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HomeMy WebLinkAboutSECTION 2-BUDGET PROCESS 2003 Final Budaet SECTION II: BUDGET PROCESS City of Auburn Budget Process Program Improvements Final Work Program Council/Mayor Goal Setting Preliminary Work Program Department Budget Process Preliminary Budget Budget Message Budget Initiatives Final Budget Baseline Budget Page 21 Final City Goals Financial Analysis Budaet Process Budget Policies 2003 Final Budaet 2003 Budget Calendar JULY 29 AUGUST 2 23 23 Aug. 29- Sept. 2 Aug. 26- Sept. 6 SEPTEMBER 16 3rd-23rd 14 30 OCTOBER Oct. 21 - Oct. 28 Finance pre-budget meeting with Mayor Budget packages distributed to department directors Department Directors return to the Finance Department completed line item budget requests, departmental 2002 accomplishments and 2003 goals Finance prepares preliminary revenue forecasts Notice of initial budget hearing Department directors review departmental budgets and goals with Mayor and Finance Director Initial public budget hearing #1 Budget requests reviewed by Council Committees Finalize revenue forecast and property tax levy Finance department adjusts budget requests based on the Mayor's recommendation Notice of filing preliminary budget and notice of public hearings to fix final budget (Published once a week for two consecutive weeks) Page 22 OCTOBER 25 31 NOVEMBER Nov 4 4 13 DECEMBER 2 Budaet Process Preliminary budget, including budget message, published and filed with the City Clerk and made available to the public. Distribute copies to the City Council. Council Retreat Formal public hearing #2 on final budget and property tax levy. Presentation of revenue estimates and property taxes. (RCW 84.52.020 & 84.52.070) (RCW 84.55.120) Property tax levy set by Ordinance (Pierce and King counties) Council work session to present the Mayor's 2003 budget recommendations 4:00-6:00 Adoption of budget by Ordinance 2003 Final Budaet A. Budget Purpose The City of Auburn's budget seeks to achieve four basic purposes: 1. A policy tool: The City's budget process is conducted in a manner, which allows the City's policy officials to comprehensively review the direction of the City and to redirect its activities by means of the allocation of financial resources. On this basis, the budget sets policies for the following year (see Section III). This budget also facilitates the evaluation of City programs by providing a means to examine both the financial activities and the progress towards yearly performance objectives of City departments over time. 2. An operations guide: This budget provides financial control by setting forth both legislative and administrative guidance to City employees regarding the character and scope of their activities. This direction is set forth in both summary and detail form in the various products of the budget process (see Section II). 3. A financial plan: This budget outlines the manner in which the financial resources of the City will be managed during the budget process. This allocation of resources is based on both the current year's needs and on a longer-term view of the development of City programs. The budget takes into account unforeseen contingencies and provides for periodic adjustments (see Section IV). 4. As a communications medium: The budget provides comprehensive management regarding both the character and scope of City activities. A budget cannot be effective unless it communicates. Since this budget has a diverse audience, it seeks to communicate at several levels and for several purposes. The budget seeks to communicate clear policy at a usable level of detail to City employees. It also seeks to communicate significant policy issues and options in a form that can be acted on by policy officials, and to communicate the Page 23 Budaet Process plans of the City to its constituents in an opportunity to provide meaningful comments to the elected officials. B. Budget Process The City of Auburn's budget process meets these purposes by integrating the planning and implementation of City programs with the allocation of financial resources necessary to support those services. The budget process starts in early spring with a retreat for the City Council and the Mayor meeting to review the Visions for the Future, Mission Statement and the previous year's goals. At that retreat, Council and Mayor discuss such issues as staffing, emerging topics and program priorities. Then, during the summer of each year, departments develop their budgets and work plans that are described in the department description for the following year (which is the calendar year). These work plans include capital projects scheduled for construction in the Capital Facilities Plan (CFP). Generally, most departments use a "bottom-up" approach to budgeting, with divisions or other administrative units developing their work objectives along with identifying their fiscal requirements. These divisional budgets are then modified for integration into a department level work program and budget proposal. Departments consult during this period with various Council committees while they are formulating their next year's work programs and performance objectives. This consultation may be either formal or informal and is intended to anticipate the Council's desires as the work programs and the supporting budget proposals are developed. In late summer, these tentative budget proposals are submitted to the Mayor. At the same time the budget proposals are submitted to the Mayor, the Finance Department develops a tentative revenue projection for the following budget year. A complete proposed budget is presented to the Mayor by the end of September. The budget and work programs are reviewed by the Mayor and Finance Director in detail with each department head. On the basis 2003 Final Budaet of this process, the Mayor formulates his recommended budget for the following year. In September, the City Council holds a public hearing to solicit comments from the general public, regarding issues the City should be considering during its review of the budget. This hearing is held early in the process in order to afford the public an opportunity to comment before the budget takes a formal shape. At the same time the Mayor is reviewing the department proposals, the departments present their budget proposals in detail to the appropriate committee of the Council. The Mayor's recommendations for the next fiscal year are formally transmitted to the Council in the form of the Preliminary Budget during the month of October. During late October and early November, the Council holds a formal hearing on the preliminary budget and conducts a series of workshops to examine the budget in detail. The Council conducts a preliminary budget hearing before acting formally on the budget as modified during its workshop hearings. Final action on the budget usually occurs in early December. The entire process is coordinated, as needed, in regular meetings of the City department heads, chaired by the Mayor. Various Council committees are consulted continually through the year as potential issues surface and new program ideas incubate. c. Budget Structure The budget process results in various budget products at appropriate stages of the process. 