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HomeMy WebLinkAbout2013-12-10 - AGENDA REPORTS - 2013-14 MID YEAR BUDGET ADJUST (2)NEW BUSINESS DATE: SUBJECT: DEPARTMENT: Agenda Item: 13 CITY OF SANTA CLARITA AGENDA REPORT City Manager Approval: Item to be presented by: December 10, 2013 Carmen Magana FISCAL YEAR 2013-14 MID -YEAR BUDGET ADJUSTMENTS City Manager's Office RECOMMENDED ACTION City Council: 1. Authorize adjustments to Fiscal Year 2013-14 budget in the amount specified in Exhibit A. 2. Adopt a resolution Amending the Classification Plan and Providing a Compensation Adjustment for the City Manager. 3. Adopt a resolution to Adopt Fiscal Policies BACKGROUND As the organization approaches the middle of the fiscal year, City staff evaluates the adopted budget, revenue projections, and economic conditions for the remainder of the fiscal year. It is standard procedure to perform a mid -year review of the City's budgetary and financial position to ensure any deviations from the initial budget projections are proactively addressed. Staff also reviews requests for appropriations to address new priorities which are unfunded or underfunded. Revenues Recommended mid -year revenue adjustments total $ 29,991,700. By fund, the revenue adjustments are as follows: General Fund $ 4,049,776 Transit Fund $ 8,807,205 City Housing Successor Fund $ 5,057,294 TDA Article 8 $ 3,443,695 t,�Opt€d: "S 1313 T c-% V I/- Internal Service Fund $ 2,500,000 Various Grant Funds $ 960,123 Bridge and Thoroughfare Districts $ 454,744 Santa Clarita Lighting District $ 160,000 Developer Fee Fund $ 10,000 Stormwater Utility Fund $ (400,000) GASB 45 Compliance (OPEB) $ (786,636) Other Special Revenue Funds $ 5,735,499 Total Proposed Revenue Adjustments $29,991,70 In the General Fund, recommended revenue adjustments include increases of $1.5 million in Sales Tax; $500,000 in Property Tax; $100,000 in Real Property Transfer Tax; $900,000 in Development revenues; $118,421 in Franchise Fees; $75,000 in Sponsorship Revenue; $69,000 in Parks and Recreation revenue, and $50,000 in Enterprise Zone Vouchering revenue. Recommended revenue decreases in the General Fund include $64,916 in Business License Fees, and $50,543 in Child Development revenue. Revenue adjustments to the Transit Fund include increases of $8 million in grants for the purchase of seventeen buses, and for Capital projects including the Transit Bus Stop Improvement, the McBean Park and Ride, Transit Information Network (TIN), Transit Maintenance Facility Improvement, and Metrolink Station Improvement. Additional increase to revenue includes $646,925 in Measure R bus operations and clean fuel; $205,146 in 2009 ARRA money for the ongoing implementation of the TIN project, and $134,301 for sales of property and equipment. Due to recent annexations, a reduction of $615,000 in County Contributions for transit services to the unincorporated areas is also recommended. Consistent with SB 1484, establishment of a new City Housing Successor Fund is recommended to account for unspent proceeds of the City of Santa Clarita Redevelopment Agency Housing Set -Aside Tax Allocation Bonds, Series 2008. The funds are currently on deposit in the Successor Agency Redevelopment Obligation Retirement Fund and must be transferred to a separate City Fund. Recommended increases of $3,443,695 in TDA Article 8 fund is for expected revenues to fund the ongoing 2013-14 Overlay and Slurry and the McBean Parkway Widening Over the River projects. The recommended adjustment of $2.5 million to the Internal Service Fund is to account for additional transfers to the Facility Replacement Fund. Grant funds adjustments include an increase in Miscellaneous Federal Grant Fund for $1,050,123 to account for the transfer from the City Housing Successor fund for the repayment of Neighborhood Stabilization Program funds to the Housing and Community Development Department, and a decrease of $90,000 in the Community Development Block Grant to correct the budget for the business incubator project. Recommended revenue adjustments in Bridge and Thoroughfare Funds includes an increase of a- $1,314,744 for the Habitat for Hereos project, and a decrease of $860,000 for the delay of the Keystone project, medical buildings on Sierra Highway and McBean, and a retail center on Oak Ridge. The recommended revenue adjustment in the Santa Clarita Lighting District is from the Villa Metro development and Henry Mayo Memorial Office Building estimated Ad Valorem taxes. An increase of $10,000 is recommended to record the developer fee received for the survey and design on Furnival Street. Additionally, a decrease of $400,000 is recommended to correct the revenue budget in the Stormwater Utility Fund. Los Angeles County has agreed to contribute $600,000 over a three-year period for costs related to a watershed plan. Therefore $400,000 will be reduced from the budget this year and recommended for appropriation over the next two years. A transfer of $786,636 in interest earnings from the City books to the Other Post Employment Benefit (OPEB) Trust account is also necessary for proper accounting. Recommended revenue increases in Other Special Revenue Funds includes: $4,865,380 in Proposition C, $442,442 in Proposition A, $3,281 in Proposition A Park Bond, and $275,245 in Measure R. All adjustments were results of increased projections by Metro. Expenditures Recommended mid -year expenditure budget adjustments total $12,490,847. By fund, these expenditure adjustments are as follows: General Fund $ 3,677,303 Redevelopment Obligation Ret. Fund $ 5,057,294 City Housing Successor Fund $ 1,050,123 Transit Fund $ 429,985 Developer Fee Fund $ 181,440 Special Districts Funds $ 17,000 Various Grant Funds $ (81,913) Other Special Revenue Funds $ 2,159,615 Total Proposed Expenditure Adjustments $ 12.490.847 In the General Fund, recommended budget appropriations include $120,000 for continuation of the CEMEX mining opposition efforts; $435,000 for Development Services plan checkers and inspectors; $42,385 for five months funding of a Building Inspector; $50,368 for Part -Time staffing at the Canyon Country Community Center; and a $50,000 increase to the water utility base budget for various parks. In addition, a budget appropriation of $150,000 is recommended to provide for the removal and replacement of play equipment, including an integrated shade cover at Chesebrough Park. The recommended expenditure increases in the City Housing Successor Fund of $1,050,123 represents the repayment of Neighborhood Stabilization Program (NSP) funds to the Department of Housing and Community Development. Expenditure adjustments in the Transit Fund include $434,658 for the Consumer Price Index (CPI) adjustment to MV Transportation's contractual agreement and a reduction of $4,673 in grant match. Developer Fee Fund expenditure increase of $181,440 accounts for a developer contribution of $10,000 for street survey and design on Fumival Street, a transfer of $163,827 to reimburse the general fund for collected fees related to the Placerita Sewer and Placeritos Sewer, and a transfer of $7,613 in Fire District admin fees due to the City for fiscal year 2012-13. Recommended expenditure increases in Special Districts Fund includes $15,000 in grant match for the Haskell Canyon Open Space, and $10,000 for part-time staffing in Environmental Services. A decrease of $8,000 is also recommended to correct the funding for payments to the Department of Water and Power for use of their property on Golden Valley Road as a parking lot and a major trail connection. The recommended expenditure adjustments in Other Special Revenue Funds includes, a transfer of $1,727,562 to the Trust account for the Annual Required Contribution; a $591,028 transfer