HomeMy WebLinkAboutRES 20-238RESOLUTION NO. 20-238
BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF BEAUMONT:
THAT the City of Beaumont Financial Management Policy, substantially in the
form attached hereto as Exhibit "A," is hereby in all things adopted.
The meeting at which this resolution was approved was in all things conducted in
strict compliance with the Texas Open Meetings Act, Texas Government Code, Chapter
551.
PASSED BY THE CITY COUNCIL of the City of Beaumont this the 27th day of
October, 2020.
I/Ial1Nod,
am
CITY OF BEAUMONT
FINANCIAL MANAGEMENT POLICY
ADOPTED
RESOLUTION NO.
EXHIBIT "A"
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Table of Contents
Summary..............................................................................................................................I
I
Accounting, Auditing, and Financial Reporting ................................................
4
II
Financial Consultants....................................................................................... 6
III
Budgeting and Long-range Financial Planning ................................................ 8
IVRevenues
.........................................................................................................
II
V
Operating Expenditures..................................................................................14
VI
Fund Balance/Working Capital......................................................................16
VII
Capital Expenditures and Improvements........................................................19
VIIIDebt
Management..........................................................................................
22
H
Cash Management and Investments...............................................................
26
XGrants
.............................................................................................................28
XI
Intergovernmental Relations.......................................................................
31
XII
Internal Controls............................................................................................
32
XIII
Economic Development..................................................................................
34
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City of Beaumont
Financial Policies & Procedures
Adopted on: 10/27/2020
Summary
The City of Beaumont (City) is responsible for safeguarding and prudently managing public finds,
which includes planning for and providing adequate funding and resources to deliver the needed
and desired municipal services to the community. To establish and document a policy framework
for effective fiscal decision -malting, planning, and management, the City shall establish and
maintain a comprehensive Financial Management Policy. This policy shall incorporate sound
financial management practices and shall demonstrate compliance with the associated federal,
state, and local statutes and other legal documents and mandates.
The Financial Management Policy shall be reviewed annually and updated or revised, asnecessary.
Updates and changes to the policies contained herein shall be presented to the City Council for
approval.
This Financial Management Policy shall apply to all finds maintained by the City unless otherwise
specified herein. These funds include:
Goi,erninental Fund Types
• General Fund - The general fund is the City's primary operating fund and shall be
used to account for and report all financial resources not accounted for and reported
in another fund. The general find shall be used to finance the basic operations of the
City.
• Special Revenue Funds - The City shall maintain special revenue funds to account
for and report the proceeds of specific revenue sources that are restricted or
committed for specified purposes other than debt service or capital projects.
• Debt Service Fund - The debt service fund shall be used to account for and report the
accumulation of resources that are restricted, committed, or assigned for payment of
principal and interest on the City's general long-term debt.
• Capital Pro iects Funds - The City shall maintain capital projects funds to account for
and report financial resources that are restricted, committed, or assigned for capital
outlay (e.g., bond funds).
Proprietmy Fund Types
• Enterprise Fund- The City shall maintain separate utility finds to account for and
report the operations of water and sewer services, and solid waste (refuse) collection
services within the City, including the annual funding of enterprise fund debt service
requirements.
City of Beaumont
Financial Policies & Procedures
Adopted on: 10/27/2020
The purpose of these policies is to ensure that financial resources are available to meet the present
and future needs of the City and its citizens. Specifically, the policy framework contained herein
mandates the pursuit of the following fiscal objectives:
I. Accounting, Auditing, and Financial Reporting: The City shall implement and maintain
accounting practices that conform to generally accepted accounting principles and comply
with prevailing federal, state, and local statutes and regulations. The City shall present
regular reports that analyze, evaluate, and forecast the City's financial performance and
economic condition. The City shall issue a Comprehensive Annual Financial Report no
later than six months following the end of the fiscal year.
II. Financial Consultants: The City shall employ the assistance of qualified financial advisors
and consultants, as needed, to assist in the administration and management ofthe City's
financial affairs, including audit services, debt administration, delinquent tax collections,
and financial modeling.
III. Budgeting and Long-range Financial Planning: The City shall establish budgeting
guidelines and shall employ a prudent fiscal strategy to provide forthe short-term and long-
term needs of the City through strategic management and preservation of its financial
resources.
IV. Revenues: The City shall establish, manage, and maintain a revenue system to assure a
reliable, equitable, and sufficient cash flow to support the desired level of City services and
fund balance.
V. Operating Expenditures: The City shall identify and prioritize services, determine
appropriate service levels, and monitor the expenditure of available resources to ensure
fiscal stability and the effective and efficient delivery of services.
Vl. Fund Balance/Working Capital: The City shall maintain the find balance and working
capital (retained earnings) of all operating funds at levels sufficient to protect the City's
creditworthiness as well as its financial position during emergencies or economic
fluctuations.
VII. Capital Expenditures and Improvements: The City shall annually review and monitor the
state of the City's capital assets, setting priorities for the addition, replacement, and
renovation of these assets based on needs, funding alternatives, and availability of
resources.
VIII. Debt Management: The City shall establish guidelines for debt financing to provide needed
land, long-term capital additions, and infrastructure improvements while minimizing the
impact of debt payments on current and future revenues.
IX. Cash Management and Investments: The City shall invest idle operating cash so as to
ensure the absolute safety of principal, to meet the liquidity needs of the City, and to
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Financial Policies & Procedures
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achieve the highest possible yield in accordance with state statute and the City's
Investment Policy.
X. Grants: The City shall seek, apply for, and effectively administer federal, state, and local
grants which support the City's current and future priorities and policy objectives.
XI. Intergovernmental Relations: The City shall coordinate efforts with other governmental
agencies to achieve common policy objectives, share the cost of providing government
services on an equitable basis, and support favorable legislation at the state and federal
levels.
XII. Internal Controls: The City shall establish and maintain a system of internal controls
designed to safeguard City assets, ensure the accuracy and reliability of accounting and
financial records, promote operational efficiency, and adhere to prescribed policies in
compliance with federal and state regulations and City ordinances and policies.
XIII. Economic Development. The City shall initiate, encourage, and participate in economic
development efforts to create job opportunities and strengthen the local economy and tax
base. The City shall account for all financial commitments made in connection with
economic incentives granted to developers.
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Accounting, Auditing, and Financial Reporting
The City shall implement and maintain accounting practices that conform to generally accepted
accounting principles and comply with prevailing federal, state, and local statutes and regulations.
The City shall present regular reports that analyze, evaluate and forecast the City's financial
performance and economic condition. The City shall issue a Comprehensive Annual Financial
Report no later than six months following the end of the fiscal year.
