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Home My WebLink About08/03/2010 07 Council Budget Committee Report BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON • AGENDA STATEMENT Item No. For Meeting Of August 3, 2010 ITEM TITLE: A Report from the Council Budget Committee regarding recommendations for Financial / Budget policies and guidelines SUBMITTED BY: Finance Department CONTACT PERSON/TELEPHONE: Rita DeBord, Director Finance (575 -6070) SUMMARY EXPLANATION: At their meeting on July 28, 2010 the Council Budget Committee (CBC) clarified their . recommendation regarding 2011 Outside Agency funding and reviewed staff's draft Financial and Budget policies and guidelines regarding: General Reserve Funds, Non - Recurring Expenditures and Fees and Charges. The CBC directed staff to update the information and bring it forward for review by the full council at the first meeting in August. The CBC recommendations include: 1. 2011 Outside Agency Funding - CBC provided three options for Council Consideration regarding General Government funding for Outside Agencies for 2011: a. Maintain current funding practice (agency by agency review). A copy of the 2010 Outside Agency Funding is attached for your reference; b. Establish a designated amount of money in the General Government funds for • distribution to outside agencies and establish a "Grant Funding" type process; c. Eliminate outside agency funding 2. General Reserve Fund: CBC recommends Council adoption (copy attached) 3. Non - Recurring Expenditures: CBC recommends Council adoption — in concept; however CBC recognized that further refinement of the specific process is needed prior to adoption and implementation (copy of conceptual outline attached) 4. Fees and Charges: CBC recommends Council direct staff to continue work on a policy to establish guidelines to be utilized to determine the basis for establishing fees and charges for services provided by the City of Yakima and to work with the CBC to finalize guidelines for full Council consideration. (Preliminary draft copy attached) Resolution Ordinance Other (Specify) Contract Mail to (name and address): Phone: Funding Source APPROVED FOR SUBMITTAL: N \� ? . City Manager STAFF RECOMMENDATION: This is a City Council policy issue. BOARD /COMMISSION /COMMITTEE RECOMMENDATION: Council Budget Committee • recommends. COUNCIL ACTION: • 2010 Outside Agency Funding A. General Government Funded: Fund Agency Name Amount Gen /Fire Allied Arts of Yakima Valley 2,667 Citizens for a Safe Yakima Communities 1 Greater Yakima Chamber of Commerce 2,950 Hispanic Chamber of Commerce 2,950 Retired Senior Volunteer Program (RSVP) - 2,000 Seasons Music Festival 4,000 Yakima Fourth of July Committee 2,750 Yakima Sunfair Festival Association 500 Yakima Symphony Orchestra 5,000 Sub Total 32,817 B. Following 2010 Outside Agency Funding included for reference purposes only: Econ Devel Yakima County Development Association (YCDA) 30,000 Yakima- Morelia Sister City Association 1;333 Sub Total 31,333 CBD Capital Committee for Downtown Yakima (CDY) 50,000 Sub Total 50,000 Total 114,150 rd Budget/OA List by Fund.xls 7 -29 -10 • • Draft • • ( 08- 03 -10) • Fiscal Policy Budgeting for General Fund Reserves Purpose: To set forth policy guidelines for the use and maintenance of the City of Yakima's General Fund Unrestricted Cash Reserves. Adequate cash reserve levels are a critical and necessary component of the City's overall financial .strength. In order to be fiscally responsible, to ensure the City has adequate cash flow to conduct its mission to serve the citizens, to provide operating cash flow, to provide for monetary protection against economic downturns and emergencies, and to be positioned to take advantage of one -time opportunities, the City will maintain a General fund Cash Reserve as prescribed herein. Policy: ➢ The City will maintain a minimum fiscal year -end General Fund cash balance 0 . between 7% to 11% of the annual budgeted General Government expenditures; ➢ The General fund cash reserve balances may be utilized to fund projected budgeted expenditures in excess of projected revenues (subject to the maximum 3.5% usage restriction described below); to cover seasonal, volatile, or • unpredicted expenditures; to aid in financial planning for future projects; to cover timing shortfalls in cash flow; to fund Council initiatives; to ad dress