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HomeMy WebLinkAboutOrdinance 10-24RECORD OF ORDINANCES Dayton Legal Blank, Inc. Form No. 30043 Ordinance No. 10-24 Passed , 20 AUTHORIZING A MODIFICATION TO THE CITY’S GENERAL FUND BALANCE POLICY WHEREAS, the City of Dublin (“Dublin”) has a General Fund Balance Policy that has been adopted by City Council; and WHEREAS, the General Fund Balance Policy establishes the policies and guidelines to be followed for the reserve level and conditions for utilization of the General Fund Balance; and WHEREAS, it is recommended that the General Fund Balance Policy be modified to include language with regard to manuscript debt. NOW THEREFORE, BE IT ORDAINED, by the Council of the City of Dublin, State of Ohio, [ p_ of the elected members concurring: Section 1. City Council hereby adopts the attached General Fund Balance Policy. Section 2. This Ordinance shall take effect and be in force upon the earliest date provided by law. Passed this _. S day of (hone , 2024. Mayor — Presiding Officer ATTEST: Sex of Cofdncil () To: Members of Dublin City Council From: Megan O’Callaghan, City Manager Date: May 14, 2024 Initiated By: Matthew L. Stiffler, Chief Financial Officer/Director of Finance Re: Ordinance 10-24 - Modifications to the City’s General Fund Policy Background Currently, the City’s General Fund Policy is silent on the utilization and repayment of manuscript debt. The following policy modification is being recommended to provide language addressing the utilization of this financing option. This language would provide additional repayment options regarding this type of financing as permitted under Section 133.29 of the Ohio Revised Code. General Fund The Excess Fund Balance provision in the General Fund Balance Policy currently requires 25% of the amount in excess of 75% to be transferred to the Capital Improvements Fund. This provision is proposed to be expanded to include the existing required transfer or the repayment of debt, specifically notes or manuscript debt. As is current practice, the Finance Director will make a recommendation to Council during the presentation of the first quarter supplemental regarding the execution of this provision and Council can choose to act or amend this recommendation. Recommendation Staff recommend Council approve the modifications to the Debt Policy at the second reading on June 3, 2024. Office of the City Manager 5555 Perimeter Drive • Dublin, OH 43017 Phone: 614.410.4400 Memo 1 CITY OF DUBLIN, OHIO GENERAL FUND BALANCE POLICY I. Purpose The purpose of this General Fund Balance Policy is to provide guidelines to City Council and the Administration for establishing, maintaining, and reviewing the General Fund Balance for the City of Dublin. It is designed to take a proactive approach to financial management in the City and allows the Administration and City Council to recognize and react to warning indicators of financial stress and set guidelines for proactive measures. II. Background Establishing a minimum General Fund balance is a mechanism that governments can implement to help insure adequate levels of fund balance are available to help mitigate current and future risks. A minimum fund balance policy is generally considered a prudent and conservative fiscal policy to deal with unforeseen situations. The Government Finance Officers Association (GFOA), is an organization whose mission is to enhance and promote the professional management of governmental financial resources for the public benefit. The GFOA recommends governments establish a formal policy that maintains a minimum unreserved fund balance in the General Fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. The choice of revenues or expenditures as a basis of comparison may be dictated by what is more predictable in a government’s particular circumstances. In addition to the benefits of having a formal policy that provides a level of reserve that mitigates current and future risks, credit rating agencies carefully monitor levels of fund balance and unreserved fund balance in a government’s General Fund to evaluate a government’s continued creditworthiness. III. Policy At the time of budget preparation, the annual appropriations shall be adjusted to ensure that the estimated year-end General Fund balance is no less than 50% of the budgeted General Fund expenditures. Throughout any fiscal year, the General Fund balance may be used to fund the cost of capital improvements in which the ultimate funding source will be a grant or the issuance of notes or long term bonds. In this instance, the General Fund balance may temporarily fall below the minimum funding level in anticipation of a future financing. If the funds are to be reimbursed through notes or bonds, the Administration will work with appropriate legal and financial advisors to assure that the funds that are to be expended are eligible to be reimbursed through such financings prior to any expenditures. 