A. A cco tinting Practices andPrinciples
The City shall implement and maintain accounting practices that conform to Generally
Accepted Accounting Principles (GAAP) as set forth by the Governmental Accounting
Standards Board (GASB), the authoritative standard -setting body for state and local
governments. All City financial reports, including the comprehensive annual financial
report, official statements, and continuing disclosure reports shall comply with these
standards.
All governmental fiends shall use the modified accrual basis of accounting, which means that
revenues are recognized in the accounting period in which they become available and
measurable, while expenditures are recognized in the accounting period in which they are
incurred. Because the appropriated budget is used as the basis for control and comparison of
budgeted and actual amounts, the basis for preparing the budget is the same as the basis of
accounting. Exceptions under the modified accrual basis of accounting include:
• Grants, which are considered revenue when awarded, not received
• Principal and interest on long-term debt, which are recognized whenpaid
The City's proprietary fiends, which include the enterprise fiends, are accounted and
budgeted using the ftdl accrual basis of accounting. Under this method, revenues are
recognized when they are earned and measurable, while expenses are recognized when
they are incurred, regardless of timing or related cash flows. The basis for preparing the
budget is the same as the basis of accounting, except for principal payments on long-term
debt and capital outlay expenses, which are treated as budgeted expenses.
B. Financial Reports and Fiscal Monitoring
Monthly financial reports shall be prepared and distributed to the City Council, Mayor,
City Manager, City Secretary, and the department directors. These financial reports shall be
useful for analyzing, evaluating, and forecasting the City's financial performance and
economic position. Additionally, the reports shall be used to evaluate key areas of
performance and to develop any remedial actions necessary to maintain the City's financial
position.
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Financial Policies & Procedures
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C. Annual Audit
Pursuant to state statute, the City shall have its records and accounts audited annually and
shall prepare an annual financial statement and report. The audit shall be performed by a
certified public accounting (CPA) firm licensed to practice in the State of Texas. The
annual financial statement and report, including the auditor's opinion, shall be part of an
official Comprehensive Annual Financial Report (CAFR) which shall be filed within 180
days after the last day of the City's fiscal year.
The audit firm shall provide a management letter to the City prior to the filing of the audit.
The audit firm shall also provide a Single Audit of federal and state grants, when necessary.
The City Manager shall be responsible for establishing a process to ensure timely
resolution of audit recommendations.
D. Annual Financial Disclosure
As required by the Securities and Exchange Commission (SEC) Rule 15c2-12, the City,
with the support of the financial advisor, shall annually provide certain financial
information and operating data to information repositories. This disclosure requirement
also applies to the filing of any periodic material event notices in compliance with Rule
15c2-12.
E. Escheating Checks
As required by state law, the City shall file the necessary reports on an annual basis to turn
over to the State Comptroller any checks in excess of $100 that have been outstanding for
more than the applicable abandonment period. This property is considered abandoned and
shall be delivered to the State Comptroller on or before July 1 of eachyear.
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11.
Financial Consultants
The City shall employ qualified financial advisors and consultants, as needed, to assist in the
administration and management of the City's financial affairs, including, but not limited to, audit
services, debt administration, delinquent tax collections, and financial impact modeling. The
principal factors in the selection of these advisors and consultants shall include technical expertise,
experience, ability to perform the services, and references.
A. Selection of Auditors
The City Council shall select an independent firm of certified public accountants to perform an
annual audit of the City's accounts and records and to render an opinion on the financial
statements of the City. It is the City's preference to rotate audit farms to ensure that the
City's financial statements are reviewed and audited from an objective, impartial, and
unbiased point of view. At least every four years, the City shall request proposals from
qualified firms and select a new firm.
Annually, the independent auditor will provide a letter of engagement to the City Council
for the fiscal year to be audited.
B. Arbitrage
The City is responsible for the arbitrage rebate calculation on each bond issue. The City
shall provide the necessary information and records to a qualified firm for completing these
calculations and preparing the required report filings. The City shall make timely payments
of any rebate amount owed to thefederal government.
Requests for qualifications shall be solicited at least every five years from firms qualified
to prepare arbitrage rebate calculations and reports.
C. Delinquent TaxCollection Attorney
Due to the specialized nature of these services, the City shall hire an experienced attorney
to collect delinquent property taxes. These services shall also include the filing of
bankruptcy claims, foreclosures on real property, and seizures of personal property. The
attorney shall provide legal representation for the City in court cases and property sales.
D. Bond Counsel
Bond counsel to the City shall provide an objective legal opinion concerning the issuance
of bonds and other debt instruments. Generally, bonds are not marketable without the
opinion of bond counsel indicating the bonds are valid and binding obligations of the City
and exempt from federal and state income taxes.
Due to the complexity of the City's financial structure and the benefits that come from a
history and knowledge of the City, the City maintains an ongoing relationship with the bond
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counsel for continuity. The engagement letter with bond counsel may be terminated at any
time upon written notice by eitherparty.
K Financial Advisory Services
The City issues various types of securities to finance its capital improvement program and shall
employ a financial advisor for these services. Debt issuance and restructuring requires a
comprehensive list of services associated with municipal transactions, including, but not limited
to, analysis of market conditions, size and structure of the issue, method of sale, preparation of
disclosure documents, evaluation of and advice on the pricing of securities, facilitation of rating
agency relations, and calculation of debt service schedules. The financial advisor shall provide
other financial advice and expertise, as needed.
Due to the complexity of the City's financial structure and the benefits that come from a
history and knowledge of the City, the City maintains an ongoing relationship with the
financial advisor for continuity. The City's agreement with the financial advisor is for a five-
year term and automatically renews on the fifth anniversary for an additional five years.
Either party may terminate the agreement at any time with thirty days written notice.
F. Depository Bank
Pursuant to state statute, the City may approve a depository services contract for a term up to
five years. The City typically establishes the contract for depository services for an initial
term of three years with the option to renew annually in each of the remaining two years. The
City shall select a depository through a formal bid process in order to provide the City with
the most comprehensive, flexible, and cost-effective banking services available.
G. Irwestinent Advisory Services
The City Council may from time to time employ qualified individuals or firms as an
Investment Advisor to assist the investment officer(s) in carrying out the investment program
and complying with the requirements of the City's Investment Policy and the Public Funds
Investment Act.
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City of Beaumont
Financial Policies & Procedures
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III.
Budgeting and Long-range Financial Planning
The City shall establish budgeting guidelines and shall employ a prudent fiscal strategy to provide
for the short-term and long-term needs of the City through strategic management and preservation
of its financial resources.
