Fort Walton Beach Council agenda — 08-12-13--special--budget — reading text

LLLL Ww Enc Trust Fund 582.729 23 0$ 225294 S12] ti5 - 54tH Lu% Ent Training Fund $ 9. 869 8$ 8379 1. 490 - 15. 1% Far Fund nla $ 0 $$ 042 8, 042 0. 0% CDBGFOnd - $ 0$ 0 0 209 CNA Fund $ 3, 3. 001. 732 $ 3. 601, 732 0 20% D61 scrvlcc Furd ( $$ 113, 5 $] 13507 $ 113. 507 0 209 Bwl Mcm— al Fund Aiil 159. 836 51, 994. 436 $ 2053.436 59.000 30% WorkingWorking CapitalCapital WorkingWorking capitalcapital relfikullegifferencerelfikullegifference betweenbetween currentcurrent assetsassets andand currentcurrent liabilitiesliabilities reported reported inin aa proprietary proprietary fund.fund. TT asureasure indicatesindicates relativerelative liquidity.liquidity. CreditCredit ratingrating agenciesagencies considerconsider thethe availability availability ofof working working capitalcapital inin theirtheir evaluations evaluations ofof aa locallocal government'government' ss creditworthiness.creditworthiness. WorkingWorking capitalcapital isis alsoalso importantimportant inin mitigatingmitigating unanticipatedunanticipated eventsevents andand ensuringensuring stablestable servicesservices andand fees.fees. TheThe City'City' ss targettarget levellevel ofof workingworking capitalcapital isis 9090 daysdays ofof annualannual operatingoperating expenses,expenses, andand currentlycurrently exceedsexceeds thisthis levellevel forfor allall funds.funds. ItIt isis notnot feasiblefeasible toto projectproject thisthis measure measure intointo thethe future.future. ActualActual FYFY 20102010 FYFY 20112011 FYFY 20122012 Ulduu,, Ulduu,, FundFund 220220 163163 290290 S,S, trasinn,trasinn, FundFund 259259 228228 226226 Smrnlwmr,Smrnlwmr, FundFund 344344 425425 353353 NetNet AssetsAssets ( ( proprietaryproprietary funds)funds) NetNet assetsassets refersrefers toto thethe differencedifference betweenbetween assetsassets andand liabilities liabilities reportedreported inin aa proprietaryproprietary fund,fund, andand maymay bebe consideredconsidered aa measuremeasure ofof netnet worth.worth. ThereThere areare twotwo typestypes ofof netnet assets:assets: UmiUmi hnnhnn W,W, XX-.-.-- 111111  5. 1. a Budget overview 1. Restricted —funds committed for identified purposes or legally required to be segregated; not available to liquidate liabilities of the current period ( e. g. debt service, impact fees). 2. Unrestricted — funds not required to be on hand and have not been identified for a particular purpose; available for capital projects or to balance the budget; the measure of financial health for an enterprise fund. City Council established that unrestricted net assets will be maintained at 33 % of operating, debt service, and transfers out per Resolution 2011 -13 adopted August 16, 2011. The City currently meets this policy for all funds. Actual FY 2010 FY2011 FY 2012 iY 101 2013 Utilities Fund 569% 43 2s, 144% 73. 8% 78. % Snnlmllon Used 60. 38 6L1% 59. 3% . 1% 24% Smnd, cn FUnd 91. 3% 113, 7% 943% 10019, 7 Investments , 0t` ' Investment Philosophy — Funds shall be invested in a mahnetC that will ensure the safety of principal while meeting daily cash flow needs. Optimitation of investment income shall be secondary to the requirements of safety and liquidity. / 4 Investment Policy — Ordinance 1875, Council in January 2013, governs the investment of funds in excess of those urrent expenses, with the exception of pension funds, funds related to the is! re there are other existing policies or indentures in effect for such funds, at Cemetery Perpetual Care funds. In a nutshell: ,( The primary investment obj es, iTdrder of importance, are: safety of principal, liquidity, and investment income. Cash balances from all fjj j j consolidated to maximize investment earnings. Investment income is allocat t fund based on the fund' s respective participation and in accordance wit ne 1 ccepted accounting principles. The investment po io shall be structured, to the extent possible, to match investment maturities with known cash needs and anticipated cash flow requirements. Investments will be diversified, to the extent practicable, to control the risk of loss resulting from over- concentration of assets in a specific maturity, issuer, instrument, dealer, or institution. Each portfolio' s performance will be reviewed on a quarterly basis, with - - — emphasis placed on results achieved over a it rolling time period of three to five years for long -term portfolios. Objectives will be reviewed annually and adjusted as necessary after consultation with the Finance Director, Investment Advisor(s), and Portfolio Manager( s). Packet Pg. 34 26  5. 1 a Budget Overview Over the past year, the City transitioned from a short- term internally- managed portfolio of certificates of deposit, money market funds, and bank accounts to two externally -managed portfolios: short- to- medium term ( PFM Asset Management) and medium -to -long tern ( Morgan Stanley Smith Barney). Staff will continue to monitor investments to evaluate whether the enhanced diversification and third -party management is resulting in additional value to the City. Debt Issuance Debt Limit — The State of Florida does not place a legal limit of debt on municipalities. However, general obligation debts greater than one year require voter refer n approval. Special revenue debt is pledged by a specific revenue source and limited b vaila a revenue; therefore it is not subject to voter referendum. Any new debt will be carefully Nuated as to its impact on operations. Debt Philosophy — The use of debt financing for long -term cap ement programs is based upon two types of debt financing: 1) " pay -as- you -go" and pay -as -you- use ". In practice, the City uses a mix of these two basic methods naike is Capital Improvements Program, with pay -as- you -go financing used for recurrent capi[ expenditures and with pay -as- you -use financing used for longterm, non -recurrent eapit expenditures. Pay- As- You- Go — A type of financing whereby c revenues, taxes, and /or grants rather than long term debt are used to pay for apft a provements. Example: annual street paving. Pay- As- You- Use — A type of financing, y long term debt is used to pay for capital improvements. Example: debut ffiiq a new municipal facility. Debt Policy Statement —The y statements govern the City' s use of debt to finance long -term, non -recurring capital Recurrent capital expen foll a o ements: for replacement, expansion and/ or acquisition of plant, equipment, and/ or mo cles will be financed on a pay -as- you -go basis from funds available and ap p a ' n the City' s annual operating budget. Only long -term, eeurrent capital expenditures for public improvements having a relatively greater cost and longer useful life, and which require additional funding over and beyond the fiscal capacity of the City' s annual operating budget, will be financed through the issuance or creation of long -term debt. These expenditures will not be debt -financed for periods exceeding the projected useful life of the improvement. All capital improvements financed through the use of long -term debt will be consistent with the adopted Capital Improvements Program and the current fiscal year' s adopted Budget. Revenue sources that will be used to pay long -term debt will be conservatively projected to ensure that such debt is adequately and soundly financed. The City' s total general obligation debt will not exceed 10% of its assessed