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HomeMy WebLinkAbout3247 RESOLUTION NO. 3247 A RESOLUTION adopting updated and amended financial goals and policies for the City of Bremerton. WHEREAS, the City Council and Mayor of Bremerton are committed to improving the City's financial management; and WHEREAS, the stewardship of public funds is one of the greatest responsibilities given to the City Council and the Administration of the City of Bremerton. Therefore, the establishment and maintenance of wise fiscal policies enables City officials to protect public . interests and ensure public trust; and WHEREAS, the City Council previously adopted financial goals and policies by Resolution No. 3034 on August 15, 2007 which are now in need of updating to provide greater clarity on interfund loan provisions and the use of unrestricted fund balances; NOW, THEREFORE, THE CITY COUNCIL OF THE C1TY OF BREMERTON, WASHINGTON, DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The provisions of Resolution No. 3034 are hereby repealed and superseded in their entirety. SECTION 2. The financial goals and policies in Attachment A to this Resolution are hereby adopted. SECTION 3. Severabilitv. If any one or more sections, subsections, or sentences of this Resolution are held to be unconstitutional or invalid, such decision shall not affect the validity of the remaining portion of this Resolution and the same shall remain in full force and effect. � SECTION 4. Effectii�e Date. This Resolution shall take effect and be in force immediately upon its passage. PASSED by the City Council of the City of Bremerton, Washington, on this t��d y of 2015. �V Gre eeler, Council President APPROVED AS TO FORM: ATTEST: � RO ER LUBOVIC Shannon Corin, City Clerk R:U_egal\Le o ut�ons\Finance\Financ�al Policy Resolution 2015.doc 1 Financial Policy Resolution Attachment A—Resolution No. 3247 City of Bremerton Financial Goals & Policies The City of Bremerton is accountable to its citizens for the efficient use of public dollars. Resources entrusted to the City should be used in a manner that provides services,public facilities, and infrastructure necessary to meet the needs of the community—both for today and for the future. The following financial goals and policies establish a framework of financial health and stability that is required to meet those expectations. The goals expressed here define what constitutes a"good outcome" for the city in regards to financial planning and decisions. Goals indicate the objectives -while the policies describe actual boundaries (or measurable) that are deemed necessary to achieve those goals. Goals for Financial Sust�inability— • Diversified annual resources that are sufficient to provide for the regular and ongoing operations associated with core city services—plus enough additional margins to cover debt service requirements and normal (average) ongoing capital expenditures. • Debt financing should be used to smooth the effects of unusual or significant amounts of capital expenditures and/or to finance facilities that are dedicated to the benefit of limited users (for example—Local Improvement District"LID"). Policy - • The budget and financial plans of the City shall balance recurring operating expenses, debt service, and average ongoing capital requirements to recurring operating revenue. Average ongoing capital requirements are defined to include payments necessary to the various Internal Service funds (i.e. ER&R, and lnformation Technology) and average recurring capital expenditures. • Before the City undertakes capital expenditures or accepts grant funds, the ongoing costs and commitments should be described fully including identification of the revenue sources expected to provide for such ongoing costs- so that proper consideration may be given to the longer term financial sustainability of the project or commitment. • Where possible, grants or contributions of capital will be identified for proposed City expenditures. • Deficit financing and borrowing shall not be used to support on-going City services and operations. Expenses shall be reduced to conform to the long-term revenue forecast. Interfund loans are permissible to cover temporary gaps in cash flow, but only from moneys in excess of anticipated cash needs throughout the duration of the loan and legally available for investment. All loans shall be 1 Attachment A—Resolution No. 3247 supported by a clear expectation and schedule for repayment. Interest shall be assessed based on the current Washington State Local Government Investment Pool rate unless the borrowing fund has no other source of revenue other than the lending fund; or the borrowing fund is normally funded by the lending fund. • Cash balances in excess of the amount required to maintain strategic reserves may be used to fund one-time or non-recurring costs. Preference should be given to uses that reduce ongoing expenses (for example- early retirement of debt). • Replacement Reserves based on expected replacement cost shall be collected and placed in the Equipment Rental and Reserve Fund (ER&R) for eyuipment(other than computer equipment) or vehicles (other than fire engines) with a value of $20,000 or more if it is expected to be a continued need beyond its estimated initial useful life. The cost of computer equipment replacement shall be included in the annual payments made to the Information Technology Fund (IT) for each computer by its using department. These payments are based on an expected five- year replacement schedule. In addition to ER&R and IT, other internal service funds may be established to appropriately account for and collect expenses for specific costs with the approval of the Mayor and the City Council. An amount equal to the annual fractional estimated cost of replacements based on the expected useful life of assets shall be included in the service charges paid by City deparhnents to the various Internal Service funds (i.e. Equipment Rental & Reserve fund and Information Technology). Replacement cost shall be