Loading...
HomeMy WebLinkAbout2024 Final BudgetORDINANCE NO. 1022 CITY OF MEDINA, WASHINGTON AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MEDINA WASHINTON ADOPTING A BUDGET FOR THE YEAR 2024, AND SETTING FORTH IN SUMMARY FORM THE TOTALS OF ESTIMATED REVENUES AND EXPENDITURES FOR EACH SEPARATE FUND AND THE AGGREGATE TOTALS FOR ALL SUCH FUNDS COMBINED AND ADOPTING THE 2024 SALARY SCHEDULE WHEREAS, State law requires the City to adopt a budget and provides procedures for the filing of a budget, deliberations, public hearings, and final fixing of the budget, and WHEREAS, a preliminary proposed budget for 2024 has been prepared and filed with the City Clerk, and WHEREAS, the City of Medina City Council held a public hearing on September 11 and October 9, 2023 to gather input as part of the 2024 budget process, and another public hearing on November 13, 2023 for the 2024 Property Tax Levy and the 2024 proposed budget, and deliberated and considered the preliminary proposed budget, and WHEREAS, the preliminary proposed final budget does not exceed the lawful limit of taxation allowed by law to be levied on the property within the City of Medina for the purposes and estimated expenditures set forth necessary to carry on the services and needs of the City of Medina for the calendar year 2024. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MEDINA, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. In accordance with the provisions of R.C.W. 35A.33.075, the budget of the City of Medina, WA, for the year 2024, is approved on the 13th day of November after the notice of hearings and after the preliminary budget having been filed with the City Clerk as required by law. SECTION 2. Estimated resources for each separate fund of the City of Medina, and aggregate expenditures for all such funds for the year 2024 are set forth in a summary form below, and are hereby appropriated for expenditure at the fund level during the year 2024 as set forth in the 2024 Budaet. General Street Tree Dev Services Contingency Capital Levy Stabilization Total Fund Fund Fund Fund Fund Fund Fund All Funds Beginning Fund Balane S 4,044,464 16 $ 17,42Z05 $ 50,595 98 $ 1,130,371 85 S 250,000 00 S 6,895,707 56 S 1,500,000,00 $ 13,888 566 60 S - Revenues S 8,121,201.04 $ 122,09600 $ 3,075.00 $ 1,247,500.00 $ - $ 1,300,00000 S - S 10,793,87204 Transfers In S - $ 535,000 00 $ - $ - S S - $ 400,000.00 $ 935,000 00 Total Resources S 8,121,201.04 $ 657,096.00 $ 3,075.00 $ 1,247,500.00 $ S 1,300,000.00 S 400,000.00 $ 11,728,872.04 Expenditures S 7,103,85592 S 645,426.76 $ 30,000.00 $ 1,224,93596 $ $ 1,495,000,00 S - $ 10.499,21864 Transfers Out $ 860,000 00 S - $ - $ - $ S 75,00000 S S 935,000 00 Total Uses $ 7,963,855.92 S 645,426.76 $ 30,000.00 $ 1,224,936.96 $ $ 1,570,000.00 $ $ 11,434,218.64 Ending Fund Balances $ 4,201,809.29 $ 29,096.29 $ 23,670.98 $ 1,152,935.89 $ 250,000.00 $ 6,625,707.56 $ 1,900,000.00 $ 14,183,220.01 Ordinance No. 1022 Page 1 of 2 SECTION 3. The 2024 Salary Schedule for authorized positions is attached as Attachment A and hereby adopted. SECTION 4. The City Clerk is directed to transmit a certified copy of the budget hereby adopted by reference to the Office of the Auditor of the State of Washington, Division of Municipal Corporation, and the Association of Washington Cities. Section 5. Corrections. The City Clerk and codifiers of the ordinance are authorized to make necessary corrections to this Ordinance including, but not limited to, the correction of scrivener/clerical errors, references, ordinance numbering, section/subsection numbers and any references thereto. Section 6. Severability. If any section, subsection, paragraph, sentence, clause, or phrase of this Ordinance is declared unconstitutional or invalid for any reason, such invalidity shall not affect the validity or effectiveness of the remaining portions of this Ordinance. THIS ORDINANCE SHALL TAKE EFFECT AND BE IN FORCE ON AND AFTER THE 1 ST DAY OF JANUARY 2024. PASSED BY THE CITY COUNCIL OF THE CITY OF MEDINA ON THE 13th DAY OF NOVEMBER 2023 BY A VOTE OF_ FOR, _AGAINST, AND _ ABSTAINING, AND IS SIGNED IN AUTHENTICATION OF ITS PASSAGE THE 13th DAY OF NOVEMBER 2023. Approved as to form: Ogden Murphy Wallace, PLLC Scott Missall, City Attorney PUBLISHED: I I I'Ui2-aZ� EFFECTIVE DATE: 01/01/2024 ORDINANCE NO.: 1022 Jessica Rossman, Mayor Attest: pi mugy * aAknrc 'AM Aimee Kellerman, City Clerk Ordinance No. 1022 Page 2 of 2 City of Medina