1. Budget Integration to Governmental Accounting Reports

2. Budgetary Basis of Accounting Budgetary Control and Budgetary Accounting Policies 1.Each May, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. 2.Public hearings are conducted to obtain citizen’s comments. 3.The budget is legally enacted by City Council resolution. 4.All budget adjustments over $5,000 and transfers between funds must be approved by the City Council by resolution during the fiscal year. The City Manager is authorized to transfer any unencumbered appropriations within a fund or department, and may authorize encumbrances under $1,000. The legally adopted budget requires that expenditures not exceed total appropriations within each fund. 5.Budgets are adopted on a basis consistent with GAAP for governmental funds. Budgets are adopted for the General Fund, all Special Revenue Funds except the Asset Forfeiture Fund, all Capital Projects Funds, and the Debt Service Fund. 6.Formal budgetary integration is employed as a management control device during the year for all budgeted funds. 7.Budgeted amounts are as originally adopted, or as amended by the City Council. Individual amendments were not material in relation to the original appropriations which were amended.

3. Governmental Accounting Subject to Reporting Requirements set forth by Generally Accepted Accounting Principles (GAAP) 1.GAAP are the standards governing the formatting and contents of general purpose external financial reports in the public and private sectors. 2.GAAP for the public sector is not the same as GAAP for the private sector. 3.The primary source of GAAP for local governments is GASB. Authoritative standards are issued after extensive due process. 4.To comply with GAAP reporting requirements, local governments must use fund accounting, budget-to-actual comparisons as part of financial reporting, special measurement focus and basis of accounting for tax supported functions. 5.GAAP reporting requirements result in longer and more complex reports than comparable private-sector reports.

4. Governmental Accounting Subject to Reporting Requirements set forth by Generally Accepted Accounting Principles (GAAP) 1.Governmental Accounting Standards Board (GASB) – ultimate authority of GAAP for state and local governments 2.GASB 34 – the Reporting Model 3.GAAFR - the Blue Book

5. City Funds FUND CATEGORIES GOVERNMENTAL PROPRIETARY FIDUCIARY

6. Governmental Funds General Fund 1.Accounts for essential services mainly supported by taxes, fees and licenses, and other general revenues 2.Revenues are not dedicated for specific use 3.Expenditures for public safety are 65-70% of total 4.Declining revenue stream

7. Governmental Funds Special Revenue Funds Account for revenues received for a specific purpose/project 1.Gas Tax 2.Fire & Police Grants 3.ATOD Grant 4.Redevelopment 5.CDBG

8. Governmental Funds Capital Project Funds Account for capital improvement projects 1.Storm Drain 2.Municipal Improvements 3.Roadway Impact 4.Street Projects

9. Governmental Funds Debt Service Funds Pay for principal/interest for general purpose bond issues 1.Firehouse Bond 2.Redevelopment Bond

10. Enterprise Funds Primarily supported by user fees and / or charges based on the cost of providing service 1.Water 2.Sewer 3.Airport 4.Transit 5.Business Park

11. Fiduciary Funds Agency Funds 1.Assessment Districts 2.CFD’s for Northwest WWTP

12. Budget Methods Budget Methods There is no specific budget type required – the following are types and methods that are incorporated into City’s budgets 1.Line Item 2.Program 3.Expenditure Control 4.Zero Budget 5.Multi-year

13. Line Item Budgeting 1.Integrated to Eden accounting system 2.Focuses on specific expenditures 3.Budget policy segregates control into three categories, personnel, operating & maintenance, and capital expenditures. 4.Line items within the operating & maintenance categories are delegated to City staff. This is a form of Expenditure Control method. 5.Control of Personnel and Capital Expenditures is maintained by Council.

14. Program Budgeting Specific program or project funded by an external source 1.Capital projects 2.ATOD 3.CDBG

15. Expenditure Control 1.Pioneered by Fairfield City Manager Gale Wilson 2.Lump sum budgets deemphasize financial detail by appropriating by departments 3.Gives department heads more freedom to manage 4.Elected bodies focuses more on goals and policies 5.Incentive to save rather than “use it or lose it” 6.Unspent funds are carried forward

16. Zero Base Budgeting 1.All budget cost centers start with zero 2.Generally more burdensome 3.Identifies relative priority of programs 4.Can be modified to various funding levels of a base year or previous year budget 5.Works well as a process for determining cutbacks

17. Multi-year Budget Multi-year 1.The trend, 2 or 3 yr budgets 2.Focus on next year; subsequent years more difficult to estimate 3.Staff time savings can be achieved if City does not go through a full budget cycle by focusing on changes and exceptions 4.Alternate years can be refocused to update capital budgets

18. Budget Preparation Calendar 1.Budget templates distributed to each department for review and completion in early March 2.First draft of budget requests submitted for review in April 3.Budgets requests back to departments for further line item justifications and due in early May 4.Complete Revenue projections in May 5.Departments resubmitted line item expenditure justification for zero based items

19. Budget Preparation Procedure for operating and maintenance line items 1.Line Item budgeting integrated with accounting system 2.Program budgeting is used to authorize funding for specific programs or projects 3.Zero Based Budgeting is used where cost variable can be eliminated

20. Budget Approval 1.Budget estimates provided to the City Council for discussion at public forum 2.Modifications made based on budget discussion 3.Final budget document brought back to Council for final approval which establishes that years appropriations

21. Budget Issues 1.Continued decline in General Fund revenues 2.Governors proposal to eliminate Redevelopment Agencies 3.Local Initiative to reduce Water and Sewer rates