8b. Set Special Meeting Dates.r
I MEMORANDUM
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CITY OF A
CHANHASSEN
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
90d Action by city Administrator
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/l (!"'''_ indorse -- -
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r'/ ,q�� f� Modified
Rejecte
TO: Mayor and City Council � ° `� � �
pate Submitted to commission(
FROM: Don Asla&.orth, City Manager pate Submmed t Co uncil
DATE: July 16, 1996
SUBJ: Set Special Meeting Dates: - 1997 Operating/Capital Budgets
- Strategic Planning/Other
1997 OPERATING AND CAPITAL BUDGETS: In accordance with the city's "Financial
Management Policies," the city council is to set budget work sessions in July. The attached
tentative schedule is very similar to last year's schedule. All of the dates shown are off Monday
nights with the exception of the "truth in taxation hearing" and the "continuation hearing " - -if
necessary. The dates for these meetings have been shown as tentative as the school districts and
counties get to choose their dates first, which then are dates not available to us.
One :change is being recommended for this year's budget review — incorporation of capital
budgets. Last year we adopted the first five year capital budget for the city. As a part of each
department's presentation of their proposed 1997 operating budget, we are suggesting that they
also discuss changes to the five year plan. This year's capital budget will be expanded to include
proposed improvement projects which need to be prioritized to ensure that we, once again, stay
within the $10 million limitation for 1997, 1998, etc.
Once the city council has approved the budget work session dates, we will resubmit the financial
management policies, including the actual budget dates set by the city council. I am also
enclosing a copy of the budget memorandum prepared by Pam Snell to ensure that department
heads have started the budget process and will be prepared by the tentative dates shown.
Recommendation:, Approval of the budget work sessions as shown on the attached sheet is
recommended. -
STRATEGIC PLANNING MEETINGS /OTHER MEETINGS: The attached work session
schedule shows four strategic planning sessions. Does the council wish to establish others?
Mayor and City Council
July 17, 1996
Page 2
RFP FOR CITY AUDITORS: During the first of year appointment process, the city council
discussed, and this office:recommended, that we go through an RFP process for city auditors in
1996. Staff will begin that process now with the intent that the final three firms will be
interviewed by the city council on September 16, 1996. It is highly important that this selection
be made prior to October so as to guarantee that we can lock in an audit time frame meeting city
needs. In addition, many work efforts need to be completed prior to the end of the year.
Although the full council did not sit in on the interviews for "official depository" or "agent of
record," I do believe that it is important for the city council to feel comfortable with the firm
carrying out audit services, and additionally, be comfortable with the work products that are
proposing to be provided. III
The city council's vote at the first of the year was for the selection of Deloitte & Touche to
officially act as auditors for the city for audit year 1995. My discussion of staff's intent to
proceed with an RFP for auditing services during 1996 was just that. However, at the end of that
discussion, Councilman Senn had noted his desire to also interview bond consultants as well.. If
this comment represents a majority feeling by the city council, I would ask for reconsideration.
Specifically, when we first came up with the idea of doing an RFP process for auditor, bond
consultant, and city attorney, I strongly recommended that we go through that process over a .
three year period for two reasons: 1) developing an RFP for one of these key services is very
staff intensive, and 2) these three services act as a team on many issues including bonding,
official depository, investing, etc. Losing two members of a three member team at time can
produce unwanted results. Hopefully we can discuss this issue Monday evening together with
the council's desire to interview auditors:
GAmgr \budwkses.doc
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CITY COUNCIL WORK SESSIONS
July 22, 1996 (Regular Meetin
Authorize Preparation of RFP for City Auditors
July 29, 1996
Present Audit Report
Strategic Plan
August 5,4496-
1997 Bud et:
a e a men
August 19, 1996
1997 Budget: P S�
September 16, 1996
Interview Auditors
Strategic Plan .
September 9, 1996 (Regular Meeting)
b fill $ ,-
Set Truth In Taxation Hearing Dates
Set Proposed Le
October 7, 1996
1997 Budget: Public Works Department
Enterprise Funds
Special Revenue
General Revenue
October 21, 1996
1997 Budget: Prioritize Requests
S trategic Plan
November 4, 1996
1997 Budget: Present Balanced Budget
Strategic Plan
December 3 or 5, 1996
(These dates are our best guess as school
districts and counties get to choose their
dates first.)