from the Valencia Industrial Center Assessment District for reimbursements of traffic signal installation and revenue corrections. This also includes $56,000 in Tourism Marketing Bureau funds for the 2014 Amgen Tour of California and a tourism bus wrap. The remaining expenditures related to the Amgen Tour of California have been previously appropriated by City Council through the fiscal year 2013-14 annual budget adoption, using a combination of Tourism Marketing District funds ($25,000) and General Fund monies ($45,000). Establishment of Cottage Food Operations Administrative Permit Fee As part of the midyear process and in response to the adoption of Ordinance No. 13-08, "AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, APPROVING MASTER CASE NO. 13-009 (UNIFIED DEVELOPMENT CODE 13-001, ZONE CHANGE 13-001), AND AMENDING THE SANTA CLARITA UNIFIED DEVELOPMENT CODE (UDC) AND ZONING MAP" a new Cottage Food Operations Administrative Permit Fee was created, consistent with Resolution No. 13-43, A Resolution of the City Council of the City of Santa Clarita, California, Establishing a Schedule of Fees and Charges for City Services, Section 3 — New Fees which states "Any fees for new services established throughout the year shall be incorporated into the City's fee structure and collected with recovery percent consistent with similar services." The new administrative permit fee is $60 per permit. Establishment of Amendment to Classification Plan and Providing a Compensation Adjustment for the City Manager Amend classification plan to change a position title and adjust City Manager salary for 2014 per Employment Agreement. Resolution to Adopt Fiscal Policies On September 6, 2012 the City of Santa Clarita's Issuer Credit Rating was upgraded one notch from AA+ to AAA by Standard and Poor's (S&P), its highest possible rating. In its report, S&P deemed the City's financial management practices as "good" under its financial management assessment methodology, indicating financial management practices exist in most areas, but not formalized by the governing body. Adoption of a comprehensive document compiling existing policies and practices represents best management practices consistent with maintaining the City's AAA credit rating. ALTERNATIVE ACTIONS Other actions as determined by the City Council. FISCAL IMPACT Adoption of the mid -year adjustments will increase the estimated revenues for all funds in the amount of $29,991,700 and budgeted expenditures in the amount of $12,490,847. ATTACHMENTS 2013-14 Mid -Year Requests - Exhibit A Resolution - Amending Position Classification Plan and Providing a Compensation Adjustment for the City Manager Resolution - To Adopt Fiscal Policies for the City of Santa Clarita Exhibit A CITY OF SANTA CLARITA Mid -Year Adjustments Requests - Summary by Fund FY 2013-14 i Expenditure Budget At{ =hzi0nfa �1 \1 I 11/27/2013 .:, Revenue BudgetAdjushnen& Revenue Transfers In Total Revenue $ 3,259,961 $ ) Transfers Total Fund Fund Title Operating UP Subtotal Out Expenditure 100 General Fund $ 729,602 $ - $ 729,602 ic. $ 2,500,000 $ 3,229,602 100 Personnel Budget Adjustments 287,701 - 287,701 3,443,695 287,701 601 General Fund -Capital Projects - 160,000 160,000 - 160,000 3,281 Subtotal Genetal Fund 1,017,303 160,000 1,177,303 2,500,000 3,677,303 104 GASB 45 Compliance OPEB (280,000) 984,744 - 984,744 10,000 203 Community Dev. Block Grant (90,000) (901000)'. (90,000) 229 Misc. Fedetal Grants - 8,087 1 8,087 - 8,087 233 TDA Art 8 - - - - 114,801 260 Proposition C 4,673 - 4,673 +_. - 4,673 261 Proposition A - - - 2,500,000 2,500,000 262 Pro A Park Bond - - 9,397,232 - 264 Measure R - - 300 Bouquet Cyn B&T - 301 Eastside Cyn B&T - - - 302 Via Princessa B&T - - - 306 Developer Fee Fund - 10,000 10,000 171,440 181,440 352 Valencia Ind. Center AD 92-5 - - - 591,028 591,028 353 Soledad Intersect AD 92-4 - - - 27,347 27,347 354 Santa Clarita Lighting District Ad Valor - - - 356 Stormwater Utility Fund 10,000 - 10,000 ';°�j - 10,000 358 Open Space Preservation District (8,000) 15,000 7,000,: - 7,000 360 Tourism Marketing District - - - 361 Tourism Marketing Bureau 56,000 - 56,000ii' - 56,000 392 Redevelo ment Obli ation Retirement - - 5,057,294 5,057,294 393 Cit HousingSuccessor Fund - - 1,050,123 1,050,123 700 Transit Fund 429,985 - 429,985 ` - 429,985 723 Public Facilities Replacement - - - - Non -GF Personnel Budget Adjustments 1,480,567 1,480,567 'a - 1,480,567 TOTAL $ 2,900,528 $ 193,087 $ 3,093,615 $ 9,397,232 $ 12,49,847 �1 \1 I 11/27/2013 .:, Revenue BudgetAdjushnen& Revenue Transfers In Total Revenue $ 3,259,961 $ 789,815 $ 4,049,776 3,259,961 789,815 4,049,776 (786,636) (786,636) (90,000) - (90,000) 1,050,123 1,050,123 3,443,695 3,443,695 4,865,380 - 4,865,380 442,442 - 442,442 3,281 - 3,281 275,245 - 275,245 (250,000) - (250,000) (280,000) - (280,000) 984,744 - 984,744 10,000 10,000 160,000 - 160,000 (400,000) - (400,000) 34,350 - 34,350 114,801 - 114,801 - 5,057,294 5,057,294 8,807,205 - 8,807,205 - 2,500,000 2,500,000 $ Z0,594,468 $ 9,397,232 $ 29,991,700 Page 1 Exhibit A CITY OF SANTA CLARITA Mid -Year Expenditure Budget Adjustments Requests -Personnel FY 2013-14 Req. Expenditures Numbe Fund Title of Request Increase / Reason for Requesting Mid -Year Adjustment r (Decrease) 100 Personnel adjustments 287,701 Update vacation payouts, employee PAFs, retiree PERS, COLA. 1 Non -GF Personnel adjustments (246,995) Update vacation payouts, employee PAFs, COLA. 2 104 Other Post Employment Benefits (GASB 45) 1,727,562 Annual Required Contribution deposit to PARS (Trust Acct) 2 Total $ 1,768,268 v 11/27/2013 Paget Exhibit A CITY OF SANTA CLARITA Mid -Year Expenditure Budget Adjustments Requests -Operation FY 2013-14 Request Number Dept Division Name Fund Division Account Title of Request / Acct Title Mid Year Request On-going Cost Reason for Requesting Mid -Year Adjustment 1 CM Administration 100 11000 5161.002 CEMEX Advocacy 120,000 0 This request is to complete the legislative efforts with S. 771 (Boxer) and continue the necessary legal and public relations services relating to the City's promotion and support of S 771. This request provides for continued funding of the City's legislative advocacy and coalition building efforts necessary to secure passage of the legislation. 1 CM TOTAL $ 120,000 $ - 1 AS Transit 700 12400 5161.016 Local Bus 74,875 74,875 CPI Contractual Adjustment for Transit Services and Contract/Admin Fees: 1.4% for Fuel (producer price index PPI ended in August) .8% for Service (August CPI for the LA -Riverside -Orange County) 8% for Maintenance (August CPI for the LA -Riverside -Orange County) 700 12400 5161.017 Dial A Ride 290,791 290,791 700 12400 S 161.018 Commuter Services 31,013 31.013 700 12400 5161.019 Contract Adntin Fees 37,979 37,979 2 AS Transit 700 12400 5201.003 Automotive Equipment (4,673) 0 Correct grant match PW Prop C Operating 260 14204 5201.003 Automotive Equipment 4,673 0 Correct grant match 2 AS TOTAL $ 434,658 $ 434,658' 1 CD Tourism Bureau 361 11306 5111.001 Special Supplies (monthly meetingex expenses) 3000 , 0 Set up Tourism Bureau Marketing expenditure accounts and corresponding revenue projections. CD Tourism Bureau 361 11306 5161.001 Contractual Services -Bus Wrap/Amgen Tour 53,000 0 2 CD Business Incubator 203 13336 5161.001 Contractual Services (90,000) 0 Correct CDBG budget -7-7777777777 7 Q 1127/2013 Pape 3 Exhibit A CITY OF SANTA CLARITA Mid -Year Expenditure Budget Adjustments Requests -Operation FY 2013-14 Request Number Dept Division Nacre Fund Division Account Title otRequestl Acct Title R�e�r On-going Cost Reason for Requesting Mid -Year Adjustment Environmental Used Oil Payment Grant This annual state grant was increased from $45,000 to $50,172. The request will budget 1 PW Services 100 14607 