Governance Element (Public Hearing Draft, 5/1/13)
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Municipal Finance

Decisions concerning municipal finance are the clearest indicators of how community goals, values and priorities guide the City’s future. Municipal finance includes:

Annual Budgeting Process. The municipal finance system centers around the preparation, adoption, and implementation of the annual budget and Long Term Financial Plan (LTFP). The LTFP establishes policy, allocates funds, guides operations, anticipates future financial circumstances and clearly communicates fiscal choices to residents, businesses and investors.

Capital Improvement Program. To address community needs for public facilities and infrastructure, the City annually prepares and adopts a Capital Improvement Program, a six-year schedule setting priorities and timing of engineering and design, land acquisition, and construction for public works projects.

Cash Management. This is a set of Council-approved strategies that guide how the City invests short-term cash flow and longer-term reserves. The City also maintains an Investment Policy to comprehensively guide the responsible management of City funds available for investment. These may include, but are not limited to, temporarily idle cash, reserve funds, trust, agency, and capital funds.

Fund Balance and Reserves. The City seeks to maintain certain levels of funds in reserve, including “emergency” and “sustainability” reserves for unforeseen cash flow disruptions and for specific purposes, such as post-retirement health care expenses. All reserves are established by a set of Council adopted Fiscal Policies and updated each year during LTFP.

Revenue and Expenditure Forecasting. The City conservatively forecasts future revenues and expenditure needs and constantly tracks those assumptions. These steps are critical to our fiscal health.

Risk Management. The risk management program includes reserves to cover potential losses, risk control programs and activities, and self-insurance pools.


GOAL:

Establish and maintain an easily understood, transparent, and accountable municipal finance system that implements the Mission Statement, Vision and Centennial General Plan, safeguards the City's assets and maintains the public's trust.

POLICIES:

G-2.01. Consistent and Transparent Assessment. We make fiscal decisions and carry out fiscal planning using a consistent and transparent process.
G-2.02. Finance and Administrative Services Department Responsibility. We require the Finance and Administrative Services Department to review City Council agenda reports to identify potential fiscal impacts.
G-2.03. Transparency in Information. We expect our City's budget and annual financial report documents to maintain the highest accounting standards for clarity and content.
G-2.04. Critical Factors for Finances. On an ongoing basis, we identify critical factors which have, or are expected to have, an impact on the City’s financial condition.
G-2.05. Financial Forecast. We update the comprehensive five-year financial forecast for the General Fund, incorporating adopted City fiscal policies, expenditure patterns, revenue trends, General Plan implementation and other known financial impacts.
G-2.06. Reserve Analysis. We analyze and recommend appropriate levels of reserves to (a) ensure they are adequate to provide for the needs of each fund program, (b) meet program needs without unnecessarily obligating scarce dollar resources and (c) ensure compliance with City fiscal policies and legal requirements by State, County or Local Ordinances.
G-2.07. Strategic Implementation Program and Capital Projects Analysis. We provide an annual summary of the General Plan Strategic Implementation Program and capital projects with funding challenges and obligations for significant projects.
G-2.08. Maintenance and Replacement Costs. We will annually project our equipment replacement and maintenance needs for the next five years and will update this projection each year. A maintenance and replacement schedule will be developed and followed.
G-2.09. General Fund Purpose. We pursue a strategy to allocate general fund resources toward the City's provision of basic municipal services.
G-2.10. Department Budget Limitation. We will not commit to spending more than a conservative projection of recurring revenues for the City as a whole.
G-2.11. Departmental Budgeting Requests. We require each department’s annual budget request to be free from reliance on one-time or unsustainable revenues (except for specific grant funded projects) and from deficit spending.

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