Ordinance Number 1022 Attachment A 2024 Salary Schedule The 2024 salary ranges for full time city employees shall be as follows (see notes in blue): Exempt Unrepresented EmDlovees: COLA increase = CPl-W, capped at 4% FTE Minimum Midpoint Maximum Building Official 0 $9,626 $10,695 Planning Manager 1 $8,554 $9,626 $10,695 Public Works Director 1 $9,858 $11,089 $13,554 Development Services Director 1 $9,858 $11,089 $13,554 Finance/HR Director 1 $9,858 $11,089 $12,322 City Clerk 1 $9,858 $11,089 $12,322 Police Chief 1 $12,143 $13,661 $15,176 Pty Manager 1 $12,442 $13,996 $16,666 Non Exempt Unrepresented Employees: COLA increase = CPI-W, capped at 4% FTE Minimum Midpoint Maximum Assistant Finance Director * 1 $6,543 $7,851 $9,194 Police Captain 1 $10,275 $11,558 $12,842 collective tiarciainina Agreement between City of Medina and Gltv of Medina Patrol UnIcers: Police Guild Contract 4.5% COLA Increase FTE Step A Step B Step C Step D Patrol Officer A $7,766 i $8,223 $8,679 $9,138 Patrol Officer B $7,860 $8,317 $8,771 $9,231 Patrol Officer C 2 $8,042 $8,499 $8,956 $9,412 Patrol Officer D 4 $8,223 $8,679 $9,140 $9,595 Police Sergeant A 1 $9,151 $9,649 $10,160 $10,679 Police Sergeant B $9,333 $9,830 $10,341 $10,863 Public, Professional and Office -Clerical Employees Union, Local 763 (Representing Public Works Employees): Teamsters Guild Contract 4% COLA Increase FTE Step A Step B Step C Step D Maintenance Worker 3 $6,050 $6,307 $6,663 $7,029 Maintenance Supervisor 1 $7,361 $7,770 $8,187 $8,624 Public, Professional and Office -Clerical Employees Union, Local 763 Revresentina Office -Clerical Employees): Teamsters Guild Contract 4% COLA Increase FTE Stop A Stop B Step C Step D Admin. Assistant -Deputy Clerk 1 $6,050 $6,307 $6,663 $7,029 Information Systems Coordinator 1 $6,050 $6,307 $6,663 $7,029 Police Administrative Specialist 1 $6,050 $6,307 $6,663 $7,029 Development Services Coordinator 1 $6,174 $6,360 $6,696 $7,049 Deputy Building Official 1 $6,562 $7,437 $8,312 $9,185 Police Office Manager 1 $7,361 $7,770 $8,187 $8,624 = position currently Mad with pad -lime employee with salary pro -rated at 0 7 FTE I YZA we, 11 mil am, I �MEDINA 2024 Budget Calendar City of Medina, Washington Statutory Planned/Actual Dates Dates 2024 Budget Process No legal requirement September 11, Council holds Public Hearing to gather input on 2023 2024 Preliminary Budget. City Manager provides City Council with 2024 Oct 2, 2023 September 11, Revenue projections for the current year. City 2023 Manager provides a 2024 Preliminary Budget showing 2022 Revenue and Expenditures by Department. No legal requirement City Council holds a study session on 2024 Sept 25, 2023 Preliminary Budget. Balancing decisions made if necessary. October 9, 2023 City Manager files 2024 Updated Preliminary Budget Nov 2, 2023 & Budget Message with the City Clerk and the City Council. Prior to November October 9, 2023 City Council holds Preliminary Public Hearing on 25, 2023 2024 Budget & Revenue Sources (Property Tax Levy) Dates as needed City Clerk publishes notice of filing of 2024 Budget No later than Nov 2, prior to Nov 8t" and publishes notice of public hearing on final through Nov 20, meeting budget once a week for two consecutive weeks. 2023 Copies of 2024 proposed final budget are made Nov 21, 2023 Nov 13, 2023 available to the public at the Regular City Council meeting. Council holds Final Public Hearing and sets the Nov 30, 2023 (KC Nov 13, 2023 2024 Property Tax Levy to certify property tax levy to due date) King County Assessor's Office (Hearing due date 12/4/23) Dec. 31, 2023 Nov 13, 2023 Council adopts Final 2022 Budget at the Regular Monthly City Council meeting. Copies of 2024 Final Budget Ordinance are filed After Adoption After Adoption with the Washington State Auditor's Office, MRSC and AWC. IMEDINA To the Community and Council of the City of Medina, staff is proud to present the 2024 preliminary budget memo. Please note a more comprehensive overview will be provided alongside the budget workbook prior to the deep dive at the second September Council meeting. Included with the memo is an overview of the 2019 passed property tax levy lid lift, with an updated financial forecast through 2031. Lastly, the overall preliminary summary of the 2024 budget, along with a brief description and highlights for visibility before the deep dive. 2019 Property Tax Levy Lid Lift The promises that were made to the voters, if they passed the measure, are