A. Balanced Budget
Budgeting is an essential element of the financial planning, control, and evaluation process
of the City. The operating budget represents the City's annual financial operating plan. It
includes all operating departments of the City. Annually, the City Manager shall file an
operating budget for the ensuing fiscal year in accordance with state and local statutes. This
budget shall adhere to the City's fiend balance policies.
A structurally balanced budget is defined as recurring revenues funding recurring
expenditures and adherence to fund balance policies. Therefore, the operating budget
should be balanced with current revenues, inclusive of beginning balances, greater than or
equal to current expenditures/expenses. Excess balances may be used for capital outlay or
other non -recurring expenditures. A structurally imbalanced budget shall be accompanied
by a plan to return the budget to structural balance, including a five-year financial forecast
that reflects steps to be taken to return the budget to structural balance. Short-term loans
shall be avoided as budget balancing techniques.
B. Current Funding Bctsis
The City shall budget and operate on a current funding basis with expenditures budgeted
and controlled so as not to exceed projected current revenues. Recurring expenditures shall
be funded exclusively with recurring revenues to facilitate operations on a current funding
basis.
C. Use of Non -recurring Revenues
Non -recurring revenue sources, such as one-time revenue remittances of fund balance in
excess of policy, can only be budgeted and used to fund non -recurring expenditures, such
as capital purchases or capital improvement projects. This will ensure that recurring
expenditures are not funded by non -recurring sources.
D. Ad Vcdorem Tctx Rate
The City Manager shall recommend an ad valorem (property) tax rate to enable the City to
operate the general fund efficiently and to find the required annual debt service payments.
City of Beaumont
Financial Policies & Procedures
Adopted on: 10/27/2020
E. Revenue Estimating forBudgeting
To protect the City from revenue shortfalls and to maintain a constant level of services, the
City shall use a conservative, objective, and analytical approach when preparing revenue
estimates. The process shall include an analysis of probable economic changes and the
estimated impact on revenues in conjunction with a review of historical revenue collection
rates and trends. This approach should reduce the likelihood of revenue shortfalls and
should help to avoid decreased service levels during theyear.
Sales tax is used to fund recurring operations, but sales tax revenue fluctuates with changes
in economic conditions. To mitigate the overall effects of these revenue fluctuations, the
City shall limit discretionary spending, exercise budget control, and generate conservative
revenue forecasts.
The water and wastewater, and solid waste revenues of the enterprise (utility) funds shall
be budgeted using an analysis of prior service levels, historical trends, and projected new
service requirements.
Whenever possible, the City will seek outside sources of revenue, such as federal, state,
and local grants, in order to leverage local dollars.
F. BudgetManagement
The City Manager shall administer the budget after it is formally adopted by City Council.
Department directors shall be responsible to manage spending so as not exceed the
department's total budget allocation.
G. Budget Amendment or Adjustment
Emergency situations, unforeseen circumstances, and revised cost estimates may require
amending the original budget. At the request of the City Manager, the City Council may
by ordinance transfer unencumbered appropriation balance from one fund to another or
increase total appropriations with the identified funding source.
Administratively, the City Manager may adjust the budget to reallocate existing
unencumbered appropriations among items of expenditure within a department. No City
Council action is necessary for these adjustments, as they do not change the budget total.
H. Operating Dejicits
The City shall take immediate corrective actions if at any time during the fiscal year
expenditure and revenue forecasts are such that an operating deficit is projected at year
end. Corrective actions may include any or all of the following:
• Deferral of capital purchases
• Expenditure reductions
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City of Beaumont
Financial Policies & Procedures
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• Hiring and/or salary freezes
• Reduction or elimination of wage increases
• Use of fiind balance
• Increased service and usage fees
• Staff reductions
Short-term loans shall be avoided as a means to balance the budget.
With City Council approval, excess fiend balance, as a one-time revenue source, may be
used to cover an annual operating deficit.
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IV.
Revenues
The City shall establish, manage, and maintain a revenue system to assure a reliable, equitable,
and sufficient cash flow to support the desired level of City services and fund balance.
A. Balance and Diversification in Revenue Sources
The City shall strive to maintain a stable and diversified revenue system to protect the City
from fluctuations in any single revenue source due to changes in local economic conditions,
for example, which may adversely impact the revenue source (e.g., sales tax revenue).
The City shall maintain balance in its revenue structure to ensure fairness and neutrality as
it relates to cost of service and willingness and ability to pay.
B. User Fees - General Fund
For services that benefit specific users, the City shall establish and collect fees to recover
the costs of these services. The City shall determine the appropriate level of cost recovery
and establish a fee schedule accordingly. Each fee shall be set and classified by the City
Council.
The City shall identify and evaluate direct and indirect costs to determine what is applicable
in calculating cost of service. The following may also be considerations when setting user
fees: current economic conditions, demand for services, impact on users, and competitive
pricing in the private sector, if applicable. While the City shall seek to recover full direct
and indirect costs, in some cases the City may deem it appropriate to set user fees at a level
that will result in partial or minimal cost recovery. The City shall review user fees on an
annual basis to calculate the level of cost recovery and determine if adjustments are
necessary orappropriate.
C. User Fees - Enterprise Funds
Utility rates and user fees shall be set at levels sufficient to fully cover direct and indirect
operating costs, meet debt obligations and all legal restrictions of applicable bond
covenants (e.g., debt service coverage), allow for planned pay-as-you-go finding for
capital improvements, and provide an adequate level of working capital.
Indirect costs shall include costs for overhead services provided and funded by the general
find; such as administration, finance, legal, information technology services, and other
costs as appropriate. These costs will be assessed to each utility based on a percentage of
sales revenues (gross receipts) as a payment in lieu of franchise fees. The percentage(s)
will be reviewed and set annually during the City's budget preparation process.
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Revenues collected for water and wastewater services, and solid waste collection services shall
remain in the respective enterprise funds. The City shall monitor monthly utility revenues to
project any revenue surplus or shortfall for the year.
The City shall not use general funds to subsidize enterprise funds.
D. Revenue Collections
The City shall enact collection policies that ensure revenues will materialize as
budgeted/forecast. The City shall follow an aggressive, consistent, yet reasonable approach
for revenue collection by pursuing delinquent and overdue accounts to the fullest extent
allowed by law.
The City shall levy a charge against any person malting a payment to the City by check,
credit card, or any automated or electronic means when such payment is returned to the
City and not paid. This charge shall apply to payments of any kind, including, but not
limited to, taxes, permits, fees, and utilities. The City shall establish this charge based on
the associated direct and indirect costs incurred by the City to recover and process the
monies owed to the City The charge shall not exceed the maximum allowed by state law.
