APL Financial Policy | City of Appleton Employee Finance Policies | City of Appleton Financial Policies
--adoped by Library Board of Trustees, October 14, 2004
CITY OF APPLETON
FINANCIAL POLICIES
The City of Appleton’s financial policies set forth the basic framework for the overall fiscal management of the City. Operating concurrently with changing circumstances and conditions, these policies assist the decision-making process of the Common Council. These policies provide guidelines for evaluating both current activities and proposals for future programs.
Most of the policies represent long-standing principles, traditions and practices and follow generally accepted accounting principles which have guided the City in the past and have helped maintain financial stability over the last several decades.
Pension Funding And Reporting Policies
Accounting, Auditing, And Financial Reporting Policies
Special Events Policies – Insurance Requirements
· The City will prepare an annual budget for all operating funds.
· The City will maintain a budgetary control system to ensure adherence to the budget and will prepare reports comparing actual revenues and expenditures to budgeted amounts.
· The City will use performance measurement and performance objectives with the operating budget.
· A contingency account will be maintained in the annual operating budget to provide for anticipated expenditures of a non-recurring nature or to meet unexpected small increases in service delivery costs. Transfers from the contingency account to the operating programs will require approval (2/3 vote) by the Common Council.
· Budgets are classified as either lapsing (spending authority terminates at year-end) or non-lapsing (spending authority continues through the life of a project; non-lapsing budgets are reviewed annually). All lapsing budgets are prepared for fiscal year operations beginning January 1 and ending December 31. Listed below are all budgeted funds showing the type of appropriation.
Lapsing Appropriations Non-Lapsing Appropriations
General Fund Central Building Maintenance Community Development
All Special Revenue Funds Parking Utility Block Grant
(Except Grant Funds) Reid Golf Course
Housing and Community
Debt Service Funds Insurance Development Grants
Water Utility Valley Transit Health Grants
Sewer Utility All Trust Funds
Stormwater Utility All Capital Project Funds
Central Equip Agency
· Operating budgets are established on a fund/department basis.
· Interfund and interdepartment transfers require the approval of the Finance Committee and two-thirds of the Common Council.
· Transfers over $15,000 between programs within a department require approval of the Finance Committee and two-thirds of the Common Council.
· New appropriations funded by grants, user fees, or other non-tax revenues up to $15,000 require written approval by the Mayor, countersigned by the Finance Director and reported to the Finance Committee as an informational item.
· New appropriations in excess of $15,000 and any appropriations funded by taxes or debt require the approval of the Finance Committee and two-thirds of Common Council.
· Transfers between Library programs require only approval of two-thirds of the Library Board. New library appropriations funded by grants require the approval of the Library Board. Any budget adjustment approved by the Library Board will be reported to the Council Finance Committee as an informational item.
· Transfers from the Reserve for Contingencies require the approval of the Finance Committee and two-thirds of the Common Council.
· Excess budgeted personnel dollars due to vacancies can not be transferred to increase the supplies and services budget with the exception to fund temporary employment service assistance.
· Capital budgeted items may only be used for the specific items indicated in the budget document. Alternate uses require the approval of the finance Committee and two-thirds of the Common Council.
· Funding for utility projects should be obtained through borrowing from:
· Revenue Bonds
· General Obligation Notes
· Internal Funds
· The City shall utilize available funding sources for capital improvements whenever practical and feasible:
· Grant funds
· Special assessments
· Developer contributions
· The City will develop a five-year capital improvement program, which will be reviewed and updated annually.
· The complete five-year capital project funding plan must be balanced each year by matching projected expenditures with proposed revenue sources by fund.
· The City will maintain its physical assets at a level adequate to protect the City’s capital investment and to minimize future maintenance and the orderly replacement of the capital plant and equipment from current revenues when possible.
· The City will try to ensure that industrial acreage is available for development within the City and served with necessary infrastructure.
· The City will try to maintain a diversified and stable revenue system to minimize short-run fluctuations in any one revenue source.
· The City will attempt to maximize benefits from major revenue sources as a way of maintaining a stable tax rate.
· The City will follow an aggressive policy of collecting revenues.
· The City will establish all user charges and fees at a level related to the full cost (operating, direct, and indirect) of providing the service, whenever practical.
· The City will attempt to review license fees/charges annually to determine if the revenues support the cost of providing the service.
· Sewer, Stormwater, and Water Utility funds will be self-supporting through user fees.