Truth in Taxation Hearing
December 10 or 12, 1996 (if necessary)
Continuation of Truth in Taxation Hearin
December 16, 1996
Adoption of the 1997 Budget
g:\user\karen \wkses96.doc
CITY OF
CHANHASSEN, MINNESOTA
FINANCIAL MANAGEMENT POLICIES
December 1994
I. PURPOSE
The City of Chanhassen is accountable to its citizens to carefully account for public funds, to
manage municipal finances wisely, and to plan the adequate funding of services desired by
the public, including the provision and maintenance of public facilities. The city is also - - - - - --
accountable for providing both short-term and long -term financial stability. The city must
ensure that it is capable of adequately funding and providing local government services
needed by the community.
Further, these financial policies provide the framework for the overall fiscal management of
the city. Operating independently of changing circumstances and conditions, these policies
assist the decision making processes of the City Council and Administration.
Most of the policies represent long standing principles, traditions and practices for city
governments. These financial policies will be reviewed periodically to determine if changes
are necessary.
II. OBJECTIVES
In order to achieve this purpose, this plan has the following objectives for the city's fiscal
performance:
1. Provide sufficient financial stability to prevent financial difficulties which may
encumber the city council's ability to make important decisions.
2. Provide sound principles to guide the important decisions, which have significant fiscal
effects, of the city council and management.
3. Provide adequate and accurate information to facilitate the council's decision making.
4. Establish principles which will ensure that the city operates efficiently and effectively.
5. Minimize investment and financial risk.
6. Promote sound management of the city's government by providing accurate and timely
information.
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The City of Chanhassen is accountable to its citizens to carefully account for public funds, to
manage municipal finances wisely, and to plan the adequate funding of services desired by
the public, including the provision and maintenance of public facilities. The city is also - - - - - --
accountable for providing both short-term and long -term financial stability. The city must
ensure that it is capable of adequately funding and providing local government services
needed by the community.
Further, these financial policies provide the framework for the overall fiscal management of
the city. Operating independently of changing circumstances and conditions, these policies
assist the decision making processes of the City Council and Administration.
Most of the policies represent long standing principles, traditions and practices for city
governments. These financial policies will be reviewed periodically to determine if changes
are necessary.
II. OBJECTIVES
In order to achieve this purpose, this plan has the following objectives for the city's fiscal
performance:
1. Provide sufficient financial stability to prevent financial difficulties which may
encumber the city council's ability to make important decisions.
2. Provide sound principles to guide the important decisions, which have significant fiscal
effects, of the city council and management.
3. Provide adequate and accurate information to facilitate the council's decision making.
4. Establish principles which will ensure that the city operates efficiently and effectively.
5. Minimize investment and financial risk.
6. Promote sound management of the city's government by providing accurate and timely
information.
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7. Employ policies which promote sustainable revenue sources.
' 8. Employ fair user charges where the direct benefit is identifiable and the cost is
measurable.
9. Provide and maintain public facilities and infrastructure.
'
10.
Protect and enhance the city's credit rating.
11.
Ensure the legal use and protection of all city funds through a sound system of
'
financial and internal controls.
12.
Maintain a risk management program that will minimize the impact of legal liabilities,
'
natural disasters or other emergencies.
III.
FINANCIAL MANAGEMENT POLICIES
Capital
Improvement
Budget Policies
1.
The city has adopted five year capital budgets associated with most capital and
operating funds included in the annual budget, i.e. vehicle and equipment replacement,
municipal facilities, streets /sewer /water, etc. During 1995, and continuing thereafter,
'
these budgets will be assimilated into one separate five year capital improvement and
expenditure plan.
'
2.
The city will coordinate development of the capital improvement budget with the
development of the operating budget. Future operating costs associated with new
capital improvements will be projected and included in operating budget forecasts.
'
3.
The city will project its equipment replacement and maintenance needs for the next
five years and will update this projection each year. From this projection, a
'
maintenance and replacement schedule will be developed and included in the operating
budget. In addition, the city will maintain all its assets at a level adequate to protect
the city's capital investment and to minimize future maintenance and replacement
'
costs.
' 4. The city staff will identify through a Capital Funding Plan the estimated costs and
potential funding sources, including the consideration of joint ventures with other
cities, for each capital protect proposal before it is submitted to the city council for
' approval.
5. The city will determine the least costly financing method considering the life of the
asset.
V
5.