1. Budget and Accounting System: The "official" budget is maintained, both before and after adoption, on the City's financial management and accounting system at a very detailed "line item" level. Computerized reports can be generated at any time and at any level of detail. Departments' can also access these budgets at any time on a read- only "inquiry" basis to see where they stand. This computerized budget becomes the accounting system, which controls expenditures after adoption of the final budget. Page 24 Budaet Process 2. Preliminary Budget: The Preliminary Budget is prepared, pursuant to State law, as the Mayor's budget recommendations to the City Council. This public document contains a summary of information at the fund level. and for the General Fund at the department level. It focuses on key policy issues, while still providing a comprehensive overview of the complete budget. Detailed information is made available upon request from the full computerized budget. 3. Budget Ordinance: The actual appropriations implementing the budget are contained in the budget ordinance adopted by the City Council. 4. Final Budget: The Final Budget is issued as a formal published document, in the same format as the preliminary budget, but as modified by the City Council. It is this document, which is formally filed as the Final Budget. 5. Operating Budget: The operating budget is produced in notebook form and presents the adopted budget in more detail. It includes detailed information at the cost center level for all funds. It is not accepted into permanent record until the accounts of the previous year's financial activity are completed since incorporating such actual expenditures creates a more usable document as a permanent record. 6. Work Programs: While the budget proposals of the administration are developed in concert with the fiscal proposals in the budget, the budget documents themselves only summarize the individual work programs and performance objectives. The actual work programs are in a goal and performance objective format maintained by each department. Generally, these work programs are not finalized until the budget is in final form since the budget will determine the actual activities undertaken by each department. Finalized departmental work programs include timetables and deadlines for implementing budgeted performance goals and activities. 2003 Final Budaet D. Components of the Budget The budget consists of two parts: baseline budget and program improvements. 1. Baseline Budget: The baseline budget consists of budget proposals, which would be sufficient to maintain the operation of programs, which had been previously authorized, in earlier budgets. 2. Program Improvements: Program improvements consist of new initiatives or substantial changes to existing programs. Separation of the budget into these two components separates key policy issues in order to facilitate their consideration. The policy officials can examine more readily at what level existing programs should be funded, what budget initiatives should be made and at what level of funding. The operating budget will consolidate the program improvements into the appropriate line items. E. Capital Planning In 1998, the City Council approved a new Capital Facilities Plan (CFP) for capital facility planning and programming. The CFP, adopted as an element of the City Comprehensive Plan, provides the City's plans to finance the capital facilities that will be needed during the next 20 years. The plan includes both long-range strategy and a specific six-year action plan of improvements. The CFP is maintained and reports are published separately from the budget. An updated CFP for the period 2003 through 2008 is currently in progress and is scheduled for adoption in early 2003. The Capital Program Summary section of this budget includes the projects within that six-year plan appropriate for funding during 2003. Also included in that section is the capital financing policies and additional financial information pertaining specifically to capital. Page 25 Budaet Process F. Implementation, Monitoring and Amendment The budget and its policies are implemented through the work programs of the individual departments and the accounting controls of the Finance Department. Progress in the implementation of the budget program is monitored by a monthly reporting system consisting of monthly reports to the Mayor from the department heads on the progress of departmental work programs and performance goals. The reports are then summarized into a monthly report by the Mayor to Council. In addition, each department prepares detailed semi-annual and annual reports on their total work program and performance goals. Implementation of the budget is further monitored by the oversight activities of the various City Council committees, which meet twice monthly to not only consider proposals before the City Council. but also to review the activities of the various City departments. Both the report function of the Finance Department and the oversight function of the Finance Committee of the Council include the status of the fiscal management policies of the budget. The financial aspects of the budget are monitored in periodic reports issued by the Finance Department comparing actual expenditures and revenues with the budget. In these reports, financial data is presented in the same level of detail as the final budget. These reports include an analysis of the City's financial condition. From time to time it becomes necessary to modify the adopted budget. The procedure for amending the budget depends upon the type of change that is needed. One type of change does not affect the "bottom line" total for a department or a fund. These changes, mainly transfers from one line-item to another within a department's operating budget or changes between divisions within a department, may be effected by the Mayor and the Finance Director with written request from the department director. The second type of budget amendment brings about a change in the total appropriations for a department or fund. Examples of these changes include but are not 2003 Final Budaet limited to the following: the acceptance of additional grant money, an adjustment to reflect increased revenues such as tax receipts, the appropriation of additional funding if expenditures are projected to exceed budgeted amounts, and re-appropriation of monies from one fund to another when deemed necessary. These changes require council approval in the form of an ordinance. The status of the budget is Page 26 Budaet Process comprehensively reviewed twice yearly to identify any needed adjustments. The budget may be modified at other intervals during the year if programs require unforeseen changes that were not anticipated during the comprehensive review periods. All requests for amendments are first filed with the Finance Department.