City Budget Rumors
Nov 01, 2017
There are some rumors floating around about the budget which I’d like to clarify (See page 7). Somewhat hard to read, but if I try to darken it any more the words and numbers don’t come out at all.
Some folks seem to think money has been transferred out of the Park fund, but it's actually a budget line (money that may be used in the future) rather than a past action. At the bottom left of the first page there's an underlined header, transfers in, just below that is line item 10-11-4900. The columns show 2014-2015 actual, 2015-2016 actual, and then three columns for the current year, 2016-2017. The final two columns are the proposed budget for Fiscal 2018, and is what was approved on September 21st for the Fiscal Year beginning October 1, 2017. The numbers won't show up in the approved budget column until the budget is actually installed in the software after all current-year invoices are cleared (usually late November-early December).
Running the columns down, for 2015-2016 $530,000 was transferred into the General Fund (GF), although there's no explanation of where those funds came from. In 2015-2016, $193,457 was transferred into the General Fund, again with no identified source. During FY17 (current year) no funds have been transferred into the GF.
For FY18, I anticipate a need to transfer $398,500 into the GF and immediately following that info is a list of exactly where those funds will come from. First, both State Statute and City Ordinance authorize an administrative fee from water and sewer into the administrative portion of the budget, since we handle personnel, payroll, benefits, etc. for all departments. The Ordinance approves 7.5% of revenue. Second, I expect to have about $141,000 left in the GF bank account as of October 1.
The third item is Fund 20, which is a sales tax fund which actually already deposits into the GF bank account. This simply reflects that it’s there.
Fund 33, Fund 80 and Fund 25, however, are Operating Loans – money the City General Fund may have to borrow from other City Funds. Fund 33 is Parks Capital Improvements. Fund 8- is Municipal Court. Fund 25 is Streets. All three contain funds which are specifically earmarked for use in Street work, Court operations, and Park capital improvements. Provided appropriate loan documents are approved by the Board of Alderman, in open session and including amount, interest rate, term, and a re-payment schedule, it is allowable if needed for the City to loan money within its various funds.
I have not located comparable documents for FY15 or FY16, and until this summer, Street Funds, Court Funds and Water/Sewer Funds were all operated under the General Fund bank account. This made it possible to use money from restricted Funds without actually recording it, and I suspect in some cases without actually knowing it.
Since I started in this job, we’ve identified some pretty significant errors in the accounting software, as I mentioned earlier. Those have been both in amounts entered, and within the operation of the software itself. This has “masked” what I’ve determined to be regular annual revenue losses from within the General Fund – more money being spent than being brought in. From what I can determine, the GF bank account (when all the other Funds were moved into their own accounts) has been losing on an average about $75,000 per year. No one identified that because the other funds were all bringing in more revenue than was being spent – positive balance at the end of the year, adjustments to the accounting software to reflect transfers, everything is good.
That’s not the way I operate, and it’s not the way the Mayor and the Board want to operate, so I created bank account to correspond with the Funds in the accounting software. Working with the auditors I took portions of the General Fund and transferred those into the various Fund accounts in the bank. Working with the software vendor, we think we’ve identified and corrected the problems in the accounting software, although we won’t be certain for probably another two or three months when we see how well the software balances with the bank statements.
So, at the end of the day, we’re transferring considerably less than the half-million-plus from 2015-2016, and we’re doing it with full transparency.
Next month I’ll try to have some more information on how the budget is put together, and how it works. I’m also having the website updated, and as soon as the new site rolls out, the full budget will be online. Budgets are sort of long and involved, so I’d expect it to take a couple of hours to have time to explain it all and answer any questions, but if there’s enough interest I’d be willing to set up a special evening meeting to go through it all.