HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/21/2017 - RESOLUTION 2017-101 ADOPTING AMENDMENTS TO THE CITAgenda Item 18
Item # 18 Page 1
AGENDA ITEM SUMMARY November 21, 2017
City Council
STAFF
John Voss, Controller
John Duval, Legal
SUBJECT
Resolution 2017-101 Adopting Amendments to the City's Financial Management Policies.
EXECUTIVE SUMMARY
The purpose of this item is to update the City's Financial Policies. Changes are recommended to three
existing financial policies; Budget, General and Fund Balance Minimums. Council Finance Committee
reviewed staff proposed changes on October 16, 2017.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
Financial Policies approved by City Council can be found at https://www.fcgov.com/finance/policies.php
At a minimum, each financial policy will be reviewed by staff every 3 years and discussed with the Council
Finance Committee. This year four policies were reviewed and staff is recommending changes to three
policies.
Budget Policy 1
Changes to the Budget Policy include monthly budgeting, order of funding and contingency planning. Staff
began to distribute the annual appropriation by month in 2012. This practice is nearly universal in the private
sector and rare in the public sector. The primary benefits are knowing genuine short falls and savings, as
opposed to simply timing differences. It also allows for improved monitoring of commitments made in budget
offers. See page 2 in Attachment 1 for specific language.
Added is policy language that reflects a long-held informal policy of using the more restricted monies before
using less restricted monies. This commonly occurs in capital projects with multiple funding sources.
Proposed language allows for exceptions that are clearly identified in authorizing ordinances, budget offers
and contractual agreements (e.g., grants and IGAs). Specifics are found on page 7 in Attachment 1.
A new section has been added for Contingency Planning for Unanticipated Revenue Shortfalls. Policy
language outlines a contingency framework that centers on aligning expenditures with ongoing revenue. All
steps are identified on page 8 in Attachment 1.
General Policy 3
Changes to the General Policy include updating the list of funds, recreation fee standards and using private
activity bonds. Since this policy was last updated, a new fund has been established, Community Capital
Agenda Item 18
Item # 18 Page 2
Improvement Program Fund (a.k.a. BOB 2.0). Also removing a debt service fund (No. 303) that has not been
used in several years. See page 5 in Attachment 2.
This change also includes updates to the Recreation Fund Rates and Charges policy. The policy as currently
stated has not been followed in nearly 10 years. The proposed language simplifies the policy parameters and
updated to reflect current practice. See page 8 in Attachment 2.
A new section has been added that relates to private activity bonds. Proposed language provides a
framework for applicants to apply, as well as processes and standards for staff to make recommendations to
City Council. The Policy differentiates direct award compared to assigning the City's allocation from the State.
Assigning the State allocation is greatly preferred. Fees for direct awards are outlined in the policy. See
pages 9-12 in Attachment 3.
Fund Balance Minimums 5
Changes to Fund Balance Minimums are relatively minor. One change reduces the minimum working capital
requirement for the Golf Fund from 25% to 12.5%. Historical variations in cash flow do not support the need
for 25% minimum. At the October 16 meeting of the Council Finance Committee, it was requested to provide
comparative information on minimum fund balances for municipal Golf Funds. See Attachment 4 for
comparisons to other municipal golf operations.
Lastly, recommending a technical change to minimum fund balance standard for the Self Insurance Fund.
Instead of using available working capital as the measuring standard, use available unrestricted net position.
See page 3 on Attachment 3.
Investment Policy 8
No changes recommended.
BOARD / COMMISSION RECOMMENDATION
At its October 16, 2017 meeting, the Council Finance Committee reviewed and approved the amendments.
ATTACHMENTS
1. Budget Policy, with changes highlighted (PDF)
2. General Policy, with changes highlighted (PDF)
3. Fund Balance Minimums Policy, with changes highlighted (PDF)
4. Municipal Golf Comparison (PDF)
5. Council Finance Committee minutes, October 16, 2017 (PDF)
Financial Management Policy 1
Budget Policy Issue Date: July 15, 2014
Version: 23
Issued by: Budget
Director
Financial Policy 1 – Budget
1
1.1 Overview
The Fort Collins City Charter establishes time limits and the essential content of the City
Manager’s proposed budget, however the budget preparation process is not prescribed, but
is developed by the City Manager with input from the City Council.
The fiscal year of the City is the calendar year. The City may adopt budgets for a budget
term of one fiscal year or more. After the Charter amendment in 1997 allowing the budget
term to be more than one fiscal year, the Council has adopted two‐year budgets that
correspond with the election cycle.
The budget is a 2‐year plan by which the City Council sets the financial and operational
priorities for the City ‐ through the budget, services are implemented. The budget along with
the annual appropriation ordinance provides the basis for the control of expenditures. The
State Constitution and the City Charter provide the basic legal requirements and time lines
for the process. Council goals, ordinances and resolutions provide additional direction and
respond to the needs of the community.
1.2 Principals Principles for Budget Planning
The City provides a wide variety of services to the residents of the community. It is in the
power of the City Council to adopt a budget and manage the available resources to best meet
the service needs for the overall good of the community (City Charter Article II, Section 5 (c)).
Objective:
Governments allocate scarce resources to programs and services through the budget process. As a
result, it is one of the most important activities undertaken by governments. The purpose of this
policy is to establish parameters and provide guidance governing the budget for the City of Fort
Collins (City).
Applicability:
This budget policy applies to all funds and Service Areas of the City.
