget shall be prepared assuming that the City will be adopting a tax rate
necessary to be in compliance with Section 2 above. Full consideration will be given
to achieving the "effective tax rate" for maintenance and operations when assessed
property values decrease, and full consideration will be giving to maintaining the current
tax rate when assessed properties values increase, as long as the tax rate does not
exceed the "rollback" rate (which is the rate that allows the City to raise the same
amount of maintenance and operation revenue raised in the prior year with an 8%
increase.)
Section 6. Funding Level from General Fund for Street Maintenance. City Council
approved Resolution #029634 on September 18, 2012 to declare its intent to establish a
street user fee for implementation in Fiscal Year 2013-2014. Section 4 of this resolution
expressed an intent to preserve the funding level of the Street Department at the
percentage of the Street Fund's budget in Fiscal Year 2012-2013 relative to the General
Fund. Excluding a decrease in General Fund revenues, the percentage of the Street
Fund's budget relative to the General Fund will neither go below that of Fiscal Year
2012-2013 nor go below the dollar equivalent if General Fund revenues increase. That
funding level equates to 6.00% of General Fund revenue less grants from the annual
adopted operating budget or $10,818,730, whichever is greater. Beginning in Fiscal
Year 2015-2016, the funding level will be 6% of General Fund revenue less grants and
industrial district revenue or $10,818,730, whichever is greater. Additionally beginning
in Fiscal Year 2015-2016, 5% of industrial district revenue will be transferred to the
Street Maintenance Fund.
Section 7. Funding Level from General Fund for Residential/Local Street Capital
Improvement Projects. In order to develop a long-term funding mechanism for capital
improvements related to residential/local streets, implement the following:
1. For 3 years beginning in Fiscal Year 2014-2015, appropriate $1,000,000
each year from the uncommitted fund balance of the General Fund and
transfer to the Residential/Local Street Capital Fund.
2. Beginning in Fiscal Year 2015-2016, appropriate and transfer 5% of
industrial district revenue to the Residential/Local Street Capital Fund.
3. In Fiscal Year 2020-2021, transfer 1/3 of one percent of the General Fund
revenue less grants and industrial district revenue to the Residential/Local
Street Capital Fund.
4. In Fiscal Year 2021-2022, transfer 2/3 of one percent of the General Fund
revenue less grants and industrial district revenue to the Residential/Local
Street Capital Fund.
5. In Fiscal Year 2022-2023 and thereafter, transfer 1c1/0 of the General Fund
revenue less grants and industrial district revenue to the Residential/Local
Street Capital Fund.
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Section 8. Funding of Texas Municipal Retirement System (TMRS) Contributions.
It is a goal of the City Council to contribute the fully funded contribution rate to TMRS to
fund the general City employees' and sworn police officers' pension. In order to
implement this goal, beginning in Fiscal Year 2014-2015, an additional 1% will be added
to the City's contribution to TMRS each year until the actuarially determined fully funded
rate is met.
Section 9. Priority of City Services. The City Council recognizes the need to provide
public services which support the continued growth of the local economy and personal
income growth to insure an adequate financial base for the future.
Section 10. Operating Contingencies. The City Manager is directed to budget at
least $200,000 per year as an operating contingency as part of General Fund
expenditures in order to further insulate the General Fund unreserved fund balance
from unforeseen circumstances. The City Manager is directed to budget similar
operating contingencies as expenditures in enterprise, internal service, and special
revenue funds of the City.
Section 11. Multi-year Budget Model. Whereas many of the City's fiscal goals
require commitment and discipline beyond the one year considered within the City's
fiscal year, the City will also consider adoption of business plans necessary for the
accomplishment of City short term or long term goals. These business plans will be
presented and recommended to the City Council in the proposed annual operating
budget and shall be used for development of future budget recommendations as
necessary to accomplish these goals. The City shall also maintain business plans
and/or rate models for enterprise operations. Preparation of annual budget will include
model for years two and three, with specific revenue and expenditure assumptions.
Section 12. Cost Recovery. The City may recover costs in the General Fund by
charging other funds for administrative costs incurred to support their operations. The
City shall attempt to pursue and maintain a diversified and stable revenue stream for the
General Fund in order to shelter finances from short term fluctuations in any one
revenue source. In order to meet the requirements outlined herein, every effort will be
made to base rates on a cost of service model so costs incurred for certain services are
paid by the population benefiting from such services.
Section 13. Quarterly Financial Reporting and Monitoring. The City Manager shall
provide interim financial performance reports and updates to the City Council on a
quarterly basis. These interim reports must include detailed year to date revenue and
expenditure estimates, as well as explanations for major variances to budget. The
format of the quarterly report must be relatively consistent with the adopted budget.
Section 14. Use of Nonrecurring Revenue. The City shall endeavor to use
nonrecurring revenue to fund one-time expenditures. Nonrecurring revenue may
include items such as sale of fixed assets, court settlements, or revenue collection
windfalls.
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Section 15. Debt Management. The City Manager shall adhere to the Debt
Management Policy adopted by Resolution 028902 on December 14, 2010, and
reaffirmed by Resolution 029321 on December 13, 2011.
Section 16. Capital Improvement Plans/Funding. The annual Capital Improvement
Plan shall follow the same cycle as the Operating Budget. As part of the annual capital
budget process, the City shall update its short and long range capital improvement
plans. For the three-year short term plan, projects include any projected incremental
operating costs for programmed facilities. The long range plan extends for an additional
seven years, for a complete plan that includes ten years. Short-term plan projects must
be fully funded, with corresponding resources identified. As part of a concerted effort to
reduce debt levels and improve financial flexibility, the City shall pursue pay-as-you-go
capital funding where possible.
Section 17. Expenditures. Within the limitation of public service needs, statutory
requirements and contractual commitments expenditures included in the operating
budget shall represent the most cost efficient method to deliver services to the citizens
of Corpus Christi. Efforts to identify the most cost efficient method of service delivery
shall continue during the fiscal year after the operating budget is adopted and may be
implemented during the fiscal year as necessary and of benefit to the public."
Section 18. Zero Based Budgeting type of process. To prepare the City's operating
budget, the City shall utilize a Zero Based Budgeting type of process. The staff shall
be accountable for utilizing a Zero Based Budgeting type of process comprehensively
for all department budgets.
ATTEST: THE CITY OF CORPUS CHRISTI
Rebecca Huerta Nelda Martinez
City Secretary Mayor
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Corpus Christi, Texas
, '1 `f--
The above resolution was passed by the following vote:
Nelda Martinez
Kelley Allen •
Rudy Garza
Priscilla Leal (JUO��
David Loeb
Chad Magill
Colleen McIntyre (a___(11.k
Lillian Riojas l�J�
Mark Scott
030205