The city will set fees and user charges for each Enterprise Fund, such as Water and
,
Revenue Policies
1. The city will estimate its annual revenue by a conservative and analytical process.
'
2. The city will project revenues for the next five years and will update this projection
annually. Each existing revenue source will be reexamined annually.
'
3. The city will maintain sound property appraisal procedures. Property value will be
The city will recover the prior year's net property tax delinquencies and abatements in
reassessed at least every four years at the legally mandated market value for each class
'
of property.
'
4. Whenever user charges and fees are determined to be appropriate and the direct
'
benefits are identifiable, the city will establish and revise annually, all user charges
and fees at a level related to the cost of providing the service (operating, direct,
,
indirect and capital).
5.
The city will set fees and user charges for each Enterprise Fund, such as Water and
,
Sewer, and recreational funds in total, at a level which fully supports the total direct
and indirect costs and capital costs of the activity. Indirect costs include the cost of
annual depreciation of capital assets.
,
6.
The city will recover the prior year's net property tax delinquencies and abatements in
setting the annual property tax levy.
'
Debt Policies
'
1.
The city will confine long -term borrowing to capital improvements or projects which
cannot be financed from current revenues. In addition, the city will not incur debt to
support current operations.
,
2.
When the city finances capital projects by issuing bonds, it will pay back the bonds
within a period not to exceed the expected useful life of the project.
'
3.
In all bond issues, the city will attempt to retire 50% of the principal amount issued
within ten years.
'
4.
The city will attempt to keep the maturity of General Obligation Bonds and General
Obligation Guaranteed Bonds at or below 15 years.
'
5.
Total debt service for General Obligation Ad Valorem debt should not exceed ten
percent (10 %) of total annual locally generated operating revenue in the General Fund
'
and Special Revenue Fund.
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6. Total General Obligation debt subject to statutory debt limits will not exceed two
' percent (2 %) of the estimated market valuation of taxable property in the city.
7. Where possible, the city will use special assessment, revenue or other self - supporting
bonds instead of General Obligation Ad Valorem Bonds.
8. The city will maintain open communications with bond rating agencies regarding its
' financial condition. The city will follow a policy of full disclosure in every financial
report and bond prospectus.
9. The Housing & Redevelopment Authority (HRA) and Economic Development Agency
will develop a set of written policies concerning the use of Tax Increment Financing
(TIF) as a development incentive.
' Reserve Policies
' Enterprise Farnd Reserve Policy
1. Over a three year period, each enterprise fund shall set rates and charges /user fees
' such that there is no cumulative reduction in net fund equity, including depreciation
and transfer of funds. Recreation type funds shall be considered on a combined basis
for compliance with this policy.
' 2. Equity transfer of funds from an enter fund to the General Fund should only be
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done on a one -time exception basis, to fund any unusual, unanticipated expenses. In
' no event shall equity transfers be made in consecutive years.
' General Fwid Reserve Policy
1. The city shall not use tax anticipation borrowings to cover operating expenses.
' 2. The year end fund balance shall be adequate to cover 50% of the percentage of which
property taxes and HACA comprise total General Fund revenue sources for the
' following year.
3. The city will continue to reduce fund balances for the portion above the formula
' amount for capital improvement projects such as building expansion/refurbishing.
I . Investment Policies
7. Compliance with these policies shall be through the finance director. The finance '
director shall report to the city council at least quarterly the condition of the city's
investment portfolio, including stated value, current market value, current yield and
conformance to city policies. In addition, city administration shall establish a check '
and balance system with each broker handling city investments whereby a control
number must be received and confirmed by them before any investment is purchased,
sold, or traded per an ordered issue by the finance director. ,
Each broker shall sign an affidavit stating that they have read the city's financial
policies and that the investment being requested to be made by the finance director '
and their firm conforms to the adopted financial policies.
8. The city shall have no investments in Risk Category Three as defined by ,
Governmental Standard Board Station No. 3.
Accounting, Auditing and Finmicial Reporting Policies
'
1. The city will maintain the GFOA Certificate of Excellence in Financial Reporting.
,
1.
The city will make cash flow analyses of all funds on a regular basis. Disbursement,
users for the full cost of providing current services.
collection and deposit of all funds will be scheduled to ensure maximum cash
availability for investment.
'
2.
When permitted by law, the city will pool cash from all funds for investment
purposes.
'
3.
The city will have at least 97% of its cash funds earning interest.
4.
Investment maturities should be matched to operating cash needs and debt service
requirements. No more than 50% of cash and investments shall have average
maturities exceeding 5 years.
