HomeMy WebLinkAbout186491 ORDINANCE NO. 18,649
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3 AN ORDINANCE TO AMEND ARTICLE VI, CHAPTER 2, OF THE
4 REVISED CODE OF ORDINANCES TO ESTABLISH FINANCIAL
5 POLICIES FOR THE USE OF CITY OF LITTLE ROCK, ARKANSAS; TO
6 DECLARE AN EMERGENCY; AND FOR OTHER PURPOSES.
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8 WHEREAS, the City of Little Rock, Arkansas, has an annual budget that is in excess
9 of one hundred and sixty million ($160,000,000) dollars, and
10 WHEREAS, the combined assets for the City from all funds, including the primary
11 City government assets as well as those from capital projects, enterprise funds, external
12 boards and commissions, and other sources, is at least one billion, two hundred and
13 twenty two million, four hundred and fifty thousand, nine hundred and eighty four
14 dollars ($1,222,450,984), according to the Comprehensive Annual Financial Report for the
15 City of Little Rock, Arkansas, for the year ended December 31, 2000, and
16 WHEREAS, the Board believes that formal financial policies are required for the
17 City and adopts the policies contained in this ordinance for the use of the City of Little
18 Rock, Arkansas.
19 NOW THEREFORE, BE IT ORDAINED BY THE BOARD OF DIRECTORS OF
20 THE CITY OF LITTLE ROCK, ARKANSAS:
21 Section 1. The financial policies attached as Attachment A hereto are adopted
22 and incorporated by reference herein as the formal financial policy of the City of Little
23 Rock, Arkansas.
[PAGE 1 OF 21
Ordinance
Financial Policy
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Section 2. Severability. In the event any title, section, paragraph, item, sentence,
clause, phrase, or word of this ordinance is declared or adjudged to be invalid or
unconstitutional, such declaration or adjudication shall not affect the remaining portions
of the ordinance which shall remain in full force and effect as if the portion so declared or
adjudged invalid or unconstitutional was not originally a part of the ordinance.
Section 3. Repealer. All earlier ordinances and resolutions expressly related to
financial policies of the City are hereby repealed.
Section 4. Emergency. It is essential to the City's public health, safety and welfare to
assure that a comprehensive document containing the financial policy of the City of Little Rock be
approved and in place in order to assist city officials and financial managers in the conduct of City
business; therefore this ordinance shall be in full force and effect on February 19, 2002.
PASSED: February 19, 2002
ATTEST:
Na cy Woo , City Clerk
APPROVED AS TO LEGAL FORM:
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20 Thomas M. Carpenter, City 4orney
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[PAGE 2 OF 21
Ordinance
Financial Policy
APPROVED: �,
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Ji Dailey, Mayor
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ATTACHMENT A
CITY OF LITTLE ROCK
FINANCIAL POLICIES
February 19, 2002
A. OPERATING MANAGEMENT
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1. All City departments will share in the responsibility of meeting policy goals and
ensuring long -term financial health. Future service plans and program initiatives will
be developed to reflect current policy directives, projected resources and future
service requirements. When appropriate, sunset provisions will be incorporated into
service plans.
2. The budget process is intended to weigh all competing requests for City resources.
Requests for new, on -going programs made outside the budget process will be
discouraged.
3. Addition of personnel will only be requested to meet program initiatives and
policy directives, after service needs have been thoroughly examined and it is
substantiated that additional staffing will result in increased revenue or enhanced
operating efficiencies. To the extent feasible, personnel cost reductions will be
achieved through attrition.
4. Current expenditures will be funded by current revenues. A diversified and stable
revenue system will be developed to protect programs from short-term fluctuations in
any single revenue source.
5. No revenues will be dedicated for specific purposes, unless required by law or
generally accepted accounting practices (GAAP). All nonrestricted revenues will be
deposited in the General Fund and appropriated by the budget process.
6. User fees and charges will be examined annually to ensure they recover all direct
and indirect costs of service. If the user fees and charges required to meet full cost
recovery would be excessively burdensome on citizens receiving service, the Board
of Directors may approve a lower user fee or charge. The City will consider market
rates and charges levied by other public and private organizations for similar services
in establishing rate and fee structures. Rate adjustments for Waste Disposal will be
based on five -year financial plans.