the foundation this budget was built on. Why did we go to the ballot? The City was at a financial crossroads. Rising costs were making it difficult for the City to provide the level of services our community has come to expect. Until 2019, the City had been able to balance the budget through aggressive cost -savings measures, identifying additional revenue sources and dipping into reserves. But in looking long-term, the City determined it could no longer find efficiencies without impacting service delivery. The 1% rule: While property values continue to rise, the City's tax revenues don't rise in tandem. This is because the City's tax revenues are not based on a percentage of Medina property value; instead, the City is authorized to collect a predetermined amount of property tax each year, and each homeowner pays a proportional share of that predetermined amount. Since 2001, local governments (like Medina) are not allowed to raise their portion of the property tax levy beyond one percent (1%) a year without a vote of the public. For context: In 2019, the City's total 2019 property tax income was set by state law at $2.8 million in total, and a 1% increase would only yield an additional $28,000 for the City in 2020, not nearly enough to cover the rising cost of services. (Fire services alone increased by nearly double that amount in 2019.) Asking the voters to decide: In the fall of 2019, the question of how to maintain Medina went to voters. Because the levy lid lift was approved, the City has funds to continue current service levels without significant cuts. 99% of all Medina's General Fund & Street Operations spending is for services that are state -mandated or essential support functions to the mandated services. �MEDINA However, the state doesn't dictate the level of services to be provided. For example, a city must provide law enforcement, but the state doesn't dictate staffing levels, how often patrols are scheduled, or whether lifeguards are required for public beaches. After nearly 20 years of budget trimming, Medina was facing the need to cut into service levels that would be noticeable in every area, including public safety. In 2018, City Council and staff started a 2-year process of long-term financial planning, exploring options and public engagement surrounding a levy lid lift measure. These promises were born from those conversations and must be kept: -Maintain the same LEVEL of services as before the levy lid lift. Remember, these were already trimmed service levels. This dictates a service level, status - quo budget. So, no additions or reductions from the promises made in 2019. -Restore the City's measures of financial health: • Start each new year with the full General Fund required balance to cover first quarter expenses. This is something the State Auditor looks for, as well as creditors. It allows us to continue to pay the bills while waiting for our major source of funding (property taxes) that only get paid to the City in portions every 6 months. • Engaged Finance Committee. • Continual long-term financial planning, always looking ahead 10 years. • Contingency Fund rebuilt. • *Develop community friendly financial statements. -Make the "bump" from the 6-year levy last at least 10-years. Levy year 1 (2020) filled the gap and allowed services to continue without reduction. Years 2-6 (2021-25) will have budgeted transfers to a Levy Stabilization Fund in amounts that will build a minimum operating reserve of $2M to draw on for at least another 4 years. 2023s budget reflects a $500K transfer into this fund. See illustration below. (MEDINA "_ , , 1111 S10.000.000 $9.000.000 S8.000.000 S7.000.000 S6.000.000 $5.000,000 S4.000.000 $3.000,000 S2,000.000 S 1.000.000 S- Excm to ur„ ShbMz~ Fu. 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 —Operating Revenues —Operating Expenditures SPECIFICS ABOUT THE LEVY The levy's structure was designed to have an initial increase of no more than $0.20 per $1000 assessed value (example $21VI AV home = additional $400/year). In 2020 this gave the City an additional 12% of revenue towards General Fund and Street Operations, $941,572. For the next five years (2021-2025) the City will be allowed to increase this amount by 5%, see projected table below. In 2026 the previous year's levy total will roll into the regular property taxes, which is limited to subsequent annual increases of no more than 1% (unless another levy lid lift is approved by