'
5.
The preservation of principal shall be the paramount objective of the investment
program. Management of the portfolio will consider safety, liquidity and yield, in that
,
order, to ensure the preservation of principal. .
6.
It is the intent of this policy to substantially reduce the interest rate risk and duration
of the current investment portfolio. As current investments mature or are liquidated,
reinvestment of these funds will only be in accordance with these adopted financial
management policies. _
,
7. Compliance with these policies shall be through the finance director. The finance '
director shall report to the city council at least quarterly the condition of the city's
investment portfolio, including stated value, current market value, current yield and
conformance to city policies. In addition, city administration shall establish a check '
and balance system with each broker handling city investments whereby a control
number must be received and confirmed by them before any investment is purchased,
sold, or traded per an ordered issue by the finance director. ,
Each broker shall sign an affidavit stating that they have read the city's financial
policies and that the investment being requested to be made by the finance director '
and their firm conforms to the adopted financial policies.
8. The city shall have no investments in Risk Category Three as defined by ,
Governmental Standard Board Station No. 3.
Accounting, Auditing and Finmicial Reporting Policies
'
1. The city will maintain the GFOA Certificate of Excellence in Financial Reporting.
,
2. Accounting policies will reflect the principle of charging current taxpayers and/or
users for the full cost of providing current services.
5 '
3. Regular monthly reports will present a summary of financial activity by major types of
' funds as compared to budget.
4. An independent public accounting firm will perform an annual audit and will publicly
' issue an opinion concerning the city's finances.
5. The Finance Director will prepare an action plan for submission to the city council on
' issues raised in the annual audit within sixty'days from submission to the State of
Minnesota Auditor's Office.
I 6. Develop a calendar of financial activities to be used as a guideline for planning
purposes on a yearly basis.
I Risk Management Policies
1. The city will maintain a Risk Management Program that will minimize the impact of
' legal liabilities, natural disasters or other emergencies through the following activities:
a. Loss Prevention. Prevent negative occurrences.
' b. Loss Control. Reduce or mitigate expenses of a negative occurrence.
C. Loss Financing. Provide a means to finance losses.
d. Loss Information Management. Collect and analyze relevant data to make
' prudent loss prevention, loss control and loss financing decisions.
2. The city's Risk Management Program will:
' a. Analyze all of the city's risks.
Y Y
' b. Avoid risks whenever cost effective.
C. Reduce risks whenever cost effective.
3. The city will maintain an active Safety Program.
4. The city will periodically conduct educational safety and risk avoidance programs,
' through our various departments and with the participation of Berkley Administrator
(city insurer).
' 5. The city will maintain the highest deductible amount, considering the relationship
between cost and the city's ability to sustain the loss.
Operating Budget Policies
1. The city will adopt a balanced budget in accordance with state statute.
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2. The city will match all current expenditures with current revenues. The city will avoid
budgetary procedures that balance current expenditures at the expense of meeting '
future years' revenues.
3.
The city shall ensure that the Capital Projects Administration Fund has a balance, at
year end, of at least 5% of the total operating budget, including General, Special
,
Revenue and Capital Funds —such to act as a contingency fund to provide a resource
for unanticipated expenditures of a non - recurring nature.
'
4.
The city manager, when submitting the proposed budget to the city council, will
submit a balanced budget in which appropriations will not exceed the total of the
,
estimated General Fund Revenue and the fund balance available after applying the
General Fund Reserve Policy.
5.
Prior to adopting the General Fund annual budget, the city council shall confirm that
the Capital Projects Fund has a sufficient projected balance to meet the City's Reserve
Policy.
'
6.
In the event there is an unanticipated shortfall of revenues in a current year budget,
the city manager may recommend the use of a portion of the General Fund balance,
,
not to exceed the amount available after deducting amounts reserved for items not
readily convertible to cash or reserved for working capital or already appropriated to
the General Fund current budget, as shown on the most recent General Fund Reserve
'
Policy as established by the city council.
7.
The budget will provide for adequate maintenance of the capital plant and equipment,
,
and for their orderly replacement.
8.
The budget will provide for adequate funding of all retirement systems.
,
9.
The city administration will prepare regular monthly reports comparing actual revenues
and expenditures to the budgeted amount.
'
10.
The Operating Budget will describe the major goals to be achieved and the services
and programs to be delivered for the level of funding provided.