2 IV. Application The anticipated year-end General Fund balance will be calculated as part of the budget preparation process and will be reported to City Council along with the Budget. It will be calculated by taking the budget year’s projected beginning fund balance less appropriations plus anticipated revenue. The resulting fund balance must comply with the minimum fund balance established in this Policy. Throughout the course of the fiscal year, any amendments to the appropriations approved by City Council as part of the annual budget process must comply with the restrictions established in this Policy, unless such amendment is for an approved purpose as noted in this Policy and approved by the majority of City Council. V. Conditions for Use The General Fund balance is intended to provide the City with sufficient liquidity to support one- time emergency costs and other non-recurring operating shortfalls such as:  Natural disaster or other emergency  Economic recession/depression  Unexpected decline in revenue  Unexpected large one-time capital expenditures The General Fund balance shall not be used to fund recurring operating expenses. An exception may be made for winding down a program or service which must be eliminated in order to provide sufficient notice and reduce the impact to the community. This action shall have a definite end date of not more than one fiscal year. A majority vote of the City Council will be required to use the General Fund balance in a manner that would reduce the balance below the 50% minimum requirement. VI. Replenishment In the event that the use of the General Fund balance would result in a balance below the 50% target (other than when paying the costs of capital improvements in which the ultimate funding source will be grants or the issuance of notes of long term bonds as noted in Section III), City Council shall approve a plan for replenishment at the same time the use of the balance is approved. If feasible, replenishment to bring the General Fund balance back to the minimum 50% level should occur within the following fiscal year. VII. Excess fund balance At the end of each fiscal year, to the extent that the General Fund Balance exceeds 75% of the actual expenditures for the year, the Director of Finance will make a recommendation to transfer 25% of the amount in excess of 75% to:  tThe Capital Improvement Tax Fund. Upon the recommendation by the City Manager, City Council may elect to transfer an amount in excess of 25%. The use of the transferred funds 3 shall be consistent with the goals and policies of the Capital Improvement Tax Fund.  The repayment of debt including but not limited to short-term notes and manuscript debt. Upon the recommendation by the City Manager, City Council may elect to transfer an amount in excess of 25%. VIII. Reporting and Review Provisions As part of the annual operating budget review process, the Director of Finance shall provide a report to City Council containing 1) the projected year-end General Fund balance for the current fiscal year and 2) the proposed year-end General Fund balance for the next budget year. The resulting fund balance must comply with the minimum fund balance established in the scope of this Policy. On a monthly basis, the Director of Finance shall provide a report to City Council containing year- to-date revenues and expenditures, budget versus actual revenues and expenditures, and the current General Fund balance (as of the last day of the preceding month). These monthly reports will be followed by quarterly financial updates which will provide a detailed analysis of the activities of the quarter. The quarterly financial update will also include current and projected year-end General Fund balances. The City’s General Fund Balance Policy shall be adopted by Ordinance by City Council. City Council shall review and reaffirm this Policy every three years, or more frequently if recommended by the Director of Finance, the City Manager, and/or City Council. 1 CITY OF DUBLIN, OHIO GENERAL FUND BALANCE POLICY I. Purpose The purpose of this General Fund Balance Policy is to provide guidelines to City Council and the Administration for establishing, maintaining, and reviewing the General Fund Balance for the City of Dublin. It is designed to take a proactive approach to financial management in the City and allows the Administration and City Council to recognize and react to warning indicators of financial stress and set guidelines for proactive measures. II. Background Establishing a minimum General Fund balance is a mechanism that governments can implement to help insure adequate levels of fund balance are available to help mitigate current and future risks. A minimum fund balance policy is generally considered a prudent and conservative fiscal policy to deal with unforeseen situations. The Government Finance Officers Association (GFOA), is an organization whose mission is to enhance and promote the professional management of governmental financial resources for the public benefit. The GFOA recommends governments establish a formal policy that maintains a minimum unreserved fund balance in the General Fund of no less than two months of regular general fund operating revenues or regular general fund operating expenditures. The choice of revenues