reevaluated periodically throughout the life of the asset and replacement reserve charges adjusted accordingly. Assets with an initial value less than$20,000 may be included in the Equipment Rental and Reserve Fund upon request by the using department with the approval of the Director of Public Works and Utilities and the Director of Financial Services. • Long-term borrowing shall be confined to significant capital improvements (or similar projects) which have an extended life and when it is not practicable to be financed from current revenues. All other available and appropriate sources of financing should be exhausted before long term borrowing is pursued. • Bonds cannot be issued for a longer maturity schedule than a conservative estimate of the weighted average useful lives of the assets to be financed. The City shall keep the average maturity of general obligation bonds at or below twenty years. • Where possible, the City shall use special assessment revenue, or other self- supporting bonds instead of general obligation bonds. • The City Utility Systems shall strive to maintain a minimum debt service coverage (annual gross revenues less annual operating and maintenance expenses divided by annual debt service) of the combined Utilities (Water, Wastewater, Stormwater) of at least 1.Sx. 2 Attachment A—Resolution No. 3247 Goals for Finaricial Flexibiliry— • Sufficient operating reserves (working capital) to manage monthly and daily cash flow variability. • Adequate liquidity to provide for limited interruptions in revenues (natural disasters,unexpected loss of revenue source, etc). • Contingency and reserve funds should be available for use in the event of emergency and/or unforeseen events. • Resources restricted by external sources or enabling legislation should be used first, then unrestricted resources as needed. Unrestricted resources should be reduced in the following order; funds committed by ordinance, funds assig�ied or earmarked for a particular purpose, and then u�zassigr�ed. Policv— • The City shall maintain reserves required by law, ordinance, and/or bond covenants. • The City shall strive to maintain ending cash and invesrinent balances in the General Fund of no less than 8.5% of total planned annual operating expenses. • The City shall strive to maintain ending cash and investment balances of no less than 12%of total planned annual operating expenses for the Gold Mountain Golf Complex,Water Utility, Wastewater Utility, and Stormwater Utility. • The City shall strive to maintain a minimum reserve fund balance in the Self- Insured Health and Welfare Reserve Fund of at least four months of Program expenses or at an amount recommended by an independent actuary, whichever is greater. • The City shall strive to maintain a balance of the equivalent of thirty-seven and one-half cents per thousand dollars of assessed valuation of property within the city in the Contingency Reserve fund as a provision for unforeseen or catastrophic events and emergencies. Goals for Stewardship of Pz�blic F�.c,�ds— • Maintain public trust and confidence by utilizing resources in the most efficient manner possible. • Expenditures should be necessary to either: o meet regulatory requirements o provide core city services o contribute to the achievement of stated goals and policies 0 or undertaken in anticipation of an emerging requirement. 3 Attachment A—Resolution No. 3247 Policy— • Budget managers shall provide sufficient documentation to support requested budget appropriations and in a manner that clearly demonstrates that the expenditure is necessary to either meet regulatory requirements, provide core city services, or contributes to the achievement of stated goals or policies of the City. • A comprehensive multi-year(minimum of six years) plan for City capital improvements shall be prepared and updated annually. The Capital Improvement Plan shall be consistent with and support the City's Comprehensive Plan. The Comprehensive Plan service level goals should be included in the Capital Improvement Plan. Goals for Accozrntability— • Reports demonstrating the status of financial activity and results should be prepared on a timely basis and in compliance with BARS and GAAP accounting requirements. • Reports showing the status of financial policy compliance should be provided periodically. • Ensure the legal use of public assets through an effective system of internal controls. To ensure all local, state, and federal rules are followed. Policy - • An annual audit shall be performed by the State Auditor's Office and include the issuance of a financial opinion. A Comprehensive Annual Financial Report shall be prepared in accordance with generally accepted accounting principles (GAAP) and shall be distributed to the City Council,Mayor, Director of Financial Services, Department Directors, City Audit Committee, and any other interested party. • Quarterly a budget status report shall be prepared and distributed to the City Council, Mayor, and Department Directors providing an overview of financial activities for the City with comparison to the approved budget. lnformation on the status of compliance with financial policies shall be provided in this report. • Regular monthly financial statements shall be prepared on a timely basis and posted for review on the City's internet and intranet site. • The City shall maintain a budgetary control system to ensure compliance with the approved budget. • The City shall maintain adequate internal controls to safeguard public assets. The Director of Financial Services shall work cooperatively with the City's Internal 4 Attachment A—Resolution No. 3247 Auditor and the Audit Committee to identify and address material deficiencies in internal controls. • The City shall manage and invest its residual cash through the City Treasurer on a continuous basis in accordance with the City's investment policies and within the guidelines established by the Washington State Statutes based upon the following order of priorities: 1) safety, 2) liquidity, and 3) yield. 5