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E, Write-off of Uncollectible Receivables - Utility and Other Accounts
The City may elect to turn any delinquent account over to a collection agency for further
attempts to collect the past due amount(s). The City shall write off utility accounts where
collection efforts have been exhausted or are no longer feasible or cost effective. Aged
receivables shall be considered for write-off when mail has been returned and all attempts
to acquire a valid forwarding address have failed or after accounts have been outstanding
for six months or more and all attempts to collect the past due amount(s) have been
exhausted.
The City shall consider any write-off of uncollected accounts as an accounting entry only
and does not release the debtor from any debt owed to the City. If an account becomes
collectible after having been written -off, the accounts receivable balance shall be reinstated
and payments applied to that balance. The CFO shall review the write-off of delinquent
utility and other accounts.
F. Non -recurring Revenues
One-time or non -recurring revenues shall not be used to finance current ongoing
operations. Non -recurring revenue sources, such as a one-time revenue remittance, may
only be used to fiend non -recurring expenditures, such as capital purchases or capital
improvement projects. Non -recurring revenues shall not be used to balance the budget.
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City of Beaumont
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V.
Operating Expenditures
The City shall identify and prioritize services, determine appropriate service levels, and monitor
the expenditure of available resources to ensure fiscal stability and the effective and efficient
delivery of services.
A. Current Funding Basis
The City shall budget and operate on a current funding basis with expenditures budgeted
and controlled so as not to exceed projected current revenues and/or planned use of fund
balance accumulated through prior year savings. Recurring expenditures shall be funded
exclusively with recurring revenues to facilitate operations on a current funding basis. Any
use of fund balance for expenditures shall be in accordance with the City's fund balance
policy incorporated in this Financial Management Policy.
B. Maintenance of Capital Assets
Within the resources available each fiscal year, the City shall maintain capital assets and
infrastructure at a sufficient level to protect the City 's investment, to minimize future
replacement and maintenance costs, and to maintain service levels.
C. Review ofProgranis andServices
The City shall conduct periodic reviews of programs and services to evaluate demand,
efficiency, and effectiveness. Programs and services determined to be inefficient and/or
ineffective shall be recommended through the annual budget process to be reduced in scope
or eliminated. Privatization and contracting with other governmental agencies or private
entities may be considered as alternative approaches to service delivery.
D. Purchasing
The City shall conduct its purchasing and procurement activities efficiently and effectively
and in compliance with all applicable state laws. The City shall strive to maximize
discounts and capitalize on savings through the use of competitive bidding, or when
competitive bidding is not required, shall seek to obtain the most favorable terms and
pricing.
Recommendations of bids, proposals, and contracts in excess of $50,000 shall be presented
to City Council for formal approval. In accordance with City Charter, change orders are
limited to 10% of the total contract amount. Change orders greater than $10,000 require
the same City Council approvals as the original contracts.
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City of Beaumont
Financial Policies & Procedures
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The City has also implemented a procurement card program to provide an efficient and
cost-effective alternative to the traditional purchasing process for materials, supplies, and
travel. Program details are contained in a separate Procurement Card Policy and Procedures
document adopted by City Council. Use of a procurement card does not replace or override
the City 's purchasing guidelines or state law. Misuse of a procurement card may be
considered misappropriation of City funds and may result in revocation of the card with or
without prior notice. The monthly statement of charges shall be reviewed by cardholders
and their respective assigned reconcilers/approvers and monitored by the Finance
Department forpolicy compliance.
All invoices approved for payment by the proper City authorities shall be paid within thirty
(30) Calendar days of receipt of goods or services or the invoice date, whichever is later, in
accordance with state law.
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City of Beaumont
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VI.
Fund Balance/Working Capital
The City shall maintain the fiend balance and working capital of its operating finds at levels
sufficient to protect the City's creditworthiness as well as its financial position during emergencies
or economic fluctuations. Unassigned fund balance is an important measure of economic stability.
It is essential that the City maintain adequate levels of unassigned fund balance to mitigate financial
risk that can occur from unforeseen revenue fluctuations, unanticipated expenditures, and similar
circumstances.
A. Definitions
Fund equity_is generally the difference between a fund's assets and its liabilities.
Fund balance is the fund equity of a governmental fund for which an accounting distinction
is made between the portions that are spendable and no spendable. In accordance with
GASB Statement No. 54, fiend balance is classified into five categories based on the
following distinctions, which depict the relative strength of the spending constraints placed
on the purposes for which the fiends may be used:
• Non -spendable fund balance includes the portion of net resources that cannot be
spent because of their form (e.g., inventory, long-term loans, or prepaids) or because
they must remain intact, such as the principal of anendowment.
• Restricted fiend balance includes the portion of net resources on which limitations
are imposed by creditors, grantors, contributors, or by laws or regulations of other
governments (i.e., externally imposed limitations). Amounts can bespent only forthe
specific purposes ,stipulated by external resource providers or as allowed by law
through constitutional provisions or enabling legislation. Examples include impact
fees and bond proceeds.
• Committed fund balance includes the portion of net resources upon which the City
Council has imposed limitations on use. Amounts can be used only for the specific
purposes determined by a formal action of the Council. Commitments may be
changed or lifted only by the Council taking the same formal action that originally
imposed the constraint. The formal action must be approved before the end of the
fiscal year in which the commitment will be reflected on the financial statements.
• Assigned fund balance includes the portion of net resources for which an intended
use has been established by the City Council or a Council official authorized to do so
by the City Council. Assignments of fiend balance are much less formal than
commitments and do not require formal action for their imposition or removal. In
governmental fiends other than the general fund, assigned find balance represents the
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amount that is not restricted or committed, which indicates that resources are, at a
minimum, intended to be used for the purpose of that fund.
Unassigned fund balance includes the amounts in the general fund in excess of what
can properly be classified in one of the other four categories of fund balance. It is the
residual classification of the general fund and includes all amounts not contained in
other classifications. Unassigned amounts are technically available for any purpose.
Negative residual amounts for all other governmental funds are reported in this
classification.
B. Committed Fund Balance
The City Council is the City's highest level of decision -making authority and the formal
action that is required to be taken to establish, modify, or rescind a fund balance
commitment is a resolution approved by the City Council at a public meeting. The
resolution must either be approved or rescinded, as applicable, prior to the last day of the
fiscal year for which the commitment is made. The amount subject to the constraint may
be determined in the subsequent period (i.e., the Council may approve the calculation or
formula for determining the amount to be committed).