or expenditures as a basis of comparison may be dictated by what is more predictable in a government’s particular circumstances. In addition to the benefits of having a formal policy that provides a level of reserve that mitigates current and future risks, credit rating agencies carefully monitor levels of fund balance and unreserved fund balance in a government’s General Fund to evaluate a government’s continued creditworthiness. III. Policy At the time of budget preparation, the annual appropriations shall be adjusted to ensure that the estimated year-end General Fund balance is no less than 50% of the budgeted General Fund expenditures. Throughout any fiscal year, the General Fund balance may be used to fund the cost of capital improvements in which the ultimate funding source will be a grant or the issuance of notes or long term bonds. In this instance, the General Fund balance may temporarily fall below the minimum funding level in anticipation of a future financing. If the funds are to be reimbursed through notes or bonds, the Administration will work with appropriate legal and financial advisors to assure that the funds that are to be expended are eligible to be reimbursed through such financings prior to any expenditures. 2 IV. Application The anticipated year-end General Fund balance will be calculated as part of the budget preparation process and will be reported to City Council along with the Budget. It will be calculated by taking the budget year’s projected beginning fund balance less appropriations plus anticipated revenue. The resulting fund balance must comply with the minimum fund balance established in this Policy. Throughout the course of the fiscal year, any amendments to the appropriations approved by City Council as part of the annual budget process must comply with the restrictions established in this Policy, unless such amendment is for an approved purpose as noted in this Policy and approved by the majority of City Council. V. Conditions for Use The General Fund balance is intended to provide the City with sufficient liquidity to support one- time emergency costs and other non-recurring operating shortfalls such as:  Natural disaster or other emergency  Economic recession/depression  Unexpected decline in revenue  Unexpected large one-time capital expenditures The General Fund balance shall not be used to fund recurring operating expenses. An exception may be made for winding down a program or service which must be eliminated in order to provide sufficient notice and reduce the impact to the community. This action shall have a definite end date of not more than one fiscal year. A majority vote of the City Council will be required to use the General Fund balance in a manner that would reduce the balance below the 50% minimum requirement. VI. Replenishment In the event that the use of the General Fund balance would result in a balance below the 50% target (other than when paying the costs of capital improvements in which the ultimate funding source will be grants or the issuance of notes of long term bonds as noted in Section III), City Council shall approve a plan for replenishment at the same time the use of the balance is approved. If feasible, replenishment to bring the General Fund balance back to the minimum 50% level should occur within the following fiscal year. VII. Excess fund balance At the end of each fiscal year, to the extent that the General Fund Balance exceeds 75% of the actual expenditures for the year, the Director of Finance will make a recommendation to transfer 25% of the amount in excess of 75% to: • The Capital Improvement Tax Fund. The use of the transferred funds shall be consistent with the goals and policies of the Capital Improvement Tax Fund. 3 • The repayment of debt including but not limited to short-term notes and manuscript debt. Upon the recommendation by the City Manager, City Council may elect to transfer an amount in excess of 25%. VIII. Reporting and Review Provisions As part of the annual operating budget review process, the Director of Finance shall provide a report to City Council containing 1) the projected year-end General Fund balance for the current fiscal year and 2) the proposed year-end General Fund balance for the next budget year. The resulting fund balance must comply with the minimum fund balance established in the scope of this Policy. On a monthly basis, the Director of Finance shall provide a report to City Council containing year- to-date revenues and expenditures, budget versus actual revenues and expenditures, and the current General Fund balance (as of the last day of the preceding month). These monthly reports will be followed by quarterly financial updates which will provide a detailed analysis of the activities of the quarter. The quarterly financial update will also include current and projected year-end General Fund balances. The City’s General Fund Balance Policy shall be adopted by Ordinance by City Council. City Council shall review and reaffirm this Policy every three years, or more frequently if recommended by the Director of Finance, the City Manager, and/or City Council.