voters). Haw Much Extra Funds is the Levy Lid Lift Creating Each Year? Projected Revenues, 2020-2029 Amount of Increase Total 2020 $ 941,572 $ 941,572 Initial "bump" 2021 $ 47.079 $ 988.651 2022 $ 49.433 $ 1.038.083 2023 $ 51,904 $ 1.089.987 +5%each yea r 2024 $ 54.499 $ _ 1,144.487 _ 2025 $ 57_224 $ 1_201.711 2026 $ 12.017 $ _ 1_213.728 2027 $ 12.137 $ 1.225.865 +t96 each 2028 $ 12_259 $ year 1_238.124 2029 $ 12.381 $ 1_260.506 $ 11.332.713 10-year total CMEDINA Forecasting for the Future After the Levy passed, former Finance Director Julie Ketter prepared the following report to compare forecasted operating revenues to expenditures over the life of the Levy and beyond. She predicted a crossover point of 2027, where expenditures would surpass revenue and the City would then have to dip into the stabilization fund. $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 Projected Revenues & Expenses, General & Street Operations $2,000,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 —Operating Revenues —Operating Expenditures Now that we are preparing for the 2024 Budget, a new forecast is imperative to track the financial stability of the City and to prepare for the future. When the prior model was created, there was no way to predict the impact that the COVID 19 pandemic would have on the City and its finances. With a halt to projects and a stay-at-home order in effect, the City saw a decrease in expected expenditures in 2020 and 2021 while subsequently seeing an increase in sales tax revenue. This would not last however as 2022 and 2023 have seen an inflationary increase across the board, only somewhat mitigated by the increase in investment interest revenue. These increases are expected to impact the 2024 budget, before a predicted gradual return to pre -pandemic levels within 2-5 years. IMEDINA -` , , 11 The below graph shows that while revenue and expenditure numbers differ from the 2020 model, the crossover to deficit spending is still on track for 2027 with the Levy stabilization amount predicted to supplement the general fund until at least 2031. Revenue Compared to Expenditure Forecast $11, 000,000 $10,000,000 $9,000,000 $8,000,000 ' $7,000,000 ' $6,000,000 $5,000,000 "Gap Years", 2027 - 2031 will be subsidized by Levy Stabilization and Contingency Funds Established 2021 - 2025. 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Operating Revenue - —Operating Expenditures 2024 Preliminary Budget Summary With high inflation raising prices across the board for almost every department, I must thank staff for their conservative approach, to allow us to bring a balanced preliminary budget to both Council and the community. First an overview of the total preliminary numbers across the board for 2024, followed by key items by department and fund. Please note that this is a working document, and all numbers are subject to change as additional information and feedback is given. CMEDINA City of Medina 2024 Budget - General Fund Revenue Total Revenue $ 8,121,201 Change S 302.432 Expenditures Department 0023 Adopted Budget 2024 Proposed Budget Delta Exec. 281,185 $ 292:970 $ 11, 785 Finance 568,879 $ 683,422 $ 114,544 Central Services 1.261:218 1,199:643 $ (61, 575) Police 2.669;889 $ 2;803;273 $ 133,384 Fire 827;788 $ 934;285 $ 106,497 Parks 605;610 $ 608,415 $ 2,805 Rec Services 48;500 $ 48;500 $ - Legislative 70.500 $ 70;500 $ - Municipal Courts 62;000 $ 63;000 $ 1.000 Legal 327:200 $ 347;200 $ 20,000 Social and Env. Services 42,058 $ 52;648 $ 10,590 Transfers 940:000 $ 860;000 $ (80:000) Total General Fund Exp. $ 7,704,827 $ 7,963,856 $ 269.029 Total General Fund Surplus $ 157,345 City of Medina 2024 Budget Capital Fund Revenue Total Revenue Change $ S Expenditures 1.300,000 46,735 Total Capital Total Stormwater $ $ 1.220.000 350.000 Total Capital Fund Exp. $ 1,570,000 Change $ 406.000 Variance between Capital revenue and Capital expenditures due to NE 12th Sidewalk project beling carried over from 2023. City of Medina 2024 Budget Dev Services Fund Revenue Total Revenue Change $ S Expenditures 1,121,500 1 Total Expenditures $ 1,098,936 Change $ 223.109 �MEDINA 2024 General and Street Fund, ($8,149,283), 75% of Total City Budget From a financial standpoint, the General Fund makes up the largest portion of the City's budget. The General Fund includes the Police Department, Central Services, Finance, Parks, Fire Services, and more. Please note while the Street Fund is separate on the accounting side, it has been included as over 75% of the fund's revenue consists of transfers from the General Fund. Revenue Notes: -Property tax revenue increase of 3.3% per the Levy Lid Lift and legacy portions. -Sales tax budgeted at a 1.8% increase from 2023 predicted with a rise in inflation. -Intergovernmental income estimated by MRSC, expected to drop as Medina's population fell from 2022 to 2023. -With the increase in interest rates, interest earning income in 2024 is predicted to increase substantially over what was budgeted for in 2023. 