C. Assigned Fund Balance
The City Council authorizes the City Manager or his designee as the City official
responsible for the assignment of fund balance to a specific purpose as approved by this
fund balance policy.
D. Minimum Unassigned Fund Balance
The City has established a target level of unassigned fund balance to alleviate revenue
shortfalls and /orunanticipated expenditures to ensure the orderly and continued provision
of services. The City shall strive to maintain an unassigned fund balance in the general
find equal to at least 20%, or 72 days, of normal recurring operating costs, based on the
current year's budgeted operating expenditures.
E. Replenishment of Minimum Unassigned Fund Balance Reserves
If unassigned find balance tin intentionally falls below 20% or if it is anticipated that at the
completion of any fiscal year the projected unassigned fund balance will be less than the
minimum requirement, the City Manager shall prepare and submit a plan to restore the
minimum required level as soon as economic conditions allow. The plan shall detail the
steps necessary for the replenishment of fund balance as well as an estimated timeline for
achieving such.
These steps may include, but are not limited to:
• Identifying new, nonrecurring, or alternative sources of revenue;
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Increasing existing revenues, charges, and/or fees;
Use of year end surpluses; and/or
Enacting cost -saving measures, such as holding capital purchases, reducing
departmental operating budgets, freezing vacant positions, and/or reducing the
workforce.
The replenishment of fund balance to the minimum level shall be accomplished within a
three-year period. If restoration of the reserve cannot be accomplished within such a period
without severe hardship to the City, then the Council shall establish an extended timeline
for attaining the minimum balance.
F. Order ofExpenditure of Funds
When multiple categories of fund balance are available for expenditure (e.g., aconstruction
project is being funded partly by a grant, funds set aside by the Council and unassigned
fund balance), the City will first spend the most restricted funds before moving down to
the next most restrictive category with available funds.
G. Working Capital of Enter prise OperatingFunds
In enterprise operating funds, the City shall maintain working capital sufficient to provide
reserves for emergencies and revenue shortfalls, specifically in the utility funds (water and
sewer, and solid waste). A cash operating reserve shall be established and maintained at a
minimum of 15% of the current year's budget appropriation foroperating expenses.
H. Appropriation of Unassigned Fund Balance and Working Capital Reserves
Unassigned fund balance and working capital reserves shall be used only for emergencies,
non -recurring expenditures/expenses, or major capital purchases that become necessary but
cannot be accommodated through current yearrevenues. Should such use reduce balances
below the established target levels, the City Manager shall provide restoration
recommendations that accompany the decision and request to utilize said balances within
the guidelines established in thispolicy.
Monitoring and Reporting
The Finance Department shall be responsible for monitoring and reporting the City's
reserve balances. The City Manager is directed to make recommendations to the Council
on the use of reserve funds, both as an element of the annual operating budget submission
and from time to time throughout the fiscal year as needs may arise.
Compliance with the provisions of the policy shall be reviewed as a part of the annual
operating budget adoption process, and subsequent review will be included in the annual
audit and financial statement preparation process.
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VII.
Capital Expenditures andImprovements
The City shall annually review and monitor the state of the City's capital assets, setting priorities
for the addition, replacement, and renovation of these assets based on needs, funding alternatives,
and availability of resources. This review shall be done during the annual budget process.
A. Capitalization Threshold for- Capital Assets
Capital items should be capitalized only if they:
• Are owned by the City
• Have an estimated useful life of at least two year following the date of acquisition
or significantly extend the useful life of the existing asset;
• Cannot be consumed, unduly altered, or materially reduced in value immediately by
use; and
• Have a cost of not less than $10,000 for property and equipment, $50,000 for
buildings and improvements, and $150,000 for infrastructure.
The capitalization threshold will be applied to individual items rather than to a group of
similar items acquired as a single lot (e.g., desks, chairs, etc.).
All costs associated with bringing an asset into working orderwill be capitalized as partof
the asset cost. This includes start-up costs, engineering, or consultant type fees that are
incurred once the decision to purchase the asset is made. The cost of land acquired includes
all related costs associated with its purchase.
Improvements will be capitalized when they extend the original life of an asset or when
they make the asset more valuable than it was originally. The replacement of asset
components will normally be expensed unless they are of a significant nature and meet all
ofthe capitalization criteria.
An item shall not be considered a capital asset if it requires regular replacement because of
rapid wear, a one-time use of the item will destroy it, or maintenance on an existing capital
asset merely returns the item to a functioning product, such as equipment repairs and clearing
of underground water and sewer lines.
B. Capital Improvement Plan
As part of the annual budget process, the City shall prepare a capital improvement plan (CIP)
based on the needs for capital improvements and equipment, including replacement and
renovation and potential new projects. Annual capital spending needs shall be
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considered within the scope of the long-range capital improvement plan, taking into
consideration pay-as-you-go financing, debt requirements, operating costs, etc.
Capital expenditures are generally defined as those to purchase and/or construct land,
buildings, improvements other than buildings, and infrastructure, including roads,
sidewalks, bridges, utility lines, etc., in order to provide services over a considerable period
of time. Capital costs typically consist of preliminary and final engineering and design and
construction, but may also include the acquisition of land or easements. For each project
identified in the plan, a project scope and justification shall be provided for review and
consideration and shall include cost estimates, funding sources, and projected annual
operation and maintenance costs. Capital projects shall become part of the City's asset
inventory.
The Capital Improvement Plan shall be reviewed along with the annual budget.
Appropriations are for the life of the capital project. At fiscal year-end, projects shall be
reviewed and, if complete, shall be closed. Following completion of a project, any
remaining funds shall be re -appropriated as part of the next year's capital budget. Funds
remaining from bond proceeds may only be used in accordance with the legal use of those
funds.
C. Infi•astructia-e Evaluation and Replacefnent/Rehabilitation
Water, wastewater, drainage, street lighting, streets and sidewalks, municipal facilities, and
other infrastructure are fimdamental and essential for public health and safety,
environmental protections, and the economic well-being of the City. The City's CIP shall
be focused on ensuring that infrastructure is replaced as needed to protect the City's
investment, to minimize future replacement and maintenance costs, to maintain existing
levels of service, and to accommodate growth.
Infrastructure will be replaced, if feasible, at the end of its useable service life. Ifupgrades
are warranted to meet current design standards, a cost/benefit analysis shall be done and
presented to the City Council for review and consideration.
D. Capital Expenditure Financing
The City utilizes several basic methods of financing its capital needs: pay-as-you-go from
current revenues, fiend balance/working capital, and debt. Capital projects shall not
commence prior to the necessary finds being appropriated.
