Fort Walton Beach Council agenda — 08-18-08 special agenda - budget — reading text

Walton Beach, FL 29_ Budget Overview , or Special Proiect Carry -Overs — Carry forward into the new year through the budget resolution with the corresponding revenue source of the prior year. These are projects and /or purchases that are incomplete as of September 30 of any fiscal year that will be continued and made part of the appropriations for the ensuing year. These are budget funds for large items ( usually capital purchases, projects, or studies) that were authorized and appropriated by City Council in a prior fiscal year but were spent due to time constraints. Encumbrance Carry -Overs — Carry forward into the new year through the budget resolution with the corresponding revenue source of the prior year. In general, purchase orders close out at the end of the fiscal year unless they are identified for carry -over as part of the budget process of the ensuing year. These encumbrances were authorized, budgeted, and appropriated by City Council in a prior fiscal year but were not fully receipted in due to the ongoing nature of the expense. Budget Transfers Budget transfers may be used to transfer appropriations between line items within a fund, not to increase the total budget or to transfer resources between funds. Transfers between funds and transfers to increase appropriations are permitted through a budget amendment adopted by resolution of City Council. All budget transfers are performed in the City's accounting system by the Finance Department. Interfund Transfers The City' s interfund transfers are comprised of two components. Cost Allocation Plan ( amounts updated annually to reflect inflation) — Perform monthly transfers to provide reasonable and proportionate reimbursement to the General Fund for services identified in the City's Cost Allocation Plan ( last updated in 2003): Accounting — payroll, accounts payable and receivable, general accounting Human Resources —recruitment & retention, benefits administration, insurance & risk management Information Technology —hardware & software management, network support Public Works —engineering, service maintenance, fleet maintenance, drainage, general labor Purchasing —competitive bidding, purchase of general goods and supplies Due to the organizational restructuring that has occurred since the last Cost Allocation Plan was prepared, staff anticipates completing a new allocation plan during FY 2008 -09. Other Shared Expenses ( amounts updated annually as needed) — Allocate costs that are not directly related to services provided by other funds, though nonetheless partly attributable to those funds, as well as new programs and services not in place at the time of the Cost Allocation Plan update. Examples include property and casualty insurance, attorneys, employee morale, and CRA police officers. Reserves General Fund — There are three types of General Fund reserves, which are identified annually in the City's Comprehensive Annual Financial Report ( i. e. audit): Reserved — funds committed for identified purposes or legally required to be segregated; not available to liquidate liabilities of the current period Examples: encumbrances, Harvey Trust Unreserved /Designated — funds not required to be identified as a reserve fund balance, but a tentative use has already been identified Examples: disaster relief, retirement contributions Unreserved /Undesignated — 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; a crucial indicator of a government's financial flexibility to deal with funding emergencies Update unreserved /designated fund balances on an annual basis in conjunction with the annual audit, as endorsed by City Council at the May 2008 Budget Policy Meeting. Health Insurance — Any budget funds remaining at year -end will revert to designated fund balance to cushion against increases in future years. City of Fort Walton Beach, FL 30- Budget Overview Pension — Budget based on the actuarial annual required contribution. Any budget funds remaining at year -end will revert to designated fund balance to cushion against increases in future years. Workers Compensation — Any budget funds in excess of the carrier' s annual audit amount will revert to designated fund balance to cushion against increases in future years. Maintain a minimum unreserved /undesignated fund balance of 30% of total annual expenditures as endorsed by City Council at the May 2008 Budget Policy Meeting. The City is fiscally sound as reported independent to benchmarks. No appropriation from by our auditors and compared various unreserved /undesignated fund balance is budgeted to balance the General Fund budget in FY 2008 -09. However, $ 178K is budgeted to be used as part of a two -year program to eliminate the Golf Fund' s negative equity in pooled cash ( i. e. the Golf Fund' s negative share of the City' s commingled funds). General Fund Reserve Analysis Actual Estimate Estimate Benchmark Reserve Levels: FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 GFOA - 15% of operating revenues min.; 33. 8% 28. 977 47. 6% 35. 4% 47.2% 43. 7% should be higher if coastal community GFOA - 17% operating expenses min.; 31. 5% 28. 4% 37. 5% 35. 4% 36. 8% 36. 7% should be higher if coastal community FLOC revenue expert - 25 % -30% of 31. 2% 27. 6% 36. 5% 34. 1% 35.9% 35.8% expenses for coastal community Auditors - 33% of operating expenses 31. 5% 28. 4% 37.5% 35.4% 36.8% 36.7% Unreserved /Undesignated Fund Balance $ 5, 279, 922 $ 5, 415, 597 $ 8, 105, 314 $ 6, 740, 055 $ 7, 000, 091 $ 6, 822, 091 Enterprise Funds _ Maintain positive net assets. Enterprise funds have restricted ( e. g. debt service, impact fees) and unrestricted ( purpose unidentified; available for use) net assets. The measure of financial health for the enterprise funds is net assets. So long as net assets are not negative, these funds are self- supporting. Total Net Assets Analysis Estimate Estimate FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 Utilities Fund 24, 431, 403 $ 24, 950, 477 $ 25, 554, 593 $ 27, 019, 016 26,498, 742 $ 26,611, 388 Sanitation Fund $ 3, 373, 149 $ 3, 246, 304 $ 2, 989, 626 $ 2, 999, 695 $ 2, 792, 813 $ 2, 703, 382 Golf Fund $ 401, 970 $ 141, 679 $ 606, 553 $ 407, 199 $ 173, 380 $ 315,901 The Utilities and Sanitation Funds remain healthy with comfortable net assets. The net assets of the Golf Fund have been decreasing over the past several years for a variety of reasons including low rates, course renovations, clubhouse construction, the recessionary economy, and hurricane damage. Total net assets of the Golf Fund have declined each year since FY 2003 with the exception of FY 2006, during which the fund incurred a net profit due to the trade -in for new golf carts and City Council' s forgiveness of 273K of debt to the General and Sanitation Funds. Total net assets are projected to be depleted without assistance from the General Fund. To this end, a $ 178K is budgeted as a transfer from the General Fund as part of a two -year plan to erase the Golf Fund' s negative equity in pooled cash. City of Fort Walton Beach, FL 31- Budget Overview Fund Balance - General Fund Fund Balance - General Fund 15 15 12 12 9 9 0 0 6 6 3 3 0 0 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 Estimate Estimate Estimate Estimate Reserved Designated El Undesignated Reserved Designated 0 Undesignated Net Assets - Sanitation Fund 5 2 4 1 3 0 0 M$2 0 1 0 1 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 Estimate Estimate Estimate Estimate Capital Restricted El Unrestricted Capital, net of debt Restricted 0 Unrestricted Investments Investment Philosophy —Funds shall be invested in a manner that will ensure the safety of principal while meeting daily cash flow needs. Optimization of investment income shall be secondary to the requirements of safety and liquidity. Investment Policy Statement — The