5161.001 Program - Contractual 5,172 0 all available grant funds to be spent before June 30, 2014. A co¢esponding revenue Services adjustment will be made to 100-4471.004. Building and Customers pay a fee to expedite review of their projects. This request will appropriate 2 PW Safety 100 14100 5161.020 Expedite Contract Services 35,000 0 those offsetting revenues for contract building inspection and plan check services. A corresponding revenue adjustment will be made to 100-4521.007. Contractual plan review, building inspection, and other permit -related services are 3 PW Building and 100 14100 5161.002 Plan Check and Inspection 435000 0 needed for January through June. Fees paid by customers for plan review and building Safety Services , permits will directly fund these services. The increase to various Building & Safety's revenue accounts directly offsets this request for contract services. Building and Request to fund a full-time Building Inspector position. The workload from 4 PW Safety 100 14100 Various Building Inspector 42,385 87,481 construction activity and inspection requests continues to exceed current staffing levels. Mid -year funding request for 5 months. 5 PW Environmental 356 14600 5002.001 PTS-Stormwater 10,0170 0 Part-time staff to address street sweeping complaints and post'No Parking' signs in Services problem areas with parked cars. This request will fund 670 hours @ 25hours per week. 6 PW Environmental 100 14601 5161.001 Non -Franchise Haul Impound (3,500) 0 Fewer illegal haulers are conducting business in the City. Acorresponding revenue Services Fee adjustment will be made to 100-4571.021. 6 PW TOTAL $ 524,057 $ 87,481 (I -�A A 112712013 Exhibit A CITY OF SANTA CLARITA Mid -Year Expenditure Budget Adjustments Requests -Operation FY 2013-14 Request Number O Division Name Ford DivisionAccount Title of Requeul Acct Title ar Nfid-Dept On-going Cost Reason for Requesting Nlid-Year Adjustment Requ Request 1 PRCS Parks 100 15204 5131,006 crease Base Budget for 50,000 50,000 Request to increase base budget. Long tern weather forecasts anticipate yet another hot Water Utility and dry year, requiring significant irrigation. An increase is needed for Pan -Time Salaries at the CCCC. The current budget is not Increase Base Budget in Part sufficient to pay for the needed level of staffing to implement year round programming. 2 PRCS Recreation 100 15315 Personnel Time Salaries for the Canyon 50,368 _ This year, the Center will operate with a full compliment of programming, Several Country Community Center programs including Summer, Fall, Winter, and Spring Blast; Special Events and Classes; Birthday Parties; and mandatory staff meetings and training are currently not funded. PRCS Cary Hall 100 14502 5121.001 Correction of funding source 8,000 8,000 3 Maintenance Payment to the Depattment of Water and Power for use of [heir property as a parking lot and major trail connection. PRCSOSPD 358 12592 5121.001 Correction of funding source (8,000) 18.000) PRCSChild Development 100 15111 5002.001 Part -Time Salaries (11,217) 0 This is a one fine request to decrease two expenditure accounts. Expenditures 4 decreased due to cancelled Child Development classes and lower enrollment, resulting PROS Child Development 100 15111 5111.001 Special Supplies (1,606) 0 in a decrease in revenue. 4 PRCS TOTAL $ 87,545 $ 50,000. 15 TOTAL OPERATING 1,132,260 572,139 Personnel Adjustment 1,768,268 40,706 GRAND TOTAL $ 2,900,525 $ 612,845 11127/2013 Page 5 Exhibit A CITY OF SANTA CLARITA Mid -Year Expenditure Budget Adjustments -Capital Improvement Projects FY 2013-14 Request Project Mid -Year Number Dept Project Name Number Fund Fund Title Adjustment Project Status Reason for Mid -Year Adjustment Request Request Sport court flooring has been purchased and the project is out to bid. Santa Clarita Sports Complex Additional funds are needed to provide for a revision of the project scope 1 PR Sport Court Flooring Replacement M3016 601 GF Capital 10,000 out to bid to include the installation of an electrical outlet in the floor to facilitate the use of scoreboards and to upgrade the basketball courts to high school regulation size. '., 19Mi,��l i4 Negotiating The project seeks to formalize the entrance to this open space area to 2 PR Haskell Canyon Open Space T4005 358 OSPD 15,000 provide secure and controlled access. The requested increase provides Easements for a total local Habitat Conservation Fund grant match of $50,000. Funds are requested to provide for the removal and replacement of play 3 PR Chesebrough Park P1005 601 GF Capital 150,000 Proposed equipment, including an integrated shade cover. This request includes the construction component. I Irl Illi^ " Effort will provide for design of improvements to address existing Code 4 PW Fumival Street Improvement 53032 306 Dee Fees 10,000 Proposed Enforcement issues. Work to include street survey and design of Design Furnivak Survey and Design to start January 2014- Funds received from Mike's Tire- Recognize SIM revenue in 300-4572.001. 2008-1 Major Median Landscape - 5 PW Soledad Canyon/SR 14 and Via80013 357 LMD (8,500) Ph II Cons[. Staff requests a transfer of savings ,n the amount of 58,500 from Princessa/SR 14 80013357 to 84006357 to provide for final retention costs. 6 PW Major Median Landscape Zone 2008-1 Soledad Canyon 84006 357 LMD 8.500 Closeout This (uuding request is to provide for final retention costs. 7 PW Intermodal Access HMNH CI006 229 Misc Fed 5,087 Closeout Adjustment will correct remaining grant amount to maximize the use of Grant gram funds. 7 Total CIP Request $ 193,087 11/2]12013 Page 6 CITY OF SANTA CLARITA Mid -Year Expenditure Budget Adjustments Requests-Interfund Transfers FY 2013-14 Request Number Dept Fund Account Title of Request/ Acct Title Mid -Year Adjustment Request Reason for Requesting Mid -Year Adjustment I ND 100 4711 352 Transfer from Valencia Industrial Center AD 92-5 591,028 To reimb OF for Traffic Signal and PY revenue correction 2 ND 100 4711,353 Transfer from Soledad Int AD 92-4 27,347 To reimb GF for accumulated Interest on the GVR projects 3 NO 1 100 4711306 Transfer from Developer Fee 163,827 To reimb GF for the Placenta and Placentas Sewer 4 ND 100 4711,306 Transfer from Developer Fee 7,613 To comect - 5% Fire District Admin fee for FY 12-13 5 ND 229 4711.393 Transfer from City Housing 1,050,123 Repayment of NSPI to the Dept of Housing and Community Dev. 6 ND 393 4711.392 Transfer from RORF 5,057,294 Transfer bond proceeds to the City Housing Successor Fund 7 NO 723 4711.100 Transferfrom GF 2,500,000 Transfer to Facility Replacement Fund Transfers In Tota( $ 9,397,232 1 ND 352 5501,100 fnm.Seno Genal Fund 591,028 Transfer horn Val Ind CO AD 92-5(I ra07c Signal) 2 ND 353 5501.100 Transfer to General Fund 27,347 Transfer from Soledad intersect AD 92-4 (GVR prej) 3 ND 306 5501.100 Transfer to General Fund 163,827 Transfer from Dev. Fee for the Placenta and Placentas Sewer 4 ND 306 5501.100 Transfer to General Fuod 7,613 Trmslu from Dev- Fee - 5% Fire Dist Admin fee for FY 12-13 5 ND 392 5501.393 Transfer to City Housing Successor 5,057,294 Transfer from Redevelopment Obligation Retirement Fund 6 NO 393 5501.229 Transfer m Misc Grant Fund 1,050,123 Repayment of NSPI to the Dept of Housing and Community Dev, 7 1 ND 1 100 1 5501.723 Transfer to Facility Replacement 2,500,000 Transfer from General Fund Transfers Out Total 1127,2013 $ 9,397,232 Page 7 RESOLUTION 13- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, AMENDING THE POSITION CLASSIFICATION PLAN AND PROVIDING A COMPENSATION ADJUSTMENT FOR THE CITY MANAGER WHEREAS, Section 37206 of the Government Code requires the City Council to prescribe the time and method of paying salaries, wages and benefits for employees of the City; and WHEREAS, the City Council has authorized and directed, under provisions of the Municipal Code of the City of Santa Clarita Section 2.080.060, the City Manager to prepare a proposed salary plan for all employees of the City. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Santa Clarita as follows: 2014: SECTION 1. The position classification plan is hereby amended effective January 3, Classification Chanee Administrative Analyst, City Manager's Ofc. Communications Specialist Grade 39 Grade 39 (Title Change Only) SECTION 2. Per the City Manager's Employment Agreement, Section 3, Salary: "...Should the City Council, upon completion of an annual review of the Employee's performance as provided for in Section 16, determine that the Employee has met performance expectations the City Council shall increase the Employee's compensation not less than 5 percent in 2014 and 2016, as is consistent with compensation increases granted to other employees in conjunction with their performance evaluations." On November 26, 2013, the City Council met with the City Manager in closed session and provided an annual review of his performance. Since all provisions of the Employment Agreement were met, the City Manager's annual salary will be increased by 5 percent effective the first full pay period in January 2014. SECTION 3. All prior resolutions and parts of resolutions in conflict with this resolution are hereby rescinded. SECTION 4. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED this 10th day of December 2013. MAYOR ATTEST: INTERIM CITY CLERK DA STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA) I, Armind Chaparyan, Interim City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the 10th day of December 2013, by the following vote: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: INTERIM CITY CLERK 2 _1JL RESOLUTION 13- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA, CALIFORNIA, TO ADOPT FISCAL POLICIES FOR THE CITY OF SANTA CLARITA WHEREAS, City Council of the City of Santa Clarita is charged with the ultimate oversight of the fiscal activity of the City government; and WHEREAS, City Council is resolved to adopt best practices in the prudent exercise of its oversight responsibilities. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Santa Clarita does hereby adopt a comprehensive set of fiscal policies as follows. SECTION 1. RESOLUTION TO ADOPT FISCAL POLICIES FOR THE CITY OF SANTA CLARITA CITY OF SANTA CLARITA FISCAL POLICIES Fiscal policies establish the framework for overall fiscal planning and management. The policies set forth guidelines for both current activities and long range planning. The City's Fiscal Policies shall be reviewed annually to assure the highest standards of fiscal management. Overall Goals The overall financial goals underlying these financial policies are: Fiscal Conservatism: To ensure that the City is at all times in a solid financial condition. This can be defined as: e Cash solvency - ability to pay bills e Budgetary solvency - ability to balance the budget a Long -run solvency - ability to pay future costs a Service level solvency - ability to provide needed and desired services Flexibility: To ensure that the City is in a position to respond to changes in the economy or new service challenges without an undue amount of financial stress. Adherence to the Highest Accounting and Management Practices: As set by the Government Finance Officers Association standards for financial reporting and budgeting, by the Governmental Accounting Standards Board and other professional standards. I. CASH MANAGEMENT A. Purpose An investment policy has been adopted by resolution and is reviewed each year. The investment policy provides guidelines for the prudent investment of temporary idle cash, and outlines the policies for maximizing the efficiency of the cash management system. The ultimate goal is to enhance the economic status of the City, while protecting its pooled cash. B. Objective The cash management system is designed to accurately monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible. The City attempts to obtain the highest possible yield, as long as investments meet the criteria established for safety and liquidity. C. Policy In order to maximize interest earnings, the City commingles the cash of all funds, except those funds held in trust for the City by various financial institutions in accordance with applicable trust agreements related to debt issues. Interest revenue derived from commingled cash is allocated monthly to the participating funds based on the relative cash balance of each fund. D. Procedures Criteria for selecting investments and the order of priority are: 1. Safety The safety and risk associated with an investment refers to the potential loss of principal, interest, or a combination of these amounts. The City only operates in those investments that are considered very safe and are allowable under Government Code Section 53601. 2. Liquidity This refers to the ability to "cash in" at any moment in time, with a minimal chance of losing some portion of principal or interest. Liquidity is an important investment quality, especially when the need for unexpected funds occasionally occurs. 3. Yield This is the dollar earnings an investment instrument can provide, and sometimes is described as the rate of return. 2 —/to — PLANNING AND BUDGETING The City's success in financial planning and budgeting is due to the City Council's timeless and proven budget practices. Some of these practices include: • The decisions made in the good times are more important than the decisions made during the bad times • Live below our means • Run a lean organization • Use conservative five-year projections • Employ full cost recovery when setting fees • Diversify revenue • Use one-time money only for one-time expenses • When in doubt, contract out It is recommended that the City Council continue to adhere to these strategic budget practices. Purpose of an Annual Budget The basic purpose of the City of Santa Clarita's budget is to serve as a "blueprint" for providing City services and a working financial plan, as well as providing a communication tool, for City residents, businesses, and employees. The document is specifically designed to give clear and accurate information to the community with respect to how its local government is organized and operates. The Capital Improvement Program (CIP) provides a comprehensive capital planning document and a context for future capital budget allocations. The City Manager presents a balanced budget, in which ongoing revenues match or exceed ongoing expenditures, to the City Council each year. This document authorizes appropriations or eligible expenditures for the City's fiscal year, which runs from July 1 to June 30 of the following year. Budget & CIP Preparation The budget is prepared each year by the City Manager's Office and the Administrative Services Department, in cooperation with other City departments and other agencies which receive public funds. The CIP is prepared each year by the Public Works Department, the City Manager's Office, and the Administrative Services Department. The CIP preparation process has been integrated into the budget process. In January of every year, each department is presented with a Budget Preparation Guide. The Finance Division provides estimated revenues for the coming year, as well as year-end projected revenues for the current fiscal year. Department expenditure and CIP requests are prepared reflecting these projected revenue trends and estimates. In March, the departments then submit their proposed budgets and requests for the upcoming fiscal year to the City Manager. The review of the budget is the responsibility of the City's Budget Team. In March