HomeMy WebLinkAboutResolution No. 377CITY OF MEDINA, WASHINGTON
RESOLUTION NO. 377
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MEDINA$
WASHINGTON, AMENDING THE FINANCIAL MANAGEMENT POLIi+CIE,
AND ADOPTING INVESTMENT POLICIES FOR INVESTING CITY FUNDS
'WHEREAS, during the October 10, 2011 Regular Meeting, the Medina City Council'
adopted by motion Financial Management Policies; and
WHEREAS, it is the policy of the City of Medina to invest public funds in a
manner that will provide the maximum security of the principal; meet the daily cash flow'
demands of the City; provide the City with the highest investment return and conform to
all Washington statutes governing the investment of public funds; and
WHEREAS, the City"s investments will be in compliance with all statutes
governing the eligible investments for public funds in the State of Washington, in
accordance with the Revised Code of Washington R 35A. 0.g50- and
WHEREAS, safety of principal is the foremost objective of the City of Medina'
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WHEREAS, City investments shall be undertaken in such a manner that seeks to
ensure the preservation of capital in the overall portfolio. To attain this objective;
diversification is required in order that potential losses on individual securities do not
exceed the income generated from the remainder of the portfolio; and
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WHEREAS, the ity's investment portfolio will remain sufficiently liquid to enable t
the City to meet all operating requirements that might be reasonably anticipated; and
WHEREAS, the ty's investment portfolio shall be designed with the objective of
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attaining a market rate of return taking into account the ity's risk constraints and the
cash flaw requirements; and
WHEREAS, the ity's current Financial Management Policies, under the section
"Investment Policies," limits the investment of all City funds not required for cash flow t
3 the Washington Mate Local Government Investment Pool ("L IP"), and
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rWHEREAS, after further review and study of the various investment options
' authorized by state law and recommended by the ity's Finance Director and financial
I advisor, and after meeting to review and discuss investmentoptions for City funds on
March 12, 2015, the City Council's Finance Committee recommends that the City
Council adopt amended Financial Management Policies to amend the Investment
Policies section to allow greater flexibility and to maximi e returns on City investments
Iti by specifically allowing the City to ingest funds outside of the LIP, as reflected in the
i proposed amended "`Financial' Management Policies,' attached hereto as Exhibit A
(proposed deleted text stricken through and new proposed text underlined);
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NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ME INA,
ti WA HIN T N, DOES RESOLVE AS FOLLOWS.
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Resolution No. 377 Page t of
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Section 1. Amended `inanci l Mqn Mgf t�c�: The City Council
finds it in the best interest of the City to allow greater flexibility and to maximize returns on
City investments and hereby adopts the amended Financial Management Policies attached
hereto as Exhibit A.
Section 2. Effective Date. This resolution shall take effect immediately upon
signing:
PASSED BY THE CITY COUNCIL AT A REGULAR P MEETING THEREOF ON THE
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13TH DAY OF AP tI;L, 2015.
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ycr Patrick Boy
ATTEST/AUTHENTICATED:
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Aimee Kellerman, City Clark
Approved as to form:
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marl Ls hand, dliy Attorney
Kenyon Disend, PLLC
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Resolution No. 377 Page 2 of
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City of Medina, Washington
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Financial ManagementPolicies
General Financial coals.
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Ensure a financial base that is sufficient to sustain City of Medina Municipal Services, able to
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withstand local and regional economic challenges, able to adjust to changes in service
requirements and maintain sound fiscal policies in support of these goals.
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Financial Management Policies:
The Financial Management Policies assembles all of the City's financial policies in one document.
They are the tools to ensure that the City is financially able to meet its immediate and long -terra
service objectives. The individual policiescontained herein serve as guidelines for both the
financial planning and the internal financial management operations of the City,
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The City of Medina is accountable to its citizens for the use of public dollars, Municipal resources
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must be used wisely to ensure adequate funding for the services, public facilities, and
infrastructure necessary to meet the community's present and future needs. These policies
safeguard the fiscal stability required to achieve the City's goals and objectives
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p7I}p T"he C@t of It edlna's Financial lUiana ei'rtent 'olicies and an arrai=ndriients thereto shall be
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ado fed b resilution of the Cif t ouncil.
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Policy Objectives.
