1. BUDGET 101

2. Learning Objectives Better understand the budget process Become familiar with the roles of staff, the City Manager, and City Council

3. Budget A plan for the acquisition and allocation of resources to accomplish specified purposes.

4. Why? State Code says so…….. Code Section 15.2-2503 –All officers and heads of departments, offices, divisions, boards, commissions, and agencies of every locality shall, on or before the first day of April of each year, prepare and submit to the governing body an estimate of the amount of money needed during the ensuing fiscal year for his department, office, division, board, commission or agency. –The governing body shall approve the budget and fix a tax rate for the budget year no later than the date on which the fiscal year begins. The governing body shall annually publish the approved budget on the locality's website, if any, or shall otherwise make the approved budget available in hard copy as needed to citizens for inspection.

5. Financial Policies Fund Balance Debt Management Budget Investment

6. Debt Policy General Information City is rated AA by the three bond rating agencies (Moody’s, Standard & Poor’s, and Fitch) Top rating is AAA City has maintained a AA credit rating for over 30 years Latest credit reports can be found on the City’s website under Financial Services, Office of the Director

7. Debt Policy General Fund Debt Service shall not exceed 10% of Expenditures (General Fund + Schools) FY 2009 $13.4 million (5.9%)

8. Budget Policy General Fund Recurring expenditures should equal recurring revenues No drawdown on Fund Balance for recurring expenses $1.2 million Reserve for Contingencies

9. Investment Policy General Information All idle funds are invested Legal investments governed by State Code Do not invest in stock market All investments are collateralized in accordance with the Virginia Security for Public Deposits Act

10. Financial Policies violated for FY 2010 Proposed Budget Fund Balance is only 9.6% Reserve for Contingency is $1 million not $1.2 million Pay-as-you-go Capital should be at least 10% of CIP would require $15.3 million only proposed $4.1 million

11. Example Budget Personnel Services Budget –Personnel changes and additions Preparing the Budget Request –How to forecast expenditures –How to forecast revenues –New Initiatives and Positions Form Organization Chart The importance of entering expenditures and revenues in the AS400 Budget Module Finalizing the Budget Request Reviewing Draft Proposed and Adopted Budgets posted to the intranet

12. Budget Calendar Fiscal Year: July 1 – June 30 –July 1, 2008 to June 30, 2009 = FY 2009 (see handout) Capital Improvement Program –Begins in August, considered by City Council in January, adopted in May Operating and Capital Improvement Program Budget –Operating Budget season: October – May Instructions to adoption –Work on the Operating Budget and Capital Improvement Program occurs concurrently from October – February

13. Where $s Come From Top 10 Revenues for General Fund –Real Estate Taxes - $51.2 million –Personal Property Taxes - $17.9 million ($12.4 + $5.5 million) –Local Sales Tax - $12.5 million –Meals Tax - $10.5 million –Business License Tax - $6.9 million –Consumer Utility Tax Electric - $3.8 million –Communications Sales and Use Tax - $3.5 million –Lodging Tax - $1.7 million –Ambulance Service Fees - $1.6 million –Motor Vehicle Licenses - $1.4 million Revenues from State and Federal Government Total Revenues Proposed FY 2010: $154,201,794 –Top 10 make up 71.9% of Total Revenue

15. Where Do the $s Go? Top 5 Big Spenders –Schools - $32.4 million –Juvenile and Social Services - $17.4 million –Police - $14.5 million (including E-911 and Animal Warden) –Fire - $14.8 million –Public Works - $13.7 million Total Expenditures Proposed FY 2010: $154,201,794 Top 5 make up 60.2% of Total Expenditures

17. How Budget Gets Balanced Do you want the truth or do you want to believe it’s magic? Okay, the truth…….. Gets balanced twice By City Manager By City Council

18. Normal Balancing City Manager, Deputy City Manager, and Director of Finance plus Budget staff read every department submission…line by line A list is made of every new initiative and new position requested Every line is looked at for historical trends

19. Normal Balancing Continued Revenues are projected…takes a village Expenses are totaled by department Add 4% of payroll for raises Becomes the “Gap” Reduce raises to 2% and pray New initiatives and new positions are the first to go unless there is a great NEED Vehicle Replacements get scrutinized next

20. Normal Balancing - There’s More Review School’s Budget Look at Managed Vacancy history Review Revenues - Again Review Benefit Costs - Again Tweak until balanced City Manager has final say - It’s his proposed document!

21. FY 2010 Balancing City Manager, Deputy City Manager, and Director of Finance plus Budget staff read every department submission…line by line A list is made of every new initiative and new position requested Every line is looked at for historical trends

22. FY 2010 Balancing Continued Revenues are projected…takes a village Expenses are totaled by department Can not even think about a raise Take out all new initiatives – only were to be submitted if mandated or public safety issue Take out all Vehicle Replacements Did not have the School’s Proposed Budget – only asked to hold funding flat

23. FY 2010 Balancing - There’s More Cut Managed Vacancy in half because of hiring freeze and holding vacant positions open Review Benefit Costs – Again – Yipee! because of wellness program – project City cost to decrease Still out of balance because FY 2009 is projected to end in the hole City Manager decides we must cut salaries through next year Feel defeated – Kim, Bonnie, and Budget Staff

25. Proposed to Adopted City Manager’s Proposed Budget goes to Council Public Hearing Council makes list of things to add and take out The Great Debate in weekly Work Sessions Council Vote – requires a majority and must be read and approved twice (in May meetings)

26. Making Changes to the Adopted Budget Budget Amendments Third Quarter Carry forward Appropriations

27. What Budget Expects of Departments Review budget to actual Monitor overtime and wage funds Even if there is no budget in the base and detail code, code expenditures to the correct account numbers to assist with budget preparation next year. Remember every dollar you spend belongs to someone else….. Be a good steward!

28. What is my Responsibility Am I working 8 hours for 8 hours of pay? Can I do my job more effectively or efficiently? Do I consider every dollar I spend like it was my own? Am I doing everything I can to be safe and promote a safe workplace? Do I think about every dollar of health insurance I spend as if it were my own? Do I understand the budget of my department? Am I really responsible?

30. Questions????