and April, the City Manager analyzes each individual budget and either approves, denies, or revises the f( 7 requested funding amounts. The final product becomes part of the draft, proposed Annual Budget and CIP document presented to the City Council. The City Council has appointed a Council Budget Subcommittee that meets during the budget process. Budget study sessions are conducted with the City Council and the Commissions in the months of January and May. Citizens have an opportunity to comment on the draft document during study sessions and at the public hearing in June. During the budget study session and the public participation period, the draft Annual Budget and CIP document may be revised or amended to reflect spending priorities that may differ from those presented in the draft document. The final Annual Budget, with the corresponding CIP Budget, is adopted by resolution of the City Council and takes effect on July 1. Once adopted, the City of Santa Clarita has a new operating budget and fiscal plan for the coming year, and a program for capital spending. Level of Control and Changes to Adopted Budget From the effective date of the budget, the amounts stated as proposed expenditures become appropriations for the various City departments and capital improvement projects. These formal budgets are employed as a management control device during the year for the General Revenue Fund and all Special Revenue Funds. The City has prepared a line -item detail, which lists each account group within each of the three expenditure categories (personnel, operations & maintenance, and capital outlay). This annual budget format is designed to provide a more comprehensive management and fiscal planning system to aid in the achievement of goals and objectives at the operational levels consistent with the City Council's policies. Funds appropriated for salaries and benefits may not be expended for any other purpose without the approval of the City Manager. The City Manager may transfer funds within and between programs and departments. Budgetary control, the level at which expenditures cannot legally exceed the appropriated amount, is exercised at the category level. Administrative policies provide guidelines on budget transfers and the authorization necessary to implement transfers. Generally, there are two types of budget transfers: Budget Adjustment This is a transfer that does not change the total appropriated amount within a fund. Approval may be granted at the City Manager level. Department heads have discretion to reapportion funds between certain line -items within a program, but may not exceed the total appropriated amounts for each category. Budget Amendment This is an adjustment to the total appropriated amount within a fund which was not included in the original budget. These supplemental appropriations require formal action by the City Council. Types of modifications can be categorized as follows: • Unanticipated revenue, which was not projected in the budget, may be appropriated by Council for expenditure in the year received. • Prior year reserves or fund balances may be appropriated to fund items not previously included in the adopted budget. The appropriation of reserves in the case of emergencies or unusual circumstances requires approval by the City Council. • Transfers between funds require formal action by the City Council. Unexpended appropriations automatically lapse at the end of the fiscal year, and are included in the ending fund balance calculations within each fund. II. BUDGET POLICIES AND PROCEDURES A. Policy The City Manager shall submit a proposed budget to the City Council each year. It is the stated policy of the Council and City Manager that ongoing revenues match or exceed ongoing appropriations. B. Budget Basis The budgets of general government type funds (for example, the general fund itself, and gas tax funds) are prepared on a modified accrual basis. Briefly, this means that obligations of the City are budgeted as expenses, but revenues are recognized only when measurable and available. The Comprehensive Annual Financial Report (CAFR) shows the status of the City's finances on the basis of "generally accepted accounting principles" (GAAP). In most cases, this conforms to the way the City prepares the budget. One exception is the treatment of compensated absences. Compensated absences, including accrued but unused holiday, compensatory time and vacation leave, are treated slightly different in the budget than in the CAFR. C. Budget Responsibility The department heads are responsible for preparing their budgets in accordance with the guidelines provided by the City Manager and Budget Officer. The Administrative Services Department provides cost experience data as required by City departments. The Department of Administrative Services prepares all revenue, debt service, and reserve estimates. D. Budget Preparation The process of developing the operating budget begins officially in January of each year. The budget preparation process provides the Executive Team an opportunity to examine programs, to propose changes in current services, to recommend revisions in organizations and methods, and to outline requirements for capital outlay items. E. Operating Budget Ongoing operating costs should be supported by ongoing, stable revenue sources. This protects the City from fluctuating service levels and avoids crises when one-time revenues are reduced or removed. Listed below are some corollaries to this policy. Funding of Ongoing Operating and Maintenance Costs Funding of ongoing operating and maintenance costs, such as street resurfacing and trail maintenance, should be financed through recurring operating revenues rather than through bond issuance. Contingency Appropriation Fund balances or contingency accounts should be used only for one-time expenditures, such as capital equipment and capital improvements. Each year's budget may include a General Fund Contingency appropriation to cover one-time unforeseen expenditures or new projects initiated after a fiscal year has begun. Operating Reserve General fund operating reserves are vital in building financial resiliency and are a critical component of the budget, as this funding source can be counted on in case of an emergency or unforeseen opportunity. The current general fund operating reserve is 17 percent of operating expenditures and it is the City Council's goal to increase the operating reserve to 20 percent. Funding of Other Post -Employment Benefits Funding of other post -employment benefits will be based on an actuarially -accepted method to maintain a fully -funded position. The extent of the City's other post -employment benefits and its contribution to them will be adjusted annually as necessary to fully fund its actuarially -required contribution (defined as City and employee contributions, if any, that when expressed as a percent of annual covered payroll are sufficient to accumulate assets to pay benefits when due). Furthermore, an irrevocable trust has been established in which said contributions are deposited. Funding of Annual Overlay and Slurry Program At least $1 million of transportation related funding shall annually fund the annual overlay and slurry program. • Fluctuating federal grants should not be used to fund ongoing programs. — C9-0 — F. Revenue and Expenditure Forecasting • Formal historic trend analysis will be performed and updated in preparation for the annual budget development and during the midyear budget review process. • Ongoing analysis will be maintained to determine whether revenues or expenditures will deviate from their long-term trends over the next five years • Whenever necessary, independent revenue forecasting will be performed on major revenue