The Financial Management Policies have the following objectives for the City's fiscal performance-
0 Guide City Council and Management Policy decisions,
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Establish operating principles that minimize the cost of government and financial risk,
@0 Maintain revenue policies that ensure adequate funding for desired programs, currently, as
well as in the future,
l Promote sound financial management by providing accurate and timely reporting
infort-nation on the financial condition of the City.
i Protect the City's credit rating and, provide for adequate resources to meet the provision of
l any debt incurred by the City.
Ensure the legal use of financial resources through an effective system of internal controls,
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• Promote cooperation and coordination with other governments and the private sector in the
financing and delivery of services with the goat of obtaining the best valise for the tax dollar.
Budget Policies
a. The annual budget will be designed in support of the Strategic Coats of the City and wilt
focus on continual evaluation of the City's success at achieving the goals and policies it has
set for itself. The operating budget is the City's comprehensive annual financial plan which
provides for City services based on City priorities.
b. The annual budget shall be developed consistent with state law and in a manner which
encourages early involvement with the public and City Council.
o The City Councit will establish municipal service levels and priorities for the ensuing year
prior to and during the development of the preliminary budget.
d. The City silt maintain a 'balanced budget The use of existing fund balances to achieve a
balanced budget (awhile generally accepted as a practice in Washington Cities), is not
sustainable For the long terra. The City prefers to adopt an operating budget where current
revenues meet or exceed current budgeted expenditures
is, The Finance Department will maintain a system for monitoring the City's financial
performance, The system will provide the City Council with monthly andlor quarterly
information in a timely manner at the fund level, by revenue resources and department level
expenditures.
f. Under the provisions of state law and the City's operating procedures, the budget is
adopted at the fund level. Adjustments or reallocations of existing appropriations within the
fund level, which do not change the bottom line of the fund„ may be done administratively
and do not require Council action, Additions to, or reductions of fund levet appropriations,
which change the bottom line of the fund, require an amendment of the budget and City
Council action by Ordinance.
g Supplemental budget appropriations (appropriations requested after the original budget is
adopted) will be submitted in the form of a Budget Amendment and wilt be considered as a
result of the availability of new revenues.
h. The annual budget will provide for the design, construction, maintenance and replacement -
of the City's Capital, facilities and equipment consistent with the Capital Facilities Plan/
Comprehensive Plan/ Capital Improvement Plan, including the associated cost for operating;
I the facilities,
�i i. The City will maintain all assets at such a level that it protects the City's capital investment
(` and minimizes future maintenance and replacement costs.
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't g The City will develop an equipment replacement and maintenance needs list by department
F for the life cycle of the equipment and will utilize this list during the annual budget
development process.
i k, Small and attractive assets.: accurate inventory of all physical assets, their physical location,
and serial numbers/asset id numbers will be maintained at the direction of the Finance
Department to ensure proper stewardship of public property,
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1. Fixed assets: inventories of larger physical fixed assets costing more than $5,000 and
having a useful life of more than one year, will be maintained on a Fixed ,Asset Schedule
and will be updated as the iproperty is added, retired or sold.
Reserve Frond Policies
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Adequate reserve levels are a necessary component of the City's overall financial management
strategy and a key factor in external agencies' measurement of the sty s financial strength,
General Fund Operating Balance: Minimum % Fund Balance Y
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The City will maintain General Fund Operating Balances at a minimum level of Ito of the Total
General Fund Budgeted Expenditures.
The General Fund Operating Balance shall be created and maintained to provide sufficient dash t
flow to meet the needs of daily financial operations -Reeds,
In general, the City shall endeavor to support ongoing operations with ongoing revenues„ but may 7
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use General Fund Operations Balances on a one-time basis to support City services pending the f
development of a longer terra financial solution
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The General Fund Operating Balance should not be used In a manner that puts the'City in danger I
of being unable to sustain future operations, If the General Fund Operating Balance falls below the
policy level stated above, it will be important for the City to create a long terra plan to replenish the
fund balance level,
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Budget surpluses in the General Fund Operations Balance may be used to fund rang -time
operations and capital expenditures dedicated to the Capital Improvement Plan, or placed into the #;
Capital Fund Reserve if" l
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a) `there are surplus balances remaining after all current expenditure obligations are met.
b) The City has made a determination that revenues for the ensuing budget year are
sufficient to support budgeted General Fund Operatingneeds.
A surplus is defused as the difference between the actual beginning fund balance and budgeted
beginning fund balance. It consists of "under -expenditures' and/or 'excess revenues" over and
x above the amounts included in the following annual budget
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Oa ital Fused Fteserve° Mmini um % of the Oenaral Fund
it The Capital Fund Reserve may be used for the following.