When cash funding is available, the City may elect to pay for all or part of its capital
improvements from the appropriate find rather than through the issuance of debt. The
anticipated benefit of pay-as-you-go financing is a reduced or minimized impact on the
property tax rate and utility rates. The use of pay-as-you-go financing may not reduce fund
balance below target levels.
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Debt financing may include general obligation bonds, revenue bonds, and certificates of
obligation, lease/purchase agreements, and other obligations permitted by state law.
Capital improvement projects may not be debt financed for periods longer than the
projected useful life of the project or improvement.
E. Reporting
A summary and status report on capital projects and expenditures shall be included in the
monthly financial report presented to the City Council.
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VIII.
Debt Management
The City shall establish guidelines for debt financing to provide needed land, long-term capital
additions, and infrastructure improvements while minimizing the impact of debt payments on
current and future revenues.
A. Use of Debt Financing
Debt financing, including general obligation bonds, revenue bonds, certificates of
obligation, lease/purchase agreements, and other obligations permitted by state law, shall
only be used to purchase capital assets that cannot be acquired from current revenues or
find balance/working capital. Debt financing may be used to fiord infrastructure
improvements and additions.
B. DebtFinancing
The City shall not assume more tax -supported general putposedebt than it retires each year
without conducting an objective analysis regarding the City's ability to assume and support
additional debt service. This analysis shall include an examination of the costs and benefits
of the proposed capital spending and the anticipated impact on the property tax rate. The
decision to issue new debt shall be based on this analysis, a review of the current and
projected conditions of the municipal bond market, and the City's ability to service the new
debt.
General obligation bonds (GOs) require voter approval and shall be issued to accomplish
projects identified in the bond referendum. General obligation bonds shall be used to fiend
capital assets of the City and shall not be used to fund current operating expenditures.
Certificates of obligation (COs) may be issued without voter approval to finance any public
works project or capital improvement, as permitted by state law. The City may issue
certificates of obligation in the event it is more economical than issuing revenue bonds.
Revenue bonds are secured by the revenues of an enterprise fund and require adequate
projected revenues to cover anticipated future payments over the life of the bonds. If the
City determines it is feasible to issue revenue bonds, it may also be necessary to make
adjustments to the City's utility rate structure to maintain required coverage. Coverage
requirements, and the need for and level of reserve funds to provide additional security in
support of the bonds, are subject to rating agency review and market standards.
Tax notes are issued in anticipation of tax collections, grant proceeds, bond proceeds, or
any other lawful purpose. Tax notes are short-term, usually not more than seven years, and
are intended to boost cash flows in anticipation of future receipts of funds. The asset(s) to
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be purchased with tax notes may at times be later incorporated into an issuance of a GO or
CO on a similar or related issue.
C. Debt Structure
The term of any debt issuance may not exceed the useful life of the asset funded by the
debt. Relative to the issuance of revenue bonds, the term of the debt shall also be consistent
with the revenue -generating capacity of the asset. The maximum term of any debt issue
shall not exceed 30 years.
The structure of any debt issuance shall be designed to achieve the best possible results for
the City given current market conditions, etc. Consideration shall be given to the term,
amortization schedule, interest rates, yield, pricing, and call provisions.
To achieve a more favorable interest rate, the City shall strive to issue bonds in amounts
such that the issue is bank -qualified. However, if the City needs to issue debt that is non -
bank -qualified, the fact that the issue is so designated will not be a consideration if all other
factors support the issuance.
D. Debt Refunding
The City's financial advisor shall monitor the municipal bond market for opportunities to
obtain interest savings by refunding outstanding debt. The City may issue an advance
refunding if the difference between when the new bonds are issued and the outstanding
bonds being refunded are called orpaid at maturity is greaterthan 90 days. If thatdifference
is less than 90 days, the City may issue a current refunding. Pursuant to federal tax law, the
City may not advance refund bonds on a tax-exempt basis. There is no limit on the number
of times the City may current refund bonds.
As a general rule, the net present value savings of an advance refunding should exceed
three percent (3%) of the refunded maturities (including cost of issuance); unless a debt
restructuring is necessary.
General obligation refunding bonds do not require voter approval.
E. Bond Elections
General obligation bond elections shall be determined and set by the City Council based
upon recommendations of the City's financial advisor, bond counsel, and underwriters. An
analysis showing the impact of the new debt on the City's tax rate and total debt capacity
will be included with each proposal to issue newgeneral obligation bonds.
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F. Method of Sale
The City shall use a competitive bidding process for the sale of debt unless the nature of
the issue warrants a negotiated sale. The City may utilize a negotiated sale when the debt
issuance is, or contains, a refinancing that is dependent on market timing.
G. Underwriting Syndicates
As part of the debt issuance process, the City shall partner with qualified and experienced
firms. The City shall be actively involved in the debt issuance process and shall work with
the financial advisor, bond counsel, and underwriter(s) to develop and recommend the most
appropriate debt financing to meet the City's needs. For any given bond issue, the City may
elect to work with a single underwriter or with an underwriting syndicate, which includes
several firms and a designated lead underwriter.
H. RatingAgencyPresentations
Full disclosure of operations and open lines of communication shall be maintained with
the rating agencies. The City shall work with the financial advisor to prepare the necessary
materials and presentation to the rating agencies. Credit ratings will be sought from one or
more of the nationally recognized municipal bond rating agencies, currently Moody's
Investor Service, Standard & Poor's Ratings Services, and Fitch Ratings, based on the
recommendation of the financial advisor.
I Bond Ratings
The City shall prudently manage the general and enterprise funds in order to maintain or
improve the City's bond rating.
J Lease/PurchaseAgreements
The City may consider lease/purchase agreements for short-term financing needs when it
is the most cost-effective option.
K. Interest Earnings on Debt Proceeds
Interest earnings on debt proceeds in governmental funds shall be transferred to the debt
service fund. Interest earnings on water and wastewater fund and debt proceeds shall
remain in the enterprise fund.
L. Continuing Financial Disclosure
The City shall comply with all requirements for continuing financial disclosure prescribed
by state and federal regulations and City bond ordinances. In order to meet these
requirements, the City must annually provide certain updated financial information and
operating data to the Municipal Securities Rulemaking Board.
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Incompliance with SEC Rule 15c2-12, the City is obligated to provide (1) certain updated
financial information and operating data annually and (2) timely notice of specified
material events to the Municipal Securities Rulemaking Board (MSRB) in an electronic
format as prescribed by MSRB. This information is available free of charge via the
Electronic Municipal Market Access (EMMA) system atwww.emma.msrb.org.