sources, such as for sales tax and property tax revenue. G. Long -Term Financial Planning • A long -tern, multi-year financial plan, such as the Five -Year General Fund Forecast, will be maintained in order to identify potential future issues and possible solutions. • Revenue and expenditure decisions are to be made primarily from a long-term perspective and tied to impacts on operations. • The goal is to maintain structural balance for all funds. H. Revenue Policies A diversified and stable revenue system will be maintained to ensure fiscal health and absorb short run fluctuations in any one revenue source. User fees for all operations will be examined and adjusted annually to ensure that fees cover the direct and, where appropriate, indirect costs of service. Development fees for one-time capital expenditures attributed to new development will he reviewed annually to ensure that fees match development related expenditures. All applicable fees will be reviewed and adjusted annually according to the Consumer Price Index (CPI) to maintain cost recovery levels. I. Cost Allocation The purpose of the City's cost allocation from its Internal Service funds is to charge the departments for City resources that are being used by the individual departments and funds. 4. Self -Insurance Fund Allocation The self-insurance fund is used to account for the cost of the City's insurance premiums (such as general liability, property, and automobile insurance), as well as claims adjuster services and legal costs. Cost is allocated to each division using the exposure and budget methodology. 5. Equipment Replacement Allocation The equipment replacement fund is used to account for the acquisition, depreciation, and replacement of City vehicles and large equipment. Charges to departments are calculated based on the actual depreciation charge for vehicles used by each department. 6. Computer Replacement Allocation The computer replacement fund is used to account for the acquisition, depreciation, and replacement of computers and related equipment. Charges to departments are calculated based on the number of computer work stations supported by the Technology Services staff in each department. J. Long -Term Capital Planning/Budget The Capital Improvement Program shall be prepared and updated each year. Although this plan may include "unfunded" projects that carry out the City's strategic and general plans, it must also include a capital spending plan that identifies projects that can be completed with known funding sources over the next five years. Each department must, when planning capital projects, estimate the project's impact on the City's operating budget. Amendments to capital appropriations fall under the same guidelines as changes to the operating budget, with one exception: any project change exceeding the Council approved contingency must receive specific City Council approval. This approval can be made by motion rather than resolution, and may accompany a recommendation for award of bid, change order, or other Council action. While this approval is not a strict legal requirement, it serves to keep the Council informed on capital activity and funding, and ensures that revisions of project priorities are in line with Council expectations. K. Budget Review During the budget review phase, the City Manager's Office, in conjunction with Department of Administrative Services, analyzes new positions, and operating and capital budget requests. This information is then compiled and presented to the City Manager. The Budget Team comprised of the City Manager, Assistant City Manager, Assistant to the City Manager, Deputy City Manager, Finance Manager, Human Resources Manager, and Senior Financial Analyst, conduct meetings with each department to review their estimated expenditures for the current fiscal year and the proposed base -line requests and enhancements for the proposed budget year. At the completion of these meetings, the Department of Administrative Services again compiles all the financial data and presents the proposed budget to the City Manager for final review and budget preparation. L. Budget Adoption The City Manager presents, via publicly noticed study sessions, the budget to the City Council. A public hearing is held and, after modifications and revisions, the budget is adopted by resolution. 8 ^ M. Budget Implementation A budgetary control system will be maintained to ensure compliance with the budget. The Department of Administrative Services is responsible for setting up the budget for tracking purposes, and is charged with ensuring fund availability during the year to cover expenditures and appropriations. Reports comparing the budget with expenditures are generated and sent to departments on a monthly basis. N. Budget Revision The City Council approves total budgeted appropriations throughout the year. Actual expenditures may not exceed budgeted appropriations at the category level (e.g., Personnel, Operations & Maintenance and Capital Outlay). The City Manager or his designee is authorized to transfer budgeted amounts at the fund level. The City has the following programs accounted for through its governmental funds: general government; public safety; parks and recreation; community development; public works; and capital expenditures. Use of unappropriated reserves must be specifically approved by the City Council. The City Manager may approve any unused appropriations at the end of each fiscal year for capital projects, special projects, and grant programs which shall be carried forward and become part of the next fiscal year's budget. All purchase order commitments outstanding at the end of the fiscal year may be continued and become part of next fiscal year's budget. III. DEBT MANAGEMENT POLICY This Debt Management Policy sets forth certain debt management objectives for the City, and establishes overall parameters for issuing and administering the City's debt, recognizing that cost-effective access to the capital markets depends on prudent management of the City's debt program. Debt Management Objectives The purpose of this Debt Management Policy is to assist the City in pursuit of the following equally -important objectives: • Minimize debt service and issuance costs; • Maintain access to cost-effective borrowing; • Achieve the highest practical credit rating; • Full and timely repayment of debt; • Maintain full and complete financial disclosure and reporting; • Ensure compliance with applicable State and Federal laws. General Provisions E. Scope of Application These policies establish the parameters within which debt may be issued by the City of Santa Clarita and the City of Santa Clarita Public Financing Authority. Additionally, these policies apply to debt issued by the City on behalf of assessment, community facilities, or other special districts, and conduit -type financing by the City for industrial development projects or other public purposes. The City Council, as a member of Joint Powers Authorities shall take these policies into account when considering the issuance of Joint Powers Authority debt. Supplemental policies, tailored to the specifics of certain types of financings, may be adopted by the City Council in the future. These supplemental policies may address, but are not limited to, the City's general obligation, lease revenue, enterprise, and land -secured financings. F. Responsibility for Debt Management Activity As delegated by the City Manager, the Administrative Services Department shall be responsible for managing and coordinating all activities related to the issuance and administration of debt. Departments implementing debt-financed capital programs will work in partnership with the Administrative Services Department to provide information and otherwise facilitate the issuance and administration of debt. 1. Debt Management Policy Review and Approval This policy shall be adopted by City Council resolution, and reviewed annually by the City Manager to insure its consistency with respect to the City's debt management objectives. Any modifications to this policy shall be forwarded to the City Council for approval by resolution. 