Finance Committee Agenda and Packet 2020 12 15

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SUBJECT: FINANCIAL POLICIES DATE: DECEMBER 15, 2020 PAGE 3 OF 3 Revenue Policies • States that the City will value diversification, stabilization, and equity within its revenue structure. • Formalizes the intent to fund all recurring expenditures with recurring revenue and that non -recurring revenue should be used to fund only non -recurring, one-time expenditures. • States that the City Council will review all fees every year during the budget process and sets broad guidelines for setting user fees and charges. Operating Budget Policies • Defines the City's Budgetary Basis of accounting. • Formalizes the City's legal level of budgetary control at the fund level. In other words, expenditures do not legally exceed appropriations until they do so at the fund level, as opposed to at the department or line item level. Therefore, budget amendments are not legally necessary until appropriations at the fund level are being exceeded. • Defines "balanced budget" and states the City's intent to also have a structurally balance budget (annual recurring revenue will be projected to equal or exceed annual recurring expenditures for each fund). • Requires a Capital Improvement Plan and a Long -Term Financial Plan to be presented at the time of budget development. Investment Policies • Sets safety, liquidity, and yield objectives. • Defines legal investments. • Defines standards of care and performance. Capital Asset Management Policies • Broadly defines the Capital Improvement Plan (C-I-P) process. • Defines and requires a "balanced" C-I-P. • States the City's intent to preserve existing infrastructure before allocating resources to new capital projects. Accounting, Auditing, and Financial Reporting Policies • Officially designates the City's Finance Committee as the City's Audit Committee. • Discusses the City's internal control structure and the Committee of Sponsoring Organizations of the Treadway Commission on Fraudulent Financial Reporting (COSO) framework. • Sets the City's capitalization threshold. The capitalization threshold for each individual item is currently $10,000. • Sets criteria for uncollectable receivables and grants certain authorizations to the Finance Committee, City Manager, and Finance Director regarding "write-offs" of bad debt. CITY COUNCIL COMMUNICATION 16