Teresa Rotschafer Finance Director City of Johnston July 14, 2014

 Economic Issues  State Law  Outside Agencies  Federal Law  Budget  Valuations  Funds  Debt  Capital Projects

 Global  United States  State  Local

 Global Economy  Business in your community  Foreign Markets  Cost of doing your business  Cost of Oil, Metals, Building Materials

 US Economy  Federal Laws and Mandates  How many of you know someone that is or has been in Iraq or Afghanistan?  Affordable Care Act  IRS Rulings  Fed Bank  S.E.C.  Grants and Endowments

ä State Economy ä State Laws and Mandates ä 2013 Legislative Impact ä Revenue Sharing ä Grants and Endowments

ä Local Economy ä Employment ä Affluence ä Crime ä Education ä Other Local Governments

National Security Boston Marathon School Shootings Mother Nature FEMA FLOODING TORNADOES WIND EVENTS BLIZZARDS

 Those taxing agencies within any given community- city, school, county, assessors, community college, extension, state which service the citizens of that community.  City  School  County  Community College  City/County Assessor  Extension  State  DNR  DOT  DOM  State Auditor’s Office

 GASB-Government Accounting Standards Board  CFC-City Finance Committee  411/IPERS  Worker’s Compensation  Homeland Security/National Guard  EOC and Township Trustees  Non Profit and Not for Profits  United Way or Community Chest  Churches and Charitable Organizations

 Council/Legislature  Citizens  Other staff  Employees

 Tell us something we REALLY need to know

 BACK TO CHEMISTRY….  General Fund  Special Revenue Fund  Fund Transfers  Permanent Funds  Debt Service Funds  Capital Projects Funds  Enterprise Funds

 Cash Basis Vs GAAP  Chart of Accounts  Standardization Is Very Critical  Financial Reporting  To Council, Citizens, other governments and Bond Buyers  GASB 34, 44 and 45  Budget and Reports

 ASSESSED VALUE-Value given to property by the City/County Assessor  TAXABLE VALUE-Value available for taxation by various taxing agencies.  How is the taxable value determined?  Assessed value minus any rollback applied to that class of property.  Residential, Commercial, Industrial, AgLand  Other influences: Multi family, condominium  What about those tax exempt properties? What role do they play in this?

 Planning-A Business Plan  Control  Monitoring/Reporting  Amending

 Budget Certification  The formal filing of an approved budget to the Department of Revenue and Finance and the County Auditor’s office.  Public Hearing Notice  A prescribed form which must be completed and published (or posted) no less than 10 and no more than 20 days before the budget public hearing. Each city must conduct a public hearing before the budget or amendment can be approved.

 Using the information on Slide 18, how would you fill in the form as required by the State of Iowa? 

 Taxes  Any general or special tax levied against persons, property or business for public purposes as provided by law, but shall not include any special assessments.  $8.10 levy limit  The limit imposed by state statue for the general fund levy. $8.10/$1,000 of TAXABLE value.

 Other taxes  Employee Benefits Emergency  Insurance Hotel/Motel tax  Local Option Tax 

 Per Capita  A calculation based upon population. Example, Road Use Tax allocation. WARNING: All allocations are not equal…

 User Fees or service charges  Water and sewer rental charges which generate enough revenue to run the activity.  How does the Council determine what the user fees should be?  Rents and Royalties  Rents paid only by those using the service. Example, renting City hall or park rental fees.  Revenue Bonds  Bonds supported by user fees, usually from a proprietary activity such as water user fees or sewer rent.

 General Fund  Chief operating fund of the city – used to account for & report all financial resources not accounted for or reported in another fund.  Capital Project Funds -  Used to account for & report financial resources restricted, committed or assigned for capital outlays, construction of capital facilities and other capital assets.

 Special Revenue Funds  Funds that have special restrictions. For example, Road Use Tax (RUT) or grants.  Proprietary Funds  Enterprise fund accounts for a city’s acquisition, operation and maintenance of facilities and services which are all or mostly self supporting by user fees.  Debt Service  Fund or funds used to account for funding and payment of interest and principal of general obligation and special assessment debt of the City. (Sec 384.4)

 Permanent Fund –  Used to account for resources that are legally restricted so that only the earnings, and not the principal, may be used to support a governmental operation.  Fund Transfers –  Cities often make transfers between funds in order to accurately portray their expenditures.