The information to be provided includes quantitative financial information and operating
data as well as audited financial statements. This financial disclosure must be filed by
March 31 of each year.
A material event notice must be filed within ten business days of the occurrence of any of
the following:
• Principal and interest payment delinquencies
• Non-payment related defaults associated with outstanding bonds, if material
• Unscheduled draws on debt service reserves reflecting financial difficulties
• Unscheduled draws on credit enhancements reflecting financial difficulties
• Substitution of credit or liquidity providers, or their failure toperform
• Adverse tax opinions affecting the tax-exempt status of the City's bonds
• Modifications to the rights of bondholders, if material
• Bond calls, if material, and tender offers
• Defeasances
• Release, substitution, or sale of property securing repayment of the City's bonds, if
material
• Changes to the City's credit ratings
• Bankruptcy, insolvency, receivership, or similar event of the City
• Merger, consolidation, or acquisition involving the City, including the sale of all, or
substantially all, City assets
• Appointment of a successor paying agent/registrar or, if material, a change in the
name of the paying agent/registrar
M Post. -issuance Compliance
The City shall adopt a separate post -issuance compliance policy and procedures to address
the requirements of the Tax Code relative to its debt issuances. These requirements include
restrictions on the use of proceeds, arbitrage yield restrictions, and the arbitrage rebate
requirement. In general, these requirements are applicable throughout the period the debt
issuance remains outstanding.
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IX.
Cash Management and Investments
The City shall invest idle operating cash in such a manner so as to ensure the absolute safety of
principal, to meet the liquidity needs of the City, and to achieve the highest possible yield in
accordance with state statutes and the City's Investment Policy.
A. Investment Management
• All aspects of cash and investment management shall be designed to first ensure the
safety of the City's financial assets.
• Cash and investment management activities shall be conducted in full compliance
with prevailing state statutes and the City's Investment Policy.
• The City shall only do business with financial institutions and broker/dealers approved
by the City Council and who have executed a written certification of their review and
understanding of the City's Investment Policy.
• The City shall design and establish policies relative to a variety of cash and
investment management issues as set forth in the City's Investment Policy.
• Investments of City fiords shall be made with the exercise of judgment and care which
persons of prudence, discretion, and intelligence exercise in the management of their
own affairs. Safety of the investment principal and liquidity needs of the City must
be taken into account before yield may become a consideration in the investment
process. Speculative investments areprohibited.
B. Investment Strategy
The City shall implement an investment strategy to achieve safety of principal, to maintain
adequate liquidity to meet operating requirements, and to achieve a reasonable yield
commensurate with the preservation of principal and liquidity. The City shall seek to
diversify the investment portfolio in terms ofinvestment type and maturity.
C. Interest Income
The City consolidates (pools) a portion of its funds for investment. Interest earned from
these investments shall be allocated to the funds from which the finds were provided.
D. Arbitrage Investments and Reporting
The investment of bond proceeds shall be made in accordance with the same priority order
of safety, liquidity, and yield. Bond proceeds shall be invested in separate instruments or
accounts and not commingled with other investment purchases. Arbitrage rebate
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calculations shall be done for each bond issue, as required, and funds shall be set aside for
any positive arbitrage. Arbitrage shall be rebated to the Federal government when due.
K Collateralization ofDeposits
Pledged collateral on the City's deposits shall be held at an independent third -party
institution and evidenced by a written receipt. The type and amount of collateral shall
comply with the City's Investment Policy. Currently, all deposits shall be collateralized at
a minimum level of 102 percent of par value. Substitutions of collateral shall complywith
the City's Investment Policy. Collateral shall not be released until the replacement
collateral has been received into the City's account.
F. Reporting
A quarterly investment report shall be prepared and presented to the City Council in
accordance with state law and the City's Investment Policy.
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X
Grants
The City shall seek, apply for, and effectively administer federal, state, and local grants, which
support the City's current and fixture priorities and policy objectives.
A. GrantGuidelines
The City shall seek and apply for all appropriate grants consistent with the objectives and
priority needs identified by the City or the City Council. The City shall recover indirect
costs to the maximum amount permitted by the grant. The City may waive or reduce
indirect costs if doing so will significantly increase the effectiveness of the grant. Grant
funding may be considered to leverage City funds;however, inconsistent and/or fluctuating
grants should not be relied upon to find ongoing programs. The potential to incur ongoing
costs shall be considered prior to applying for a grant.
B. Grant Review and Approval
All grant submittals shall be reviewed for their cash match requirements, their potential
impact on the operating budget, and the extent to which they meet the City's goals and
policy objectives. If there is a cash match requirement, the source of funding for the
matching finds shall be identified prior to submitting the grant application. All grant
submittals shall also be reviewed for any "in -kind" grant match being considered in lieu of
a cash match. Since an "in -kind" match requires the use of force account labor, the
requesting department shall confirm this will not negatively impact existing service levels.
All grant submissions must include an explanation of the need for the grant, the terms of
the grant, including reporting requirements, and an analysis of the ongoing maintenance
and operations costs that will be incurred by the City upon acceptance of the grant. The
department shall designate a GrantAdministrator for each grant. The Grant Administrator
shall coordinate all grant submissions with the City Manager or his/her designee.
The City Manager or his/her designee shall approve all grant submissions. The City
Council must approve all grant applications. If a department has a narrow window to
pursue a grant opportunity less than
$25,000 (e.g., grant funds unexpectedly become available on a compressed timeline), the
Grant application may be ratified at the City Council meeting immediately following the
submission of the grant application.
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If the grant opportunity is identified during the budget process, it shall be included in the
appropriate revenue and expenditure accounts. If the grant is accepted after completion of
the budget process, the department applying for the grant funding shall work with the
Finance Department to prepare the associated budget amendment.
C. GrantAdnunistration
The Grant Administrator shall provide a copy of the approved grant submission (via email
or hard copy) to the City Manager or his/her designee and the Finance Department. Once
a grant agreement is signed, the Grant Administrator shall provide a copy of the executed
agreement to the City Manager or his/her designee.
D. GrantManagement
The Grant Administrator shall be responsible for all operational aspects of grant
management and shall maintain detailed records to ensure maximum reimbursement of
grant funds and full compliance with the grant requirements and the Single Audit Act.
The expenditure of grant funds shall follow all applicable City policies and procedures,
including purchasing and bid policies. The Grant Administrator shall verify that any
vendors selected for the grant -funded program/expenditure are not debarred or excluded
from providing goods and services under state or federal award programs. The list of
vendors debarred from doing business with the State of Texas is available at the website of
the Texas Comptroller of Public Accounts (Debarred Vendor List) at:
littps•//comptroller texas gov/purchasing/programs/vendor-performance-
trackin /debarred-vendors.ph2. The Grant Administrator shall utilize the Official U.S.