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a) To sustain City services in the event of a catastrophic event such as a naturallrmenmade
I, disaster e•g earthquake, windstorm„ flood, terrorist attach) or a major downturn in the
i! economy.
(r bl To fund the Capital Improvement Plan,
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All expenditures which are transferred into and out of the Capital Fund Reserve, shall be t<
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authorized by the City Council during the annual budget process, or shall require separate City x.
Council approval,
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uuromenj Replacement Account
The City may elect to maintain an Equipment Replacement Account for the purpose of funding fleet
maintenance (police and public works) or d capital equipment reserve for the purpose of capital
asset replacement,
Revenue Policies
a.
To the extent possible, a diversified and stable revenue system will be maintained in order
to improve the ity`s ability to handle fluctuations in individual revenue sources, '.
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Revenue forecasts should be realistically estimated and based on the best information
available. The City will take into consideration that revenues are subject to local and
regional economic activities.
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short-term (less than one year) economic downturns and temporary gaps in cash flow; l;>
Expense reductions and/or restrictions may be imposed. Council may approve a transfer
from the Capital Fund Reserve to address a temporary downturn in City revenues.
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Long-term (greater than one year) revenue downturns: Revenue forecasts will be revised,
Expenses, will be reduced to help stabilize the bang terra impacts and/or revenue increases t=
will be considered. '
a.
All potential grants shall be carefully examined for matching requirements. Some grants
may not be accepted if the local retching funds Minot be justified, Grants may also be
rejected if programs must be continued with local resources after grunt funds are
exhausted, Prior to grant approval, future expenditure impacts (e.g. tangoing repairs and
maintenance) should be identified and communicated to management.
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The City will set fee schedules at levels sufficient to cover the entire cost of service delivery.
The City will systematically review user fees and consider adjustments as necessary to take
into account the effects of additional service costs and inflation, ? ,
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the City wilt review contracts and leases, which result in revenues to the City on a timely
basis in order to ensure approval by the Council and ongoing revenue streams. ;
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Expenditure Policies
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a.
The City budget will provide for sustainable levels of service.
b.
The City wilt propose only those operating expenditures, which can be supported from ono �sy
going operating revenues,
c.
The Crty's operating budget wilt not use one-time revenues to support ongoing
expenditures, Before the City undertakes any agreements that would create fixed on -going
expenses„ the cost implications of such agreements will be folly determined for current and
future years. Capital expenditures may be fended from one-time revenues, but the
operating budget expenditure impacts of capital expenditures will be reviewed for
compliance with this policy provision 4
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Department heads are responsible for managing their budgets within the total appropriation
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for their department, tS
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The City will maintain expenditure categories according to state statute and administrative {
regulation.
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All compensation planning and collective bargaining will focus on the total cost of a
compensation, which includes direct salary, health care benefits, pension contributions,
education, training allowance„ and other benefits of a non -salary nature„ which are a cost to
the City,, i
z Purchasing Policies
k a.
The City wilt follow state laws, adopted resolutions, ordinances and policies regarding
procurement
b.
The Director of Finance shall develop detailed procedures for purchasing, credit card
usage, petty cash, expenditure authorization and/or contract management activities.
c.
Federal funds or Grants: When procurement involves the expenditure of federal funds or
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grants, the purchase shaft be conducted in accordance with any applicable federal/grant
laws or regulations, When purchasing items to be reimbursed by a grant, the purchaser
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will perform the due diligence required to ensure that the purchase meets the criteria of the
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specific grant prior to initiating the purchase and requesting a release of City funds for the
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purchase,
d.
Emergency Procurement. The City Manager or designee may make or authorize others to
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make emergency procurements of materials, supplies or equipment or services when a
threat to public health, welfare or safety exists, Mate Laws relating to emergency
declaration and emergency purchases will be followed.