2024 GENERAL FUND REVENUE - $ 8,121,201 T 2022 -2023 2024 60.00% 53.71% 55.23% 54.94% 50.00% 40.00% 30.00% 25.23% 25.19% 24.78% 20.00% 12.13% 11,56% 11.64% 10.aa% 5.89% 5.65% 5.34% 3.04% 2 37% 3.31% 0.00% MISCELLANEOUS REVENUES INTERGOVERNMENTAL UTILITY TAX & FRANCHISE FEES RETAIL/USETAXANDCRIMINAL PROPERTY TAXES JUSTICE FUNDING $236K -> $185K -> $268K $457K -> $441K -> $434K $941K -> $904K -> 945K $2.05M -> 1.96M -> $2.01M 54.16M -> 54.32M -> 54.46M �1V�IEDINA Employee Salary and Benefits - With the CPI-W of 4.5% June to June, law enforcement will see that rate reflected in their wage increase. With the CPI-W above the max COLA increase for Teamsters, employee salaries will increase by 4%: this will include non -represented employees as well. - Medical benefits are predicted to increase by 4.1% for 2024 with Dental and Vision staying flat. While still waiting on some additional rates, a conservative 5% total increase will act as a placeholder. - The additional cost of adding Juneteenth as a recognized Holiday for the City has been added to the budget, awaiting Council discussion and direction. Fixed Cost Increases for 2024 - ARCH, the City's portion to support transitional and low-income housing will increase in 2024 to cover the admin costs ($8.5K increase). - With a heavy increase in employee compensation and the new Station 10 being built, Bellevue Fire has increased their service cost by 13.35% for 2024. - For the second year in a row, WCIA has increased their insurance cost significantly to replenish their fund drained by heavy payouts by other jurisdictions. Medina's portion has risen by 29% for 2024. - Our IT managed services are expected to increase by 10% for 2024. GENERAL FUND EXPENDITURES - $7,963,856 OTHER EXPENDITU RES, 7% LEGAL DEPARTMENT, 4% FINANCE DEPARTMENT, 9R' PDLICE DEPARTMENT, 35% PARRS DEPARTMENT, 9% OPERATING TRANSFERS. llk'c FIRE AND MEDICAL, 12% CENTRAL SERVICE5,15% CMEDINA Highlighted Department Notes and Asks for 2024 - Transfers 0 4.55% increase to Street fund to cover rising costs and the replacement plow. o $400K allocated to the Levy Stabilization Fund per Council direction. - Legal o $20K increase to Special Counsel, to cover legal fees associated with WSDOT lid discussions and new Teamsters Labor Contracts. - Police Department o Body worn cameras and tasers, both would be leased and set at a fixed annual cost of $32K. o Increased costs for 2024 include replacement uniforms, and inflationary increases to vehicle repairs, Shredder Day, educational brochures, and NORCOM. - Finance o Increased cost of financial software and first full year of new HR/Payroll system, conservatively budgeting for $10K more for software. - Central Services o Cut Public Storage costs by 2/3rds as staff works to streamline public records. o Reduction in building maintenance and capital outlay, as projects moved to Capital Fund. o $20K carried over from 2023 for consulting on Laserfische and public records. - Public Works o Replacement plow truck moved to 2023 item providing availability for this winter. o Various increases of supplies and utility costs due to inflation. 2024 Development Services Fund ($1,129,946), 10% of Total City Budget 2022 was the first year of the Development Services Enterprise Fund. Unfortunately, this coincided with a reduction of residential work within the city, which saw permitting revenue fall under what was forecasted. So far in 2023, we have seen a return to expected work within the city, keeping the city's Development staff busy. Please note that an increase in permitting work does lead to an increase in expenditure. However, some of the costs can be passed through to residents and contractors though the advanced deposit process. IMEDINA III Notes for 2024 o Based on 2023 actuals, staff are forecasting an 11% increase in revenue from permitting for next year. 0 110% increase in building plan review consultant rates for 2024, similar workload to 2023. This directly corelates with building permit revenue. o Increase in postal expenses for code enforcement with staff more active in community over violations. o $45K budgeted for fuel efficient replacement vehicle for Building Official, to visit job sites without use of personal vehicle. 