7. Grant funding should be considered to leverage City funds. Inconsistent and /or
fluctuating Grants & Trusts should not be used to fund on -going programs. Programs
financed with grant moneys will be budgeted in separate cost centers, and the service
program will be adjusted to reflect the level of available funding. In the event of
reduced grant funding, City resources will be substituted only after all program
priorities and alternatives are considered during the budget process.
8. All grants and other federal and state funds shall be managed to comply with the
laws, regulations, and guidance of the grantor, and all gift and donations shall be
managed and expended according to the wishes and instructions of the donor.
9. Fleet replacement will be accomplished through the use of a "rental" rate structure.
The rates will be revised annually to ensure that charges to operating departments are
sufficient for operation and replacement of vehicles.
10. Balanced revenue and expenditure forecasts will be prepared to examine the
City's ability to absorb operating costs due to changes in the economy, service
demands, and capital improvements. The forecast will encompass five years and will
be updated annually.
11. Comparison of service delivery will be made to ensure that quality services are
provided to our citizens at the most competitive and economical cost. Departments
will identity all activities that can be provided by another source and review
alternatives to current service delivery. The review of service delivery alternatives
will be performed continually. During the annual budget process, funding for Outside
Agencies, FUTURE - Little Rock, and special projects will be evaluated.
12. To attract and retain employees necessary for providing high quality services, the
City shall establish and maintain a very competitive compensation and benefit
package with the public and private sectors.
13. The City will follow an aggressive and professional policy of collecting
revenues.
14. In each annual budget, the City may authorize a transfer from one fund to another
for one or more special projects. Expenditures from the special project shall be
consistent with the purpose of the special project. Unspent appropriations for special
projects shall carry forward into the next fiscal year. Unspent special project
appropriations remaining on June 30 in the next fiscal year shall be returned to the
fund of origin unless the City Manager authorizes a special project to continue.
15. The City will strive to maintain fair and equitable relationships with its
contractors and suppliers.
B. CAPITAL MANAGEMENT
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1. A five -year Capital Improvement Plan will be developed biannually and updated
annually, including anticipated funding sources. Capital improvement projects are
defined as infrastructure or equipment purchases or construction that results in a
capitalized asset costing more than $5,000 and having a useful life (depreciable life)
of two years or more.
2. The capital improvement plan will include, in addition to current operating
maintenance expenditures, an adequate level of funding for maintenance and
replacement to ensure that all capital facilities and equipment are properly
maintained.
3. Proposed capital projects will be reviewed by a cross - departmental team for
accurate costing (design, capital, and operating), congruence with City objectives and
prioritized by a set of deterministic criteria. Financing sources will be sought for the
highest - ranking projects.
4. Capital improvement operating budget impacts will be coordinated with the
development of the annual operating budget. Future operating, maintenance, and
replacements costs will be forecast as part of the City's five -year financial forecast.
5. The City will provide for a minimum of 5% of internal, pay -as- you -go financing
for its Capital Improvement Program. Funding may come from fund balance
reserves or any other acceptable means of funding.
C. DEBT MANAGEMENT
1. The City will seek to maintain and, if possible, improve its current bond rating in
order to minimize borrowing costs and preserve access to credit. The City will
encourage and maintain good relations with financial bond rating agencies and will
follow a policy of full and open disclosure.
2. Every future bond issue proposal will be accompanied by an analysis showing
how the new issue combined with current debt impacts the City's debt capacity and
conformance with City debt policies.
3. The City will attempt to develop a coordinated communication process with all
other overlapping jurisdictions with which it shares a common tax base concerning
collective plans for future debt issues.
4. Financing shall not exceed the useful life of the asset being acquired.
5. The City will not use long -term debt to finance current operations.
6. The general policy of the City is to establish debt repayment schedules that use
level annual principal and interest payments.
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7. The general policy of the City is to fund capital projects (infrastructure) with new,
dedicated streams of revenue or voter approved debt. Nonvoter approved debt may be
utilized when a dedicated revenue source other than general revenue can be identified
to pay debt service expenses.