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Capital Investment Policies
a. The City will make capital improvements in accordance with an adopted Capital
Improvement Mari.
b. It will be the policy of the City to maintain a Capital Facilities Fund to provide funding for
future facilities including debt repayment, The use of any funds within the Capital Facilities >;
Fund wilt be as approved by City Council,i
c, The Capital Improvement Man and the base budget will be reviewed at the same time to
ensure that the ity's capital and operating needs are funded and that the Capital
Improvement Plan is aligned with the ity's ether long-range plans..
d, The City wilt identify the estimatedcosts and potential funding sources for each capital
project proposal before it is submitted to Council for approval,
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e. The City will comply with state and local taus regarding use of Real Estate Excise Tax
(REET) Revenue,
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Accounting, Auditing and Financial Reporting
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The City will maintain a system of financial monitoring„ control, and reporting for all operations and
funds in order to provide effective means of ensuring that overall City goals and objectives are met
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Accounting Records and Reporting: The City wilt maintain its accounting records in accordance
with state and federal regulations. Budgeting, accounting and reporting will conform to Budgeting,
Accounting and Reporting System (BARS) for Governments as prescribed by the Washington
l State Auditor's Office, Regular monthly and annual financial reports will present a summary of
i` financial activity by frond type and will be provided to the City Council.
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Auditing: The City shall prepare and submit in a timely manner, the Annual Financial Report to the
i Washington Mate Auditors Office in accordance with the standards established for the Annual
If Financiat Report, The Washington State Auditor's Office will perform the ity's financial and
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compliance audits on an annual basis. Results of the audit will be provided to the City Council in a
,y timely manner.-
r. The Finance Department wilt develop, maintain, and consistently seek to improve cash
management systems and processes which will ensure the accurate and timely accounting,
y' investment and security of all cash assets, Cash received will be deposited in a timely mariner and,
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monies will be safeguarded (e.g. kept in a safe) until they are deposited.
The City will establish a Petty Cash Fund in the amount of $200. The Petty Cash Fund is to be
s used solely for the purpose of making payment and/or small reimbursements for City related
purchases.
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Investment Policy
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It is the Doficv of the ON of Medina to invest Dubfic funds in a manner whioh will rovirte the
maximum securitv of the rinci al meet the dailv cash flow demands of the fit ro ide the
City with the highest investment return and conform to all Washim ton statutes novernina the
invetrri�nt of �iulatid funds„
2.0 Obiective:
The it 's investments will be in compliance with all statutes governing the eligible
investments for oublic funds in the State of Washinaton, in accordance with the Revised Code
of vtiashgrr ton yv SA 4p,tt t ,
the rirnar, ob' ores in riortt ostler, of the q investrraent activities shrill be,
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afet , Safetv of wincioal is the foremost objective of the Cily,of Medina, Investments
of the it shall be undertaken in such e manner that seeks to ensure th reservation of
ca ital in the overall cortfolio, To attain this ob edtive diversification is re` aired in order
that potential losses on individual securities do not exceed the indorne generated from the
remainder of the portfolio,
b Li uidit . The it 's investment Dodfolio will remain sufficiently li uid to enable the Citv
to meet allpertin re uirerneits which nliciht tae reasdnably antgcioate.
c Return on Investment: The it 's investment pgrffolio shall be deal ne with the
ob ectie of attainin a n�arttet rate at return takih into aecount kne twit s`risk ccarstraints
and the cash, flow -requirements.
The Finance Director shall be re§po2onn§siMblie2_lfo2rLaMilLtLransactions undertaken and shall establish
systerri of condrol to reouulate a@C investrnen# activities, and neoort taronaoilw tea the raunoil anv
adverse develo rnent with env investment,
3.0 Ethics and Conflicts of Interest,
ni cane involved in"the invds saint rocess shall refraigk ffrorr ersonsl business activrt that ty o oy
could conflict with gro2er execution'of the investment gMgrain or wh`cch could irn air their
abilitv to snake imDartial investment decisions Employees and Council "Member officials shall
diSC1229 to; thiests in financial
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institutions that conduct business with the fit and sheltie shall further disclose anV Dersona,l
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fine ial.tinvestment osi mars that coufd be relate to the rtorrnan of the `fit " ortfolio.