2. Debt Administration Activities Under the direction of the City Manager, the Administrative Services Department is responsible for the City's debt administration activities, particularly investment of bond proceeds, compliance with bond covenants, continuing disclosure, and arbitrage compliance, which shall be centralized within the Department. G. Purposes for Which Debt May Be Issued Long-term Borrowing Long-term borrowing may be used to finance the acquisition or improvement of land, facilities, or equipment for which it is appropriate to 10 spread these costs over more than one budget year. Long-term borrowing may also be used to fund capitalized interest, costs of issuance, required reserves, and any other financing -related costs which may be legally capitalized. Long-term borrowing shall not be used to fund City operating costs. 2. Short-term Borrowing Short-term borrowing, such as commercial paper and lines of credit, will be considered as an interim source of funding in anticipation of long-term borrowing. Short-term debt may he issued for any purpose for which long-term debt may be issued, including capitalized interest and other financing -related costs. Prior to issuance of the short-term debt, a reliable revenue source shall be identified to secure repayment of the debt. The final maturity of the debt issued to finance the project shall be consistent with the economic or useful life of the project and, unless the City Council determines that extraordinary circumstances exist, must not exceed seven (7) years. Additionally, short-term borrowing may be considered if available cash is insufficient to meet short-term operating needs. 3. Refunding Periodic reviews of outstanding debt will be undertaken to identify refunding opportunities. Refunding will be considered (within federal tax law constraints) if and when there is a net economic benefit of the refunding. Refundings which are non -economic may be undertaken to achieve City objectives relating to changes in covenants, call provisions, operational flexibility, tax status, issuer, or the debt service profile. In general, refundings which produce a net present value savings of at least three percent (3%) of the refunded debt will be considered economically viable. Refundings which produce a net present value savings of less than three percent (3%) will be considered on a case-by-case basis. Refundings with negative savings will not be considered unless there is a compelling public policy objective that is accomplished by retiring the debt. D. Debt Issuance 1. Debt Capacity The City will keep outstanding debt within the limits of any applicable law, and at levels consistent with its credit worthiness objectives. The City shall assess the impact of new debt issuance on the long-term affordability of all outstanding and planned debt issuance. Such analysis recognizes that the City has limited capacity for debt service in its budget, and that each newly issued financing will obligate the City to a series of payments until the bonds are repaid. 2. Credit Quality The City seeks to obtain and maintain the highest possible credit ratings for all categories of short -and long-term debt. The City will not issue bonds directly or on behalf of others that do not carry investment grade ratings. However, the City will consider the issuance of non -rated special assessment, community facilities, multifamily housing, and special facility bonds. 3. Structural Features a. Debt Repayment Debt will be structured for a period consistent with a fair allocation of costs to current and future beneficiaries of the financed capital project. The City shall structure its debt issues so that the maturity of the debt issue is consistent with the economic or useful life of the capital project to be financed. b. Variable-rate Debt The City may choose to issue securities that pay a rate of interest that varies according to a pre -determined formula or results from a periodic remarketing of the securities. Such issuance must be consistent with applicable law and covenants of pre-existing bonds, and in an aggregate amount consistent with the City's credit worthiness objectives. When making the determination to issue bonds in a variable rate mode, consideration will be given in regards to the useful life of the project or facility being financed or the term of the project requiring the funding, market conditions, and the overall debt portfolio structure when issuing variable rate debt for any purpose. C. Derivatives Derivative products may have application to certain City borrowing programs. In certain circumstances, these products can reduce borrowing cost and assist in managing interest rate risk. However, these products carry with them certain risks not faced in standard debt instruments. The City Manager or designee shall evaluate the use of derivative products on a case-by-case basis to determine whether the potential benefits are sufficient to offset any potential costs. E. Professional Assistance The City shall utilize the services of independent financial advisors and bond counsel on all debt financings. The City Manager or designee shall have the authority to periodically select service providers as necessary to meet legal —C:�_: b — requirements and minimize net City debt costs. Such services, depending on the type of financing, may include bond and disclosure counsel, financial advisory, underwriting, trustee, verification agent, escrow agent, arbitrage consulting, and special tax consulting. The goal in selecting service providers, whether through a competitive process or sole -source selection, is to achieve an appropriate balance between service and cost. F. Method of Sale Except to the extent a competitive process is required by law, the City Manager or designee shall be responsible for determining the appropriate manner in which to offer any securities to investors. The City's preferred method of sale is competitive bid. However, other methods such as negotiated sale and private placement may be considered on a case-by-case basis. Debt Administration A. Investment of Bond Proceeds Investments of bond proceeds shall be consistent with federal tax requirements, the City's Investment Policy as modified from time to time, and with requirements contained in the governing bond documents. B. Disclosure Practices and Arbitrage Compliance 1. Financial Disclosure The City is committed to full and complete primary and secondary market financial disclosure in accordance with disclosure requirements established by the Securities and Exchange Commission and Municipal Securities Rule making Board, as may be amended from time to time. The City is also committed to cooperating fully with rating agencies, institutional and individual investors, other levels of government, and the general public to share clear, timely, and accurate financial information. 