,
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Financial Calendar
Februa
Begin Capital Budget Planning
'
March
Audit field work begins
' A
ril
Finalize Capital Budget
'
Bonding -1st Series
June
Produce CAM & apply for certificate
'
Jul
Finalize Budget Calendar/Work Session dates
'
Au ust
Budget Work Sessions - Proposed Departmental Expenditures
Auditor reviews CAM with City Council
Se tember
Bonding- 2nd Series
Budget Work Sessions - Proposed Departmental Expenditures
'
Department of Revenue notifies City of HACA
'
Certify to the County Auditor dates for public hearing & maximum property tax levy
October
RFP for official depository
'
Budget Work Sessions Revenues Compared to Expenditures
-
November
Designate official depository
Truth in taxation Notices mailed by the County Treasurer
Budget Work Sessions- Present Balanced Budget
'
December
Truth in Taxation Hearing
'
Continuation hearing, if necessary, 5 -14 days following
Formal Adoption of Budget & Tax Levy /Certification
CITY OF
CHANHASSEN
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
TO: All Department Heads
FROM: Pam Snell, Finance Director
DATE: July 10, 1996
SUBJ: 1997 Budget Process
I have included three packets of information, for each of your respective divisions, to assist you in your
budget re- estimates for 1996 and budget projections for 1997. This includes Budget Worksheets, G/L
Detail Report for 01/96 -06/96 and GAL Detail report for 01/95- 12/95.
As a part of this year's budgetary process, please include estimates of all capital improvement projects and
major capital outlay expenditures that you are aware and proposed funding for the next five years, 1997-
2001. For example, (these are only examples):
Year Project Amount Fundin Amount
1997 Well No. 8 S .8M Water Revenue Bonds $ .8M
1997 Lake Drive $ 2.OM G.O. Improvement Bonds $ 2.OM
2000
Public Works .5M
Expansion
1999
Rice Marsh Lake $ 30,000
Park
2001
Lake Ann Water $ 2.OM
Slide Park
2000
Severe Weather $100,000
Warning Siren
2001
800mhz Radios $ .5M
Amount fully assessable
Reserves set aside for this $ .5M
Project
Park Acquisition & $ 30,000
Development Fund Reserves
Special Referendum $ 2.OM
Federal Grant $100,000
Property Tax Allocation $ .5M
of $100,0001997 -2001
etc. etc. This will become a part of the 1997 budget review work sessions with the City Council and be
included in the final CIP document. Please contact me for recommended format.
Also, a reminder to again this year budget sales tax in the respective account lines in which the items will
be purchased.
Cathy has been working on getting all departmental financial and justification budget templates setup for
your direct input this year. Hard copy templates of your budget will be distributed and made available
once preliminary payroll estimates have been completed. This is estimated for mid next week.
A calendar of City Council Work Sessions has been distributed as prepared by the City Manager. I have
attached a budget calendar to include other pertinent deadlines.
Please contact me with questions!
1
' 1997 Budget Calendar
When Who What
'
July 10, 1996
Finance
Budget Worksheets Distributed to Departments
July 17, 1996
Finance
Budget Templates (financial & justification) made available
to Departments
July 29, 1996
Park & Rec
Budget Templates to Finance for Summarization
Planning
& City Manager review
'
August
5, 1996
Park & Rec
1997 Budget Work Session (Park & Rec and Planning)
Planning
'
City Council
August 12, 1996
Public Safety
Budget Templates to Finance for Summarization
Administration
& City Manager review
August 19,
1996
Public Safety
1997 Budget Work Session (Public Safety & Administration)
Administration
'
City Council
September 9, 1996
City Council
Set Truth in Taxation Hearing Dates & Set Proposed Levy
September 15, 1996
Finance
Certify to County Auditor Maximum Proposed Levy
September 30, 1996
Public Works
Budget Templates to Finance for Summarization
'
& City Manager review
October 7, 1996
Public Works
1997 Budget Work Session (Public Works, Special Revenue
'
City Council
& General Revenue)
October 21, 1996
City Council
1997 Budget Work Session (Prioritize Requests & Strategic
All Departments Plan)
November
4, 1996
City Council
1997 Budget Work Session (Present Balanced Budget &
All Departments Strategic Plan)
'
December 3/5, 1996
City Council
Truth in Taxation
'
December 10/12,1996
City Council
Continuation Hearing if necessary
December 16,1996,
City Council
Adopt 1997 Budget
December 30,1996
Finance
Certify to County Auditor Adopted Levy