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to ees and Council Me,i er of ciai shall subordinate thalr ersonal investrn nt
transaction to thoae ¢af tho fit aeticuRari with ra drd to the t nee pit urcha es and saleso
4,0 ,Authorized Fin ncia6 Dealerslin fitutions
�tthoried broker�deal rs and finanoil Nnstitratiorts III b� 6iritited to those that are � raved
bv the Finance Committee and --f one or mare of tFwe follo�vin
Flnancil tnstit�rticans roved b tho oshin toh 9�ublic Cae rani protection
ommi sion LRCW 39 581, or
b Firm dealers recognized_by the Federal Reserve Bankor
� �#on- ri�aa dolars ta'afifiad uhder the tf. acur�ties and chan �
+�r�lrnision Ft��l ��c-9 the l�lhifs�rrn that itl Rule and � certif�t:d rrtrnbor of
the rational �s" ra iatioh nrt eotirlt�s �iaalers
at,the r oast of the fit financial institutiohs brokers and dealers erfcarmih snvestrment
srvNcas for the i shall iovid than rn�ast recent financier statemhts or onsol�datd
ReLort of gondition Lcall rd tart" for review,
o:f_ aAuthon ed investments°
ib cats maw env tin an taf the s cunt os idantAfied as alp ibis anvostrnents as defir$ed b
RgLAL�t3. in aural then oonsist of
a investment de osits certificates of de osits with Ualifiod ublic depositories as
defined in Chaoter 39,5
b ortlf oatos notes or bonds of the nit d t tag or othdr tabu ations of the Unata
tat�r its ienoias tar of an czar oration wrh�it owned b the tavornr�ant of
t the t1n�t�tl t�t����,s�acl� s tk�t: �vrraror�nt �ticr�l 1�a�t � � sta��tibn e
c �bla etions oaf overnn�ent�s oi�scared oor orations whAt*rt are alG ibis as Dollar rdl
for advances to member banks as determined b the Board of Governors of the
Eederol Reserve stern. These include but are not limit ,d to Fede l rEtoma
Loan Rank ntatos and brands° F er 1 Farm t;redlt dank consolidated notes and
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�I{ bands and F decal rational fort ssoc�at�on notes bondd and �aorantaed
Ir certificates of partici�aation.}
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t d }3anke' a cetares urchased on the seconda market.
o fond of the Mate of "u�iashin ton and do local ovarnrnent in rho tat of
{ tashin ton vu'h�i h havo at the tune of investrnnt rang of the those hi hdSt ordlt
ratino of a nataonai6 recottni�ed rating attend+.
f Ra rarchase a remeri for socuritses listed �n and abovd r v�ded that the
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transact+on rs tructur so that the fit` of htadiraa obtains oontrol over the
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underlying securities and a Master ReDurchase reement has been si ned with
the bank or dealer.
The State of Washin ton Local Government Investment fool,
h For a corn fete list of eli hale investments for ubtic funds in the state of
iashln ton visit° htt :�tww.tre.wa ovidocumentsrrnveli df' i=
6.0 afekee rn artd gustod `l
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All securities transactions entered Into b the Dit ofledrna shall be conducted on i
delivery versus- a"rnent (DVPbasis. Securities will be held by a'third 2art
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financial institution 'desi nated bv the Finance Director as custodian on the fit 's
behalf. Ali §ecurfties puLohased by 1h@ gity of Medina afrall be rd rI deal noted
as an asset of the Drt and no _withdrawal of s ch securities, in whole or in art. she lM Z'
Le rn rule from safekee in exce t by the Finance Director as authorized herein or bv
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the Director" esi nee
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The Finance Director will determine what investment information will be included in the
rnonthiy firiancial rer3fart. f:
Debt Policy %l
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The City will maintain adequate available debt capacity for specific priority projects,
The objectives of the City"s Debt Management Policy will be to minimize the need for debt by
maintaining strong revenue sources which meet or exceed expenditures.
Debt may be utilized to address short-term cash flow needs and/or to finance significant capital or
other obligations, Debt will not be used to fund long -terra revenue shortages. City Council
approval is required to approve the issuance of debt, ra..
Current Operations will not be financed with long terra debt. In the event that the need for Icing r
term debt arises, the term of the Icing term debt will not exceed the fife of the projects financed.
When evaluating the use of non -voted Councilmanic Debt and the associated debt service k
obligations, an analysis shall be performed to determine the ity`s ability to make debt service1
payments, taking into account revenue fluctuations associated with periodic economic cycles.
Debt may be considered wherethe Director of Finance can demonstrate that there is sufficient
projected discretionary revenue to service the debt without disrupting the City"s existing service
delivery or programs,
Voted and non -voted Councilmanic Debt will be used prudently in a manner to avoid an adverse
impact on the ity`s credit rating or ability to issue subsequent or additional debt �
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Upon the issuance of any debt, the Director of Finance will establish the appropriate procedures to
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assure compliance with bond/debt covenants and applicable federal, state and local laws, policies
and regulations,.3
Its the event that the use of debt is required, the City will rape capital at the lowest coast, consistent
with the deed to borrow, This will be accomplished by keeping a high credit rating, and maintaining
a good reputation in the credit markets by managing the annual budget responsibly:
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