· The minimum utilities rates should be set at a rate which will yield net income which is 1.25 time the highest principal and interest payment due. This requirement is in conformance with the mortgage revenue bond requirements. Rate adjustments for the Water Utility are submitted to the Public Service Commission and Common Council for review and approval.
· Rate adjustments for the Stormwater and Sewer Utilities will be submitted to the Common Council for review and approval.
· Redemption will be established in the Water, Stormwater and Sewer Utilities in accordance with Revenue Bond Ordinance provisions.
· Funds will be reserved for equipment, major replacement and repairs in the Sewer Utility, as required by EPA grant provisions.
· All general obligation debts will be paid through a general debt service fund, except for that incurred by an enterprise fund. Operating budgets will be prepared to meet the annual principal, interest and service charge costs for each fund. Net debt service requirements (debt service expenditures less debt service revenue) will be funded through the general tax levy.
Wastewater Utility
· Maintain a working Capital Reserve equivalent to three months of operation expenditures based on the audited expenditures of prior year in the Wastewater Utility Fund.
· Any projected favorable balance above Working Capital Reserves in the Wastewater Utility Fund is to be used to pay costs for all possible approved Capital expenditures.
General Fund
· All General Fund Unreserved Designations and related policy should be approved in advance of their creation/amendment by the Common Council.
· The amount to be retained in Designated for Health Insurance Cost Stabilization Unreserved Fund Balance be equal to the stop loss percentage.
· Interest income will not accrue in the Designated for Health Insurance Cost Stabilization Fund Balance Account.
· Total Unreserved Fund Balances (excluding Designated for Debt Service) will be 25% of the following year’s budgeted appropriations with the designation for Working Capital Reserve equal to 17% of the following year’s budgeted appropriations.
· The City will maintain a Designated Fund Balance for Debt Service of 25% of ensuing years Debt Service requirements. Any excess funds over that amount will be used to pay existing long-term debt.
· At least 75% of General Fund Balances in excess of the reserve policy (currently 3 months operating expenditures) be used for the reduction of Long-Term liabilities. Utilization of the remaining funds be subject to recommendation from the Finance Committee to be used for additional reduction of Long-Term liabilities or General Fund expenditure with final council approval.
New Subdivision Fund
· The unreserved Designated New Subdivision Fund Balance will be no less than three months’ operating expenses based on the prior year’s audited expenditures and a maximum of 80% of the most recent 5 year average including current budgeted total expenditures. Reserved Fund Balance will be the result of the 100% carryover policy.
· Excess funds remaining in the New Subdivision Fund Balance after applying the New Subdivision Fund Balance policy will be transferred to the General Fund.
Industrial Park Fund
· The Industrial Park Fund shall first designate fund balance for debt service to the extent of total debt outstanding and if available shall designate up to $50,000 for working capital.
· Excess funds remaining in the Industrial Park Fund after applying the above criteria will be transferred to the General Fund.
Parking Utility Fund
· The Parking Fund shall maintain a working capital reserve equivalent to three months of audited operating expenditures of the prior year in the Parking Utility Fund.
· Any projected favorable balance above the Working Capital Reserve in the Parking Utility Fund will be advanced to TIF District #3 to meet debt requirements related to parking facilities constructed by that district.
FOR
General Fund-Core Portion
DNR Replacement Fund
Sewerage Redemption Fund
Water Bond Reserve Fund
Water Tax Escrow Fund
Frank Young Memorial Fund
Investment Objectives
· The overall objective of City of Appleton Investment management is to maximize the total return of designated funds and preserve capital within stated parameters.
· The performance objective is to achieve total returns on the portfolios that exceed the total return of the Lehman Brothers Intermediate Government Index over a market cycle.
Investment Guidelines
· Investments will conform to Wisconsin State Statute 66.04.
· Individual corporate bonds will have a 7-year maximum maturity or put (tender at option of holder) limit. Treasury and mortgage securities will have no maturity limit.
· All debt securities, excluding issues of the U.S. Government and its agencies, shall be rated AA or higher
· No single issuer, with the exception of the U.S. Government and its agencies, shall constitute more than 5% of the value of the fund (at time of purchase).
· No single corporate industry group shall constitute more than 15% of the value of the fund (at time of purchase).
Communication and Reporting
· The Investment Manager shall issue a quarterly report to the City of Appleton reviewing the performance and investment strategy of the firm on behalf of the portfolios.
