HomeMy WebLinkAbout2013-12-10 - RESOLUTIONS - FISCAL POLICIES (2)' RESOLUTION NO. 13-84
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:
• Cash solvency - ability to pay bills
• Budgetary solvency - ability to balance the budget
• Long -run solvency - ability to pay future costs
• 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
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C.
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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.
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.
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.
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.
3.
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.
Yield
This is the dollar earnings an investment instrument can provide, and
sometimes is described as the rate of return.
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' 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 I 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
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 I by the City Council.
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Types of modifications can he categorized as follows:
• Unanticipated revenue, which was not projected in the budget, maybe 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.
H. 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 I 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 I the annual overlay and slurry program.
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t • Fluctuating federal grants should not be used to fund ongoing programs.
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-term, 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 be 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.
1. 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.
2. Equipment Replacement Allocation
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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.
3. 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.
' 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
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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.
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General Provisions
A. 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.
B. 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.
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.
C. Purposes for Which Debt May Be Issued ,
1. Long-term Borrowing
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' Long-term borrowing may be used to finance the acquisition or
improvement of land, facilities, or equipment for which it is appropriate to
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.
1. 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 be 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.
' 2. 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,
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and that each newly issued financing will obligate the City to a series of I 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. Derivative
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
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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 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.
L 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.
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IV. ANNUAL AUDIT POLICY
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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
annual audit, a firm of Certified Public Accountants will complete the audit for the fiscal
year ending June 30.
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 '
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• Account Groups - General Fixed Assets and General Long -Term Debt
C. Goverumental Funds
Governmental Funds are used to account for the City's expendable financial
resources and related current liabilities, except for those accounted for in
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
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services to departments within the City. Costs of materials and services used I are accumulated in these funds and are charged to the user departments as
such goods are delivered or services rendered.
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.
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' • 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.
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.
V1. 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 10th day of December 2013.
ATTEST:
DATE: /- 7?—
/ V
STATE OF CALIFORNIA ) '
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA)
I, Armine 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: Kellar, Boydston, McLean, Ferry, Weste
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
IM
IWERDAIffTY C Eli