0 100% increase in Planning Consultant costs for 2024, while the City looks for the Next Planning Manager 2024 Capital and Tree Funds ($1,600,000), 15% of Total City Budget Capital Fund revenues come from five sources, each coming with restrictions of what it can be used for: Real Estate Excise Tax -REET ($1,125,000 or 86% of total) is generated from the selling of real estate within the community. It is the most restrictive source as it can only be used for large capital improvement projects. The State strictly defines those projects, and its use is audited thoroughly each year. Since the real estate market goes through boom -to -bust cycles over time, this revenue source mirrors it. Medina has been enjoying a robust local real estate period for several years but more recently, while still active, it has been heavily weighted towards small, older homes often on larger lots. 2024's anticipated REET revenue of $1.125M has been budgeted conservatively. It assumes there is a finite amount of developable inventory within the city as well as available local industry and customers with an appetite to take on the types of homes that we have seen built. Grant Funds/Intergovernmental (0% of total) Grants can come from a variety of sources. In Medina they typically come from the State Transportation Improvement Board. While nothing is expected from TIB in 2024, city staff will continue to look at options for federal funding going forward. �MEDINA King County Parks Levy ($50,000 or 4% of total) is the voter approved levy to improve parks county -wide. Medina's allocation from that levy that will be received each year, 2020-2025; Investment Earnings ($125,000 or 10% of total) from the balance kept in this fund. The capital fund is projected to start 2023 with a fund balance of almost $5.2M. This balance has been built over the recent real estate boom to continue with needed projects once the market cools and REET receipts decline. Donations from the community for capital projects, especially park improvements, are the fifth source of funding. The community has been generous over the years, but this is not a source we include in budget planning. 2024 Projects - $105K for 881h Ave NE Overlay. - $830K for NE 121h and NE 101h repairs and Improvements. - $150K for City Hall and Post Office Maintenance and Improvements. - $200K for NE 2nd Place and 781h Ave NE Stormwater Improvements. - -$30K set aside for tree planting and potential hazardous tree removal. 2024 Capital Fund Expenditure Allocation ■ TRANSFERS:, $75,000,5% . CAPITALSTREETS:, $105,0D0,7% • CAPITAL 6UILOIAC CAPITAL STORM4NATER:, $350,000 ,22% CAPITAL PARKS:, ' CAPITAL SIDEWALK:, 5830,004, 53% IMEDINA -` , , 11 Year End Carryover Balances As is the case with a lot of smaller organizations, Medina does not use accrual accounting methods, instead it operates on a cash basis. Accrual accounting means revenue and expenses are recognized and recorded when they occur, while cash basis accounting means these line items aren't documented until cash exchanges hands. A result of this is that known future expense obligations are not reflected in financial reports. This distinction is important when it comes to viewing the City's year-end carryover balances. Fund balances remaining at the end of each year, especially in the General Fund, can be mistakenly assumed to be discretionary "reserves". It is similar to a personal checkbook balance that is needed to pay bills that will come due before you get paid again. Since most Medina's funding for general day-to-day operations doesn't come in until the spring it is our policy, based on auditor & financial advisory organizations recommendations, that we start each year with a 25% carryover balance to cover those 1" quarter expenses. When unexpected General Fund revenues or cost savings happen, it will be staff's recommendation to Council --based on Finance Committee's set policy --to direct that amount into rebuilding the City's drained Contingency Fund. The first transfer of this kind was made in 2021 from 2020's ending fund balance carryover excess. Additional funds are planned to be transferred in 2024.