emergencies or for other authorized City uses. • ➢ The allocation of General Fund Unrestricted Cash Reserves to balance the annual budget should be no more than 3.5% of the annual General Government budgeted expenditures. • ➢ When preparing the subsequent year's annual General Government budget, the utilization of General Fund Unrestricted Reserves to balance the annual budget in an amount greater than the 3.5% limitation noted above or in an amount that would result an estimated year -end balance below the 7% minimum noted above, is allowed only with the prior authorization of the City Council. ➢ The temporary intra -year use of General Fund cash in an amount that would lower the fund balance below the 7% minimum is allowed at the direction of the City Manager only to cover unexpected and extraordinary fiscal emergencies / • shortfalls. Pagel of 2 \ \apollo \users \ranson\BUDGET \Budget - CBC \New Policies \07 -28 -10 Gen.Reserves.doc Last printed 7/28/2010 7:04:00 PM • ➢ The use of funds that draw the General Fund cash reserve balance below the 7% minimum guideline shall require the City Manager to submit notice of such to the City Council and a budgetary plan of action and time -frame that will bring the Fund back into compliance with the•minimum balance guidelines. • Page2of2 \ \apollo \users \ranson\BUDGET\Budget - CBC \New Policies \07 -28 -10 Gen.Reserves.doc Last printed 7/28/2010 7:04:00 PM • • Draft - Conceptual Framework . (08- 03 -10) • • Fiscal Policy Budgeting for Non- Recurring General Government Expenditures Definition: Non - Recurring Expenditures are expenditures that are significant in amount and unique to the normal, annual business cycle of the City. Additionally, such an expenditure is not expected to occur again in the foreseeable future, or is of a nature that if occurs very infrequently and budgeting for it in its normal Division / Department would cause a significant and unusual "anomaly" in the budget for the related area in the year(s) it occurs. Examples include:. election costs; some retirement cash -outs; costs related to Purchasing Division's-consolidation with the County; special one -time studies. • Policy: ➢ When expenditures fitting the above description occur, such expenditures will not be budgeted in their normal manner within the affected Division / Department. - Instead, such expenditures will be budgeted in a special account(s) within General Government. These expenditures will be budgeted within the appropriate "Basub" and "Object Code" classifications (State mandated classifications) within the special General Government account to ensure proper accounting and accuracy of financial statements. ➢ The applicable Division / Department to which the expenditure relates will be identified when recording the actual expenditure. ➢ Budget staff will maintain a record of all such budgeted expenditures, by year, for future reference and tracking. • • Note: the information above outlines the conceptual design =for handling non - recurring expenditures in the budget in the future; further refinement and details need to be developed before this concept could be implemented. • • \\apollo \users \ranson \COUNCIL \Council Agenda Items \2010 \08 -03 -10 Policy Issues Attachmnt - Non - Recurring Exp.doc Last printed 7/28/2010 7:03:00 PM Preliminary DRAFT • (08- 03 -10) . Fiscal Policy • Budgeting for Fees and Charges • Purpose: To establish the guidelines to be utilized to determine the basis for - establishing fees and charges for services provided by the City of Yakima. The City will periodically review and update its fees and charges to ensure they remain fair and.reasonable, conform to the City's budget policies, reflect changes in the costs of delivering the service / product. Policy: • Each department will submit as part of the annual budget process a • schedule of any recommended changes in their fees and charges. The schedule should include the schedule from the previous year, any new recommended fees and a write -up justifying the recommended fees and charges. User Fee Factors:. Several factors will be considered when developing and reviewing charging for services: 1. Fees and Charges levels of recovery should consider if the service is community wide versus a special service program or activity. User fees are appropriate for services that are of special benefit to easily indentified individuals or groups. Community wide services such as city parks are a • more appropriate use of general. purpose revenues. 