The Fundamentals o of Budgeting for L Local Governments - PowerPoint PPT Presentation

The Fundamentals o of Budgeting for L Local Governments Oregon Government Finance Officers Association Fall 2018 Conference Tuesday October 16, 10:30 Craig Gibons Executive Director Tax Supervising and Conservation Commission

Surv rvey How Many of You Have…  Never prepared a budget?  Created a private sector budget?  Contributed to a budget?  Balanced a fund?  Balanced a whole budget? Is anyone here from a school district or community college? Has anyone just moved here from another state? 2

Key Concepts What is the legal purpose of creating a budget? To Create Appropriations. How important is it that the public have an opportunity to weigh in on a budget? Mandatory. Who sets the rules for how budgets are made? The State Legislature. 3

Key Concepts What is the purpose of Local Budget Law? 294.321 Standard Set of Procedures for all Municipal Corporations Program and Policy Descriptions Revenue and Expenditure Estimates Specific Methods for Pubic Input Means of Controlling Expenditures Financial Transparency 4

Key Concepts What are statutes? Laws Created by Legislature and signed by Governor. 294.305 to .565 What are administrative rules? State Agency Created Rules That Elaborate on State Statutes. Handout 1, LBL Admin Rules Index 5

Key Concepts What happens if your district does not follow Local Budget Law? Your District Can Not Levy Taxes Or Expend Money. 294.338(1) Any Public Official Who Expends Public Money  In Excess of the Amounts authorized by Law  Or for a Purpose other than Authorized by Law Shall Be Civilly Liable. 294.100 6

Key Concepts What are the three stages of building a municipal government budget in Oregon? Proposed Approved Adopted What group of people is the acting body in each of these three stages? Staff Budget Committee Governing Board 7

Step 1: Get Organized The Board appoints a Budget Officer who is responsible for assembling budget material and information and physically preparing the proposed budget. 294.331 What is that person’s first duty? Create a budget calendar. Handout 2, Sample Budget Calendar 8

Step 1: Get Organized What is a Budget Committee? 294.414 • The governing body and • Equal number of electors o May not be officers agents or employees o Serve with no compensation o Appointed by governing body to staggered 3-year terms • Board can remove a member, but only with caution • Elects a president at first meeting 9

Step 2: Create the Proposed Budget What is Fund Accounting and why do public bodies use it? Restricted Revenues Resources = Requirements 294.388(1) 10

Step 2: Create the Proposed Budget What are the types of funds according to Oregon Revised Statutes and Administrative Rules? 150-294-0420. • General Fund • Special Revenue Funds • Capital Projects Funds • Debt Service Fund • Special Assessment Funds • Enterprise Funds • Internal Service Funds • Trust and Agency Funds 11

Step 2: Create the Proposed Budget So the budget is organized by funds and each fund is divided into resources and requirements. Each fund has at least six columns for numbers. 12

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Step 2: Create the Proposed Budget Resources First Beginning Fund Balance Property Taxes Everything Else 14

Step 2: Create the Proposed Budget Beginning Fund Balance This year’s Ending Fund Balance is next year’s Beginning Fund Balance Fund balance as of today (2-1-18) $3,000,000 Estimates from today to June 30 th : Resources +1,000,000 Requirements -2,000,000 Ending Fund Balance $1,000,000 15

Step 2: Create the Proposed Budget Property Taxes Budgeting Permanent Rate and Local Option Levies Assessed Value x Tax Rate = Taxes Extended (Taxes Extended – Loss to Compression) x Collection Rate = Budget Budgeting GO Bond Property Tax Levy Debt Service Required x Collection Rate = Budget 16

Step 2: Create the Proposed Budget Assumption Worksheet 2018-19 District: East Multnomah SWCD Permanent Rate 0.1000 2014-15 2015-16 2016-17 2017-18 2018-19 Assumptions Actual Actual Actual Actual Assumed Actual Assessed Value 44,341,355,333 46,019,324,981 48,021,224,815 49,953,115,275 Actual Growth 4.81% 3.78% 4.35% 4.02% Assumed Growth 1.04 Assumed Assessed Value 51,951,239,886 Taxes Extended 4,449,759 4,631,422 4,833,985 5,024,356 5,195,124 Actual Compression 249,330 182,921 162,545 170,394 Compression as a % of Taxes Extended 5.60% 3.95% 3.36% 3.39% Assumed Compression Percentage 0.0340 Assumed Compression 176,634 Taxes Imposed 5,018,490 Assumed Discount and Delinquency Rate 5.0% Taxes Estimated to be received 4,767,000 17