 Treasurer Report  Cash on Hand/In Bank and Investments  Receivables (how much has been billed out but not received—good idea even on cash basis  Unappropriated Surplus  Budget Report  By function: Police, Fire, Library  By Program: Public Safety, Public Works  Balance Remaining

 Cash Flow  Timing of Revenues  Timing for Expenditures  Checks-ACHs-Wires  Banking services  Investments  Safety  Liquidity  Rate of Return  Fraud

 What are idle Funds?  Cash on hand (in checking or savings account) not currently needed for expenses.  What is Cash Float?  The balance in an account which has been pledged (a check written) but not yet needed (the check has not been presented to a bank for payment.  What is Cash Flow?  Cash flow is the activity of revenues and expenditures though out any given period.

 By Fund  By Date  By Type  Revenue  Taxes vs fees vs state shared  Expenditures  By Program  By Department  By Cycle  By Bank Account  Electronic Banking  ACH-Automated Clearing House used for debits and credits against another account.  Wires-same day debits or credits on another bank  Sweep Accounts-account which is cleaned out at 2:30 and returned the next day in order to earn one day’s interest  All of the Above

 Liquidity  The availability of funds from an account or conversion of an investment to secure cash.  What kind of money are you investing?  Co-mingled Funds: A mixture of fund balances used to create a larger balance without loosing identity of ownership.  Pro Rated Interest: The allocation interest earned on an investment or interest bearing account which is made up of various funds. This allocation is usually based upon ownership of balance.

 Interest on Checking  Negotiate banking services  Timing the length of your investment  Banking Calendars  Cash flow charts  Discussions with Departments/Contractors  Gantt Chart: A chart to show a schedule for a project.  Other information-electronic banking and Treasurer of State Website   Flexible CDs

 How to determine liquidity: Look at the lowest balance over the last two years + Add the smallest amount of monthly revenue  Subtract the highest monthly expense Presto: $6,000-$1, = $5,100.

 Using slides 36 and 38 determine the liquidity of this community.  Answer:  Lowest balance  Smallest amount of monthly revenue  Highest monthly expense  $159,041+$18,808-$168,754 = $9,095

 Historical information-Get the big picture before you look at the pieces  Discussions with Departments/Contractors  Discussions with Banker/Treasurer  Engineers, Architects, Financial Advisors

 Other forms of spreadsheets  Software as simple as MS Money or Quicken  Complex packages  Trace your cash and investments  Help you forecast cash needs  Patterns  Know when you get what and when you’ll spend $$

 Safety of Principal  Safety of Assets  Fraud Prevention

 What kinds of fraud or theft are we looking for?  The obvious?  Someone walking out the door with cash?  Someone disconnecting the water meter to water the lawn?  Investing in “a sure thing”?  “Investing in our own Community” Buyer beware. Do your homework.

 Are you loosing too many tools?  What happened to all that copy paper, city gas?  Is someone using city equipment for personal purposes?  Are purchases done thru competitive bidding? Or are you paying the price no matter what? How do you know if it is too high?

 People are assets (Intellectual Assets)  Employees are people too  Do you have safety training?  Driver>>>Confined spaces>>>Ergonomics  Fire/Property Losses---Insurance?  Flood Plan  What will you do if a Pandemic hits your community?

 A salesman calls to confirm an order for soap. You didn’t order it. He says Bob ordered it but since he is on vacation, you have to accept it. You’re not sure. He agrees to give you a free CD player for accepting this before the end of the month-- he really needs to complete his sales for the month. Since Bob ordered the soap, anyway, what does it hurt?

 Purchasing Policies  When to purchase  How much to purchase  How to purchase  Capitalization Policies  Projects  Equipment/Buildings

 POLICY-POLICY-POLICY  Equipment  Projects  Buildings  Infrastructure

 POLICY-POLICY-POLICY  General Obligation  Revenue Bonds  Leases-Operating vs Capital  Tax Increment Financing (TIF)  Registrars

 Insurance Policies  28E Agreements  Contracts-Performance Bonds  Worker’s Compensation Policies  Safety Programs

 Annual Debt Report – State Treasurer’s Office (on line)  Road Use Tax Report - Department of Transportation(on line)  Annual Financial Report –State Auditor’s Office (can get e-report from DOM)  T.I.F. Reports – DOM

 It’s not a dirty word (there are 5 letters)  Municipal Oversight Law  Helps your understanding  Helps your credibility  Good references

 Iowa League of Cities Web Site  Calendar of Events  2013 New Laws of Interest to Cities  FAQ – Municipal Oversight Law 

 Lots of pieces  Lots of questions  Lots of responsibility  Lots of help

 City Attorney  Bond Counsel  Other city staff  Local Bankers  ISU  Iowa League of Cities  Mentor Program  Department of Management  State Auditor’s Office  State Treasurer’s Office  Department of Natural Resources  City Finance Committee  IMFOA and GFOA  Each other-call, network, share  Me

TERESA ROTSCHAFER FINANCE DIRECTOR CITY OF JOHNSTON (515)