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HomeMy Public PortalAbout2100.4 - Business and Financial Services - Management & Budget - Expenditure PolicyOffice of Business and Financial Services Management and Budget Section 2100.4 Policies and Procedures Manual Page 1 2100.4 SUBJECT: EXPENDITURE POLICY :1 OBJECTIVE: To establish policies and procedures guiding administration of City expenditures practices to ensure financial stability, enhance financial planning, and promote sound financial management. :2 AUTHORITY: This policy is adopted by the City Council November 1, 2010, Item A-2. :3 DIRECTION: The Chief Financial Officer, as an appointed official, serves at the pleasure of and receives direction from the Mayor. :4 FUNCTIONS: A. Introduction City government, as an institution, has multiple partners including citizens, taxpayers, businesses, visitors, employees, and other governments. As a major institutional, economic, and service force in the region, it is important that the City strengthen relationships with its partners by adopting a clear and comprehensive set of policies and procedures. Furthermore the integrity of the City of Orlando is of utmost importance, and adopting a set of policies is a key element to maintain this integrity. The expenditure objectives and policies stated herein shall provide the framework for developing and ensuring adherence to the City’s budget. B. Objective The City of Orlando will provide the level of expenditure necessary for the ongoing health, safety, and welfare of its residents, businesses, and visitors. In order to accomplish this objective, the following statements shall guide the allocation of resources: 1. The City will identify priority services, establish appropriate service levels, and administer the expenditure of available resources to assure fiscal stability and the effective and efficient delivery of service. 2. Essential City services will receive first priority in funding decisions. Essential City service refers to those activities that protect lives and property. 3. The City shall require that, to the extent possible, increased demand for service as a result of growth shall be paid for through taxes and fees collected as a result of that growth. Office of Business and Financial Services Management and Budget Section 2100.4 Policies and Procedures Manual Page 2 4. The budget will be structured so that the City Council and the general public can readily establish the relationship between expenditures and the achievement of service objectives. The budget shall be developed using budget best practices, and annually the City will strive to achieve the Government Finance Officers Association’s Distinguished Budget Presentation Award. C. Policies 1. Appropriation and Control a. Budgets shall be appropriated by the City Council. The level of control is established at: 1) Department level for the General Fund 2) Project level for capital improvement projects 3) Fund level for all other funds b. The level of budgetary control shall not be exceeded. Departments shall also reduce their expenditures to offset revenue shortfalls. c. Appropriations are not guaranteed from one fiscal year to the next. Each year appropriation levels shall be based on a detailed review of spending needs, priorities, expected results, and available funding. d. At the close of the fiscal year, the Department of Finance shall prepare a comprehensive annual financial report that contains statements which compare audited expenses relative to budgetary appropriations. The report will include an explanation of each instance in which expenditures exceeded appropriation. 2. Maintenance of Capital Assets Within the resources available each year, the City will maintain all physical assets at a level adequate to protect the City’s capital investment, to minimize future maintenance and replacement costs, and to maintain current service level. 3. Avoidance of Operating Deficits The City will take immediate corrective action if at any time during the fiscal year expenditure projections exceed revenue estimates. Corrective action may include a hiring freeze or other expenditure reducing measure. Office of Business and Financial Services Management and Budget Section 2100.4 Policies and Procedures Manual Page 3 The following actions shall not be used to balance the budget when an operating deficit is identified: a. Expenditure deferrals to the following year b. Short-term loans c. Use of one-time revenue 4. Pension Funds Annually an actuarial study shall be conducted by a private actuary to determine the current pension contribution that must be made to the City’s pension plans. The City will not defer the current pension contribution to future years. 5. Program Review and Productivity a. Periodically the City shall conduct internal and third-party reviews of programs for efficiency and effectiveness. Programs that are determined to be inefficient and/or ineffective shall be reduced in scope, eliminated, or restructured. b. Within existing legal authority and contractual obligations, the City will consider the delivery of services by other public or private organizations whenever greater efficiency or effectiveness can be achieved. c. The City will develop and use technology and productivity enhancements to avoid increases in personnel costs. 6. Contingencies a. The City budget shall include a General Fund contingency in order to accommodate unexpected operational changes, legislative impacts, or other economic uncertainty that may affect the City’s operations which cannot be reasonably anticipated at the time the budget is prepared. Through the Budget Review Committee Process, City Council approval is required to use funds budgeted in the General Fund contingency. b. Contingencies shall be used in funds other than the General Fund for similar purposes plus, if applicable, designated amounts to fund future construction projects, reserves, or other operating purpose. 7. Administrative Costs a. In all program areas, administrative overhead costs shall be kept to the minimum necessary to support operations. Office of Business and Financial Services Management and Budget Section 2100.4 Policies and Procedures Manual Page 4 b. Except for those funds where it is specifically prohibited or financially unfeasible, an administrative overhead charge should be assessed on all funds that utilize the services of the General Fund. :5 FORMS None :6 COMMITTEE RESPONSIBILITIES None :7 REFERENCE Procedure adopted by City Council February 26, 2007, Item A5; amended November 1, 2010, Item A-2. :8 EFFECTIVE DATE This procedure effective November 1, 2010.