2. Arbitrage Compliance The Department of Administrative Services shall maintain a system of record keeping and reporting to meet the arbitrage compliance requirements of federal tax law. IV. ANNUAL AUDIT POLICY Sound accounting practices suggest that an annual audit is a prudent business decision. The City requires an annual audit by a qualified independent accountant of the books of account, financial records, inventories and reports of all City officers and employees involved in the handling of financial matters. In compliance with the requirement of an 13 annual audit, a firm of Certified Public Accountants will complete the audit for the fiscal year ending June 30. V. FINANCIAL STRUCTURE A. Accounting System and Budgetary Control In developing and evaluating the City's accounting systems, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: • The safeguarding of assets against loss from unauthorized use or disposition; and • The reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: The cost of a specific control feature should not exceed the benefits likely to be derived; and • The evaluation of costs and benefits require estimates and judgments by management. All evaluations of the City's system of internal control will continue to occur within the above framework. The City's internal accounting controls must adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. B. Fund Descriptions The City's accounting records are organized and operate on a "fund" basis, which is the basic fiscal accounting entity in governmental accounting. Each fund is designed by fund type and classification: • Governmental Funds - General, Special Revenue, Debt Service and Capital Projects • Proprietary Fund - Enterprise and Internal Service • Fiduciary Funds - Trust and Agency • Account Groups - General Fixed Assets and General Long -Term Debt C. Governmental Funds Governmental Funds are used to account for the City's expendable financial resources and related current liabilities, except for those accounted for in 14 _ o� — proprietary funds. The basic financial statements necessary to fairly present financial position and operating results for governmental funds are the balance sheet and the statement of revenues, expenditures, and changes in fund balance. Governmental funds are maintained using the modified accrual basis of accounting. • General Fund - Accounts for all the general revenue of the City not specifically levied or collected for other City funds, and for expenditures related to the rendering of general services by the City. • Special Revenue Fund - Accounts for the proceeds of specific revenue sources that are restricted by law or administrative action for specified purposes. • Debt Service Fund - Accounts for accumulation of resources for, and payment of, interest and principal on long-term debt. • Capital Project Fund - Accounts for financial resources used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds). D. Proprietary Funds Generally accepted accounting principles applicable to a private commercial business are applicable to proprietary funds of a governmental entity. The accrual basis of accounting is utilized. The measurement focus is based upon a determination of net income, financial position and cash flows. Accordingly, basic financial statements are required, such as balance sheet, statement of revenues, expenses and changes in retained earnings (deficit), and the statement of cash flows. Enterprise Fund - Accounts for operations that are financed and operated in a manner similar to private enterprises, where the intent of City Council is that the cost and expense, including depreciation and amortization, of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Internal Service Fund - Accounts for activities involved in rendering services to departments within the City. Costs of materials and services used are accumulated in these funds and are charged to the user departments as such goods are delivered or services rendered. 15 E. Fiduciary Funds Fiduciary Funds are maintained to account for assets held by the City in a trustee capacity for individuals, private organizations, other governments and other funds. Expendable Trust Fund - Accounts for assets and activities restricted to specific purpose in accordance with a trust agreement. Agency Funds - Accounts for assets held by the City as an agent for the City employees deferred compensation plan. F. Account Groups Account Groups are used to establish accounting control and accountability for the City's general fixed assets and general long-term debt. General Fixed Assets Account Group - Accounts for long-term assets of the City, except for those accounted for in proprietary fund types. • General Long -Term Account Group - Accounts for long-term debt of the City, except for debt accounted for in proprietary fund types. G. Fund Classifications In February 2009, the Governmental Accounting Standards Board issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The fund balance classifications are: Non -Spendable, Restricted, Committed, Assigned, and Unassigned. Non -Spendable — That portion of fund balance that includes amounts that are not in a spendable form (inventory, for example) or are required to be maintained intact (the principal of an endowment fund, for example). Restricted — That portion of fund balance that includes amounts that can be spent only for the specific purposes stipulated by external resource providers (for example, grant providers), constitutionally, or through enabling legislation (that is, legislation that creates a new revenue source and restricts its use). Effectively, restrictions may be changed or lifted only with the consent of resource providers. Committed — That portion of fund balance that includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision-making authority. Commitments may be changed or lifted only by the government taking the same formal action that imposed the constraint originally. 16 _3U_ Assigned — That portion of fund balance that comprises amounts intended to be used for specific purposes, but that are neither restricted nor committed. Such intent can be expressed either by the governing body or by an official designated for that purpose. Resolution of the City Council of the City of Santa Clarita No. 11-54 delegates the authority to assign amounts to be used for specific purposes to the Deputy City Manager for the purpose of reporting these amounts in the annual financial statements. Unassigned — That portion of fund balance that includes all amounts not contained in the other classifications. Unassigned amounts are technically available for any purpose. The City's fund balance is classified under the five fund balance classifications. VI. RISK MANAGEMENT The City of Santa Clarita is covered for Property, Liability and Worker's Compensation by Special District Risk Management Authority (SDRMA), a not-for-profit public agency. Limits for third -party claims consist of $10 million by SDRMA and $5 million in excess by Evanston Insurance Company. Risk Management administers the funding of the self-insured portions of the program, manages the administration of general liability claims, works in conjunction with the City Attorney's Office and outside counsel to monitor, control, and to resolve litigated matters, and provides training to minimize the risk of future losses. The Risk Management program provides centralized services to all City departments for risk management, loss control, and safety. Primary activities includes a yearly review of the City's comprehensive insurance program, including coverage for property/casualty, professional administration of the City's self-insured retention, loss prevention and control, and safety programs. Risk Management also administers the City's Contract Management system and provides yearly training on contract routing and City contractual policies. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. 17 PASSED, APPROVED, AND ADOPTED this day of 2013. ATTEST: INTERIM CITY CLERK DATE: 18 MAYOR STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF SANTA CLARITA) I, Arming Chaparyan, Interim City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: day of 2013, by the following vote: 19 INTERIM CITY CLERK 33