2. Charging for services can affect the demand and subsequent level of the service provided and as such should be reviewed periodically and conform to stated City priorities and guidelines. Setting fees and to compensate for the full cost recovery has the advantage of ensuring that the service is not overly used due to artificially low prices.and the • disadvantage of placing undue: hardships lower income groups or specific initiatives. 3. The feasibility of collection and recovery may be appropriate for specific services while it may be impractical or too costly to establish and maintain a system to identify and charge the user. The feasibility of assessing and collecting charges needs to be considered before a new fee service is • identified and budgeted. Page 1 of 3 \ \apollo \users \ranson \COUNCIL \Council Agenda Items \2010\08-03-10 Policy Issues Attachmnt - Fees and Charges.doc Last printed 7/28/2010 7:08:00 PM o Services with very low or no cost recovery ability typically not .. subject to user fees include: • Activities where the cost of tracking / recording outweighs the benefit of the revenue generated from the specific fee /charge; • Costs of providing social and public safety goods where collecting fees will hamper efficient delivery of service, or those services where collecting fees would discourage compliance with regulatory requirements should be considered; • Delivering public safety emergency response; • • Maintaining and developing public facilities for the community such as streets, parks and general service buildings • Social service and economic development activities are o Any new fee program should be subject to periodical reviews after inception to ensure that the intent matches the results, (example: the case of charging inmates for medical costs). Developing.Service Charges • 1) Revenues should not exceed the reasonable cost of providing the service. Cost recovery goals should be based on the total cost of delivering the service, including both direct and indirect costs including accounting, human resource, and information services and the like. 2) The method of assessing and collecting fees and charges should be as simple as possible in order to reduce the administrative cost of accounting and collection. 3) Rate structures for fees should be sensitive to 'market' pricing for similar services. 4) Fees and charges should take -into account specific strategies that support City priorities; ex: youth pricing to enhance the Qualify of Life priority. a.. Cost recovery for activities directed to adults should be relatively high and charge near the full cost of providing those services. b. Cost recover for activities directed to youth, seniors and low income citizens should be less relative to the full cost of providing those services. c. Cost for services should be higher in circumstances where services for youth and the seniors are similar to those provided in the private sector. Page 2 of 3 \ \apollo \users\ranson \COUNCIL \Council Agenda Items\2010 \08 -03 -10 Policy Issues Attachmnt - Fees and Charges.doc Last printed 7/28/2010 7:08:00 PM • Samples of some Fee and Charges Guidelines used by one City: Parks - Adult Athletics (volleyball, basketball, softball, soccer) 80 -100% of Cost Facility Rentals 80 -100% of Cost - Special Events (Hot Shots, etc) 50 -80% of Cost - Sr/Youth /Minor baseball, basketball 30 -50% of Cost - Community Gardens 15 -30% of Costs Pools - Adult Lap Swim 80 -100% of Costs - Senior Swim 30 -50% of Costs - Lessons 30 -50% of Costs - Public Swim 30 -50% of Costs - Special Swim Classes 15 -30% of Costs • Golf Course - Adult Golf /Equipment 80 -100% of Costs - SrlYouth Golf /Equipment 50 -80% of Costs Senior Center ® - Facility Rentals 80 -100% of Cost - Special Events 30 -50% of Cost - Lessons /Meeting 15 -50% of Cost - Senior/Teen Services 0% Codes Administration - Permits and Fees - Planning permits, maps, variances, rezoning 100% of Costs - Building and Safety permits, checks, inspections 100% of. Costs Engineering inspections, etc 100% of Costs - Fire plan check 100% of Costs Delinquent Accounts 100% of Costs • Page 3 of 3 \ \apollo \users \ranson \COUNCIL \Council Agenda Items\2010 \08 -03 -10 Policy Issues Attachmnt - Fees and Charges.doc Last printed 7/28/2010 7:08:00 PM