· The Investment Manager is expected to meet with designated employees of the City of Appleton to review the portfolios and to discuss investment results in the context of these guidelines and objectives upon request. At all times the Investment Manager and Investment committee are encouraged to communicate on significant matters pertaining to investment policies and the management of the portfolios.
· The City will confine long-term borrowing to capital improvements.
· The City will attempt to limit use of short-term debt to bond anticipation purposes.
· The City will follow a policy of full disclosure on every financial report and bond prospectus.
· The City will use “pay as you go” financing to fund street reconstruction and equipment purchases.
· Section 67.03(1) of the Wisconsin Statutes provides that the amount of indebtedness of a municipality shall not exceed 5 percent of the equalized valuation of the taxable property in the municipality. Although State Statutes allow five per cent of the equalized valuation, the City has set an internal debt goal, which seeks to remain below 40 per cent of the maximum amount allowed by the State Statutes.
· The levy for debt service shall be no greater than 20% of the total levy, with an effort to maintain the levy at a proportionate even level for tax rate stabilization.
GENERAL POLICY
· Special assessments will be billed on all abutting property owners for construction of sidewalk, curb and gutter, paving, sanitary sewer mains and extensions. All improvements are guaranteed for a set number of years. In the event the improvement does not last the entire estimated period, a prorata credit adjustment will be made for the remaining life of the improvement.
SPECIAL ASSESSMENTS SUBJECT TO PAYMENT PLANS
· Bills of $500 or less are due by January 31. For bills in excess of $500, a five-year payment plan is assumed. Deferred payments will bear an interest on the unpaid balance at the rate of 9% per annum (12% for developers).
Street Construction and Reconstruction
· Assessment based on cost of residential street with a 33’ width (curb to curb), a 3” asphalt surface, and a 7” concrete surface.
· Useful Life of Pavements:
· Curb and Gutter – 20 Years.
· Asphalt Surfacing – no curb and gutter – 1 Year.
· Asphalt Partial Reconstruction or Overlay – 15 Years.
· Asphalt Reconstruction – 20 Years.
· Portland Cement Concrete – 30 Years.
· Concrete Driveway Aprons – 1 Year.
Sidewalks
· Assessment Rate for new construction is based on 100% of assessable construction costs, including engineering costs.
· There will be no assessment for sidewalk that meets the “green dot” criteria. Assessments will be levied when sidewalks not meeting “green dot” criteria are replaced at the property owner’s request.
· Useful Life - 20 Years
Sanitary Sewers
· Assessment rate for new sanitary sewers based on actual construction cost up to and including 12” sanitary sewer main and manholes, plus area assessment where applicable. Assessment Rate for reconstruction will be 125% of the assessment rate for new sewer construction, except that credit will be given for the remaining useful life calculated on current cost of construction.
· Useful Life – 75 Years.
Storm Sewers Facilities
· Previously developed or reconstruction are assessed at 100% of the assessment rate for new sewer construction plus area assessment. New subdivisions are at 100% of actual construction costs of facilities required by the subdivision plus area assessment.
· Useful Life – 75 Years.
Water Mains
· Assessment Rate will be determined on the basis of actual construction cost.
· Useful Life – 75 Years.
SPECIAL ASSESSMENTS DUE IN YEAR ASSESSED
· Ornamental street lighting, snow removal, weed cutting, tree planting, Business Improvement Districts, delinquent utility charges.
· Assessment based on total cost of operating and maintaining the system and is assessed in full to benefited properties.
· Purchases for all City departments for the City of Appleton shall be in accordance with the City Procurement Policy.
· The methods of source selection are as follows:
· Public Construction – Competitive Sealed Bidding must be used for purchases of $15,000 or greater in accordance with Wisconsin Statutes. This process shall consist of:
o Invitation for bids
o Public notice
o Bid opening
o Bid acceptance and evaluation
o Bid award – Common Council approval
· Purchases of $5,000 or more (other than Public Construction) require that a minimum of three written quotations be solicited. Any new contracts or agreements for services with an anticipated cost of $15,000 or more require the approval of the Committee of Jurisdiction and the Common Council prior to execution.
· Purchases greater than $500 but less than $5,000 require that at least two formal or informal quotes be solicited. Purchases up to $500 may be made based upon the best judgment of the department making the purchase.
· Sole Source Procurements – Purchases of goods and materials under $15,000 may be made without competition when it is agreed between the department and the Purchasing Manager that there is only one acceptable source available. Reasons for sole source purchases must be documented and will expire on an annual basis. Emergency purchases, as defined in the Procurement Policy, may also be exempted from the competitive bidding process. Such emergency purchases must also be documented and approved by the Mayor.