8. Interest earnings on bond proceeds will be limited to 1) funding the improvements
specified in the authorizing bond ordinance, or 2) payment of debt service on the
bonds.
9. Utility rates will be set to ensure debt service coverage exceeds the bond indenture
requirement of 125 %.
10. The City shall comply with the Internal Revenue Code Section 148 — Arbitrage
Regulation for all tax- exempt debt issued. An annual estimate of arbitrage liabilities
shall be obtained by the City and recorded on the financial statements.
11. The City shall use a competitive bidding process in the sale of debt unless the use
of a negotiated process is warranted due to market timing requirements (refunding),
or a unique pledge or debt structure. The City will award competitively issued debt on
a true interest cost (TIC) basis.
12. Proceeds from debt will be used in accordance with the purpose of the debt issue.
Funds remaining after the project is completed will be used in accordance with
the provisions stated in the bond ordinance that authorized the issuance of the
debt.
1. All fund designations and reserves will be evaluated annually for long -tern
adequacy and use requirements in conjunction with development of the City's five -
year financial plan.
2. The General Fund goal is to set aside $10,000,000 or 10% of general fund
revenues, whichever is greater, into a restricted reserve fund on or before December
31, 2005. Thereafter, the restricted reserve shall be maintained at the greater of
$10,000,000 or 10% of general fund revenues.
3. Each annual operating budget will include a contingency appropriation in the
general fund sufficient to provide for unforeseen needs of an emergency nature for
that year. The desired level of the contingency appropriation each year shall be based
on the average of the three prior years' experience levels but no less than .5% of
general fund revenue for the current fiscal year.
4. The Waste Disposal fund will maintain an unrestricted retained earnings reserve of
no less than 15% of current year revenues.
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S. Fleet Management reserves will be maintained based upon lifecycle replacement
plans to ensure adequate fund balance required for systematic replacement of fleet
vehicles. Operating departments will be charged for fleet operating costs per vehicle
class and replacement costs spread over the useful life of the vehicles.
6. Self- insurance reserves will be maintained at a level that, together with purchased
insurance policies, will adequately indemnify the City's property and liability risk. A
qualified actuarial firm shall be retained on an annual basis in order to recommend
appropriate funding levels.
7. A Facility Maintenance Reserve will be maintained based upon lifecycle
replacement plans to ensure adequate funding for infrastructure repair and operating
equipment replacement (HVAC, roofing, etc.).
E. CASH MANAGEMENT AND INVESTMENTS
1. Cash and Investment programs will be maintained in accordance with the City
Charter and the adopted investment policy and will ensure that proper controls and
safeguards are maintained. City funds will be managed in a prudent and diligent
manner with an emphasis on safety of principal, liquidity, and financial return on
principal, in that order.
2. The City will maintain written guidelines on cash handling, accounting,
segregation of duties, and other financial matters.
3. The City will conduct periodic reviews of its internal controls and cash handling
procedures.
4. The City will annually identify and develop an Internal Audit Work plan
F. ACCOUNTING AUDITING AND FINANCIAL REPORTING
1. The City's accounting and financial reporting systems will be maintained in
conformance with generally accepted accounting principles (GAAP) and the
standards set by the Governmental Accounting Standards Board (GASB) and the
Government Finance Officers Association (GFOA).
2. An independent public accounting firm will perform an annual audit. The auditor's
opinion will be included with the City's published Comprehensive Annual Financial
Report (CAFR).
3. The City's CAFR will be submitted to the GFOA Certification of Achievement for
Excellence in Financial Reporting Program. The financial report should be in
conformity with GAAP, demonstrate compliance with finance related legal and
contractual provisions, provide full disclosure of all financial activities and related
matters, and minimize ambiguities and potentials for misleading inference.
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4. The City's Budget will be submitted to the GFOA Distinguished Budget
Presentation Program. The budget should satisfy criteria as a financial and
programmatic policy document, as a comprehensive financial plan, as an operations
guide for all organizational units and as a communications device for all significant
budgetary issues, trends and resources.
5. Financial systems will be maintained to monitor revenues, expenditures, and
program performance on an ongoing basis.
6. Monthly and quarterly reports shall be prepared and presented to the Board of
Directors on a timely basis.
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