Step 2: Create the Proposed Budget Total Resources Dictate Maximum Requirements Taxes Business Licenses Franchise fees Revenues Fines Resources Interest income Charges for services Donations Transfers in from Other Funds Transfers In Beginning Fund Balance Beginning Fund Balance 18

Step 2: Create the Proposed Budget Wages Benefits Personnel Services Retirement Statutory Benefits Professional Services Expenses Utilities Appropriations Office Supplies Materials and Services Requirements Travel and Meeting Equipment Property Maintenance Capital Projects Capital Outlay Transfers to Other Funds Transfers Out Transfers Out Contingency Contingency Contingency Ending Fund Balance Ending Fund Balance Ending Fund Balance Unappropriated 19

Step 2: Create the Proposed Budget Some Rules for Requirements  Personnel Services: Individual positions do not need to be listed in budget, roll them up to a wages line item. Include Full Time Equivalent (FTE) tally.  Capital Outlay: The district determines what qualifies as a capital expenditure. Document that decision in financial policies.  Debt Service: Budget must show separate amounts for principal and interest 294.388(6)  Contingency: In operating funds only, no limit on size, but can not be used for expenditures- must be transferred to an expenditure line item. 150-294-0430 and 294.463(2)  Ending Fund Balance: not an appropriation. Use is severely restricted. 150-294-0440 20

Step 2: Create the Proposed Budget Revenues – Expenditures = Increase or (Decrease) in Fund Balance Appropriations are listed in the budget resolution and are the legal spending limit for the fiscal year. Requirements must equal Resources . 21

Step 2: Create the Proposed Budget Finish the Proposed Budget • Total budget has to balance. • Total transfers have to balance. • At a minimum, proposed budget consists of the detail budget sheets and budget message 294.403 22

Step 3: Budget Committee Process Budget Committee Meeting Notice 294.426 (3, 4, & 5) • Use the state form. Budget Committee Duties 294.426 • Receive the budget message and document • Provide for public comment • Deliberate, revise, and approve the budget and ad valorem tax amount or rate for all funds Budget Committee Rules • Meeting quorum is one more than half the committee 150-294-0450 • Affirmative votes require “yes” votes from one more than half the full committee 150 -294-0450 • Individual members have no authority to act, only the committee can act 294.428(3) • Deliberations must be done in public at committee meetings 294.426(6)(a) • Committee may compel attendance and/or documents 294.428(2) 23

Step 3: Budget Committee Process 24

Step 3: Budget Committee Process 25

Step 3: Budget Committee Process • Budget Committee duties are finished when the Committee approves the budget. • Off Season Budget Committee meetings 294.428 (2) and state handout Handout 3, Pre-meeting Topics for Budget Committee Discussion 26

Step 4: Prepare Budget for the Board Update detail sheets with changes from Budget Committee Give notice of Budget hearing 249.438 Notice requirements Use state form: https://www.oregon.gov/DOR/forms/FormsPubs/form-lb-1-municipal_504-073-2.pdf Handout 4, Notices of Budget Committee Meetings Error in the notice, notify board at next available meeting 294.451 Keep track of any staff-initiated suggestions for changes to the budget 27

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Step 4: Prepare Budget for the Board Create budget resolution and LB-50 Format of budget resolution: 294.456(3)(a) Manner of Appropriations: 150-294-0510 Include tax rates, tax amounts, and categorization in budget resolution Handout 5, Budget Resolution Create Notice of Property Tax and Certification of Intent to Impose a Tax, Fee, Assessment, or Charge on Property (Form LB-50) Handout 6, LB-50 29

Step 5: Hold the Budget Hearing 150-294-0480 Quorum and voting One more than half the board must vote in the affirmative to pass resolution 294.453 any person may appear 30

Step 6: Adopt the Budget & Levy Taxes • Staff introduces suggested changes • Board considers public testimony, deliberates, and changes budget • Cannot increase taxes 294.456 (1)(c)(C) • Changes limited to 10% of expenditures in each fund 294.456 (1)(c)(A) • Budget must be balanced • Board votes on Budget Resolution and ad valorem taxes 31

Step 6: Adopt the Budget & Levy Taxes What has the Governing Board done by adopting the budget? Created Appropriations, the legal authority to send money- and the legal limit. Authorized the County Assessor to levy taxes on its behalf. 32