PENSION FUNDING AND REPORTING
POLICIES
· All current pension liabilities shall be funded on an annual basis.
Existing Plan Funding
· All permanent employees of the City are participants in the Wisconsin Retirement System (WRS), a state-wide, defined-benefit pension plan to which employer and employees both contribute. The rates of employer and employee contributions are set annually by WRS based on actuarial evaluations. The State’s policy is to fund retirement contributions to meet current costs of the plan. The 2004 rate requirements for the Wisconsin Retirement System employees are as follows:
General Police Fire Elected
Employment Contribution 5.6% 4.5% 3.2% 2.6%
City Contribution 4.2% 11.2% 14.2% 8.1%
Total 9.8% 15.7% 17.4% 10.7%
Prior Years’ Unfunded Pensions
· The State of Wisconsin administers a plan for retired employees of the Appleton Police and Fire Departments. These individuals had been covered by a private pension plan prior to the City contributions to meet current benefit payments to retired employees.
The City has paid off all WRS prior year unfounded pension liability.
ACCOUNTING, AUDITING, AND FINANCIAL REPORTING POLICIES
· An independent audit will be performed annually for all City funds.
· The City will produce a Comprehensive Annual Financial Report (CAFR) in accordance with Generally Accepted Accounting Practices (GAAP) as outlined by the Governmental Accounting Standards Board (GASB).
On January 1, 1990, the City of Appleton became one of thirty-seven municipalities that joined a municipal insurance pool with Cities and Villages Mutual Insurance Company (CVMIC), a municipal mutual insurance program, to provide liability insurance services. As part of this self-funded program, the City Insurance Fund provides coverage for $175,000 per general, automobile, police professional or public officials liability claim, to a maximum of $700,00 per year. The mutual insurance is liable for any costs above these limits up to $1 million per event/$10 million aggregate.
Additionally, the insurance fund provides coverage for:
$350,000 per worker’s compensation claim for Police and Fire employees, $300,000 per claim for all other employees, with purchased coverage to $2 million, $100 - $20,000 per property damage claim, depending on the property, with purchased replacement value coverage, $25,000 per employment practices liability claim, depending on the property, with purchased coverage to $1 million per occurrence/$1 million aggregate per year, and $25,000 per environmental liability claim related to the Mackville Landfill Site, with purchased coverage to $5 million per occurrence/$5 million aggregate.
· The objective of this program is to protect the City, its assets and the public against accidental losses, destruction, or depletion.
· The City will self-insure all losses which occur with predictable frequency and those which will not have a significant impact on the City’s financial position.
· The Human Resources Department and City Attorney’s Office review and make determinations on all claims. Claims in excess of $5,000 property damage and all bodily injury claims are also reviewed by CVMIC.
SPECIAL EVENTS POLICIES – INSURANCE REQUIREMENTS
Organizations that use City parks and/or City facilities for special events such as foot races, parades, festivals, etc., are required to obtain liability insurance (and other insurance as may be required for the event).
· $1,000,000/occurrence - $1,000,000 aggregate coverage is required for “large exposure events” such as parades, rock concerts, bike races, circuses, sidewalk sales, activities that draw 5,000 – 25,000 people, events with amusement devices, pony rides, bleachers used to seat more than 500 people or fireworks displays and other events with a high potential for liability. (For events in excess of 25,0000 people, there is also a $2,000,000 umbrella requirement.)
· $500,000/occurrence - $1,000,000 aggregate coverage is required for “medium exposure events” such as concerts (not rock), dances, parades (under 500 spectators), auto shows, animal shows or activities that draw less than 250 people. However, the sponsoring organization is responsible for any losses which may occur as a result of their activity. Further, they are required to sign a “Hold Harmless Indemnification” and defense sheet and are to carry adequate insurance to protect themselves. The City offers the CVMIC “TULIP” program to those interested parties.
· Coverage for “miscellaneous” jobs or activities such as asbestos abatement, pollution cleanup, oil recycling, hazardous waste removal, or any new contract or activities where it is not clear what level of insurance should be required would be set by Human Resources Director/Risk Manager.
Events not covered by the above-mentioned categories must be reviewed by the Human Resources Director/Risk Manager. All waivers of liability insurance must be approved by the Human Resources Director/Risk Manager.