Government System for Award Management (SAM) to verify that a potential
vendor/contractor has not been excluded or debarred before contracting with that vendor
on a federally -funded grant. SAM contains an electronic roster of debarred companies
excluded from Federal Procurement and non -procurement programs throughout the U.S.
Government (unless otherwise noted) and from receiving Federal contracts or certain
subcontracts and from certain types of Federal financial and nonfinancial assistance and
benefits. Instructions on how to access SAM may be found at:
http://www.dol. gov/ofccph•egs/compliancdpreaward/d ebarlst.htm.
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E. Grant Termination and/or Reduced GrantFZcnding
In the event of reduced grant funding, City resources shall be substituted only after all
program priorities and alternatives have been considered during the budget process, unless
the City is obligated, through the terms of the grant, to maintain the program or associated
positions.
The City shall terminate grant -funded programs and associated positions when grant funds
are no longer available and it is determined that the program no longer supports City goals
and policy objectives or is no longer in the best interest of the City The City shall complete
any outstanding obligations following the termination of any grant funding.
F. Reporting
The Finance Department shall prepare and furnish financial reports to granting authorities
as required. Each individual department shall be responsible for program administration
and related program reporting.
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X1.
Intergovernmental R e l a t i o n s
The City shall coordinate efforts with other governmental agencies to achieve common policy
objectives, share the cost of providing government services on an equitable basis, and support
favorable legislation at the state and federal levels.
A. Interlocal Cooperation in Delivery of Services
In order to promote the efficient and effective delivery of services, the City shall actively
seek to work with other local jurisdictions to share, on an equitable basis, the costs of
services, to share facilities, and to develop joint programs to improve service to its citizens.
B. Legislative Program
The City shall cooperate with other jurisdictions to actively oppose any state or federal
regulation or proposal that mandates additional City programs or services but does not
provide the funding to implement them.
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XII.
Internal Controls
The City shall establish and maintain a system of internal controls designed to safeguard City
assets, ensure the accuracy and reliability of accounting and financial records, promote operational
efficiency, and, adhere to prescribed policies in compliance with federal and state regulations and
City ordinances and policies.
A. Written Procedures
Wherever possible, written procedures will be established and maintained by the Finance
Department for all functions involving cash handling and accounting throughout the City
These procedures will embrace the general concepts of fiscal responsibility set forth in this
policy statement.
B. Seg•egation of Drties
The City shall strive to maintain appropriate segregation of duties in the conduct of City
business in order to reduce the opportunities for any person to perpetrate and conceal errors
or irregularities in the normal course of assigned duties.
C. Training
The City shall ensure that all employees responsible for cash handling and/or financial
transactions are familiar with and understand the applicable City policies and procedures
associated with these responsibilities. Employees shall be properly trained and supervised
in the exercise of these duties.
D. Fiscal. Authority
The City shall implement appropriate levels of fiscal authority and shall design, implement,
and maintain procedures to ensure financial transactions and activities are properly
reviewed and authorized.
E. Signature of Checks
All City checks shall require two signatures. Two persons shall be authorized to sign checks:
the City Manager and the CFO. Signatures shal l be affixed on all City checks via facsimile
signature with a secure laser check printing system or by manual signature.
F. Electronic Payment Vouchers
The City makes payments electronically to those vendors who enroll for the service.
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G. Bankand Investment Statement Reconciliations
The Finance Department shall receive and reconcile the monthly bank and investment
statements. The completed bank and investment statement reconciliations shall be
reviewed and approved by the Controller. The Finance Department shall then perform a
final review of the bank reconciliation application in the City's financial software system
to check for unusual activity and to ensure there were no modifications made to the banking
activity.
To mitigate the City's exposure to the inherent risks of limited segregation of duties, the
employee who completes the bank reconciliations shall not handle cash or prepare related
cash or adjusting entries.
H. Recordkeeping
The City shall design, implement, and maintain procedures to ensure financial transactions and
events are properly recorded such that all financial reports are current, accurate, and up-to-date.
I Safeguarding Assets and Financial Records
The City shall design, implement, and maintain procedures to ensure appropriate and
adequate safeguards exist over the access to and use of financial assets and records. These
measures shall be designed to protect the City's assets from unauthorized access, fraud or
theft.
J Internal Audits
The City shall conduct internal audits to ensure compliance with established procedures
and proper valuation of recorded amounts. During the year, the Finance Department shall
conduct at least one surprise audit of each petty and working cash fund. Other programs
subject to audit include City credit card accounts and travel expense reports. All finance
directives and any recommendations resulting from either an internal audit or from an
external independent audit should be reviewed, addressed, and implemented by the
department director as quickly as possible.
K. Annul Review
The City shall conduct an annual review of the system of internal controls and shall make
any appropriate changes or modifications to improve the controls.
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X1111.
Economic Development
The City shall initiate, encourage, and participate in economic development efforts to create job
opportunities and strengthen the local economy and tax base. The City shall account for all
financial commitments made in connection with economic incentives granted to developers.
A. Commitment to Expansion and Diversification
The City shall encourage and participate in economic development efforts to expand
Beaumont's economy and tax base, to increase local employment, and to invest when there
is a defined specific long-term return. These efforts shall not only focus on new areas but
on redevelopment of older areas, the Downtown Historic District, and other established
sections of Beaumont where development can generate additional jobs and other economic
benefits.
B. Tax Abatements
The City shall follow its established tax abatement policy to encourage commercial and/or
industrial growth and development throughout the Beaumont. The City shall balance the
long-term benefits of tax abatements with the short-term loss of tax revenues prior to the
granting of the abatement. Factors considered in evaluating proposed abatements for
development include the location of the project, its size, the number of temporary and
permanent jobs created, the costs and benefits for the City and the impact on Beaumont's
economy and other factors specified in the City's Tax Abatement Guidelines Summary.
C. Increase Non-residential Share of Tax Base
The City's economic development program shall seek to expand the non-residential share
of the tax base to decrease the tax burden on residential homeowners.
D. Coordinate Efforts with Other Jurisdictions
The City's economic development program shall encourage close cooperation with other
local jurisdictions to promote the economic well-being of this area.
E. Use of Otherincentives
In accordance with its established policies, the City shall use tax increment reinvestment
zones and economic development grants/loans as allowed by law and shall seek new
sources to encourage business expansion. The City shall also coordinate with state and
Federal agencies on offering any incentive programs they may provide for potential economic
expansion.
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