Authorized by:
City Council Resolution 2014‐058
ATTACHMENT 1
Financial Policy 1 – Budget
2
In 2005 the City Council, on recommendation from the City manager, endorsed the Budgeting
for Outcomes budget process. At a high level, the budgeting for outcomes methodology can
be summarized as:
1. Determine how much money is available. The budget should be built on expected
revenues. This would include base revenues, any new revenue sources, and the
potential use of fund balance.
2. Prioritize results. The results or outcomes that matter most to citizens should be
defined. Elected leaders should determine what programs are most important to their
constituents.
3. Allocate resources among high priority results. The allocations should be made in a
fair and objective manner.
4. Conduct analysis to determine what strategies, programs, and activities will best
achieve desired results.
5. Budget available dollars to the most significant programs and activities. The
objective is to maximize the benefit of the available resources.
6. Set measures of annual monthly progress, monitor, and close the feedback loop.
These measures should assign monthly budget, spell out the expected results and
outcomes and how they will be measured.
7. Check what actually happened. This involves using performance measures to
compare actual versus budgeted results, and financial measures for budget versus
actual results on a monthly basis.
8. Communicate performance results. Internal and external stakeholders should be
informed of the results in an understandable format.
At that time, the City Council also identified the key outcomes it believed should be used in
the new budget process. In addition, the 2005‐2007 Policy Agenda sets forth the
implementation and continued improvement of the collaborative budget process, aligning
spending with desired outcomes.
In 2012, the City Council passed resolution 2012‐076 promoting improved results through
performance measures and data‐driven decision making. In reference to the budget, an
outcome‐based performance measurement system will help ensure that available resources
are used to achieve excellent results at low cost to the taxpayers and will enhance the citizen’s
understanding of the City and the services it provides.
1.3 Scope
A. Comprehensiveness
The proposed budget shall provide a complete financial plan for each fund of the city and
shall include appropriate financial statements for each type of fund showing comparative
figures for the last completed fiscal year, comparative figures for the current year, and the
Financial Policy 1 – Budget
3
City Manager's recommendations for the ensuing budget term (City Charter Article V, Part 1,
Section 2). In addition, the City of Fort Collins Budget Document may include items such as:
1) Statement of organization‐wide strategic goals.
2) A description of the budget process, including a timeline.
3) A Glossary of Budget Terms.
4) A City of Fort Collins organizational chart.
5) Letter from the City Manager.
6) Budget Overview which may include:
a) The economic outlook;
b) Revenue assumptions;
c) Summary of use of reserves;
d) Budget priorities and highlights.
7) Copy of signed appropriation ordinance and a schedule of 2nd year proposed
appropriations.
8) Revenue, expense and changes in fund balance summaries.
9) Summary of employee full‐time equivalent staffing by service area and department.
10) A section for each of the key strategic Outcomes, which may include:
a) Information indicating how the Offers in the Outcome are funded, by fund;
b) Major key purchases;
c) Major enhancements purchased;
d) Detailed listing of all offers funded and unfunded;
e) Strategic objectives of the Outcome.
11) Fund Statements.
12) Overview of debt position.
13) Current Capital Improvement Plan.
14) Summary of changes to user fees.
15) Summary of property tax mill levy and assessments.
The annual appropriation ordinance shall also include the levy in mills, as fixed by the
Council, upon each dollar of the assessed valuation of all taxable property within the city,
such levy representing the amount of taxes for city purposes necessary to provide,
during the ensuing fiscal year, for all properly authorized expenditures to be incurred
by the city, including interest and principal of general obligation bonds. If the Council
fails in any year to make said tax levy as above provided, then the rate last fixed shall be
the levy fixed for the ensuing fiscal year and the Financial Officer shall so certify (City
Charter Article V, Part 1, section 5).
B. Budget Form
The City of Fort Collins uses the Budgeting For Outcomes model to create the City budget. A
new budget is designed from the ground up based on the results desired in each of the
Outcomes defined by the City. The BFO budget‐building process includes four steps:
Financial Policy 1 – Budget
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1) Determine how much revenue will be available (the price people pay);
2) Determine the priorities of the City and its citizens and the results to be achieved;
3) Allocate the revenue needed to achieve the desired results;
4) Determine which budget items will best produce the desired results at the price allocated.
C. Basis of Budgeting
All budgetary procedures conform to state regulations and to generally accepted accounting
principles. The basis or principle used for budgeting is the same as that used for accounting,
with a few exceptions, and varies according to the fund type.
Governmental Funds use the modified‐accrual basis of accounting. This means that revenues
are recognized when they are earned, measurable and available. Expenditures are recognized
in the period that liabilities are due and payable. The budgetary basis is the same and is used
in the General Fund, Special Revenue and Debt Service Funds, and Capital Project Funds.
Proprietary and Fiduciary Funds use the full accrual basis of accounting. Revenues are
recognized when they are earned and expenses are recognized when liabilities are incurred.
However, the budgetary basis in these funds is primarily based on the modified‐accrual
approach. Instead of authorizing budget for depreciation of capital assets, the budget
measures and appropriates cash outflows for capital acquisition and construction, which is a
modified‐accrual approach. In full accrual based accounting debt proceeds are recorded as
liabilities rather than a revenue (funding source). For these reasons, a reconciliation and
adjustment is made on these fund statements to show the difference between the budgetary
basis and the accounting basis.
D. Budget Calendar
The fiscal and accounting year shall be the same as the calendar year. "Budget term" shall
mean the fiscal year(s) for which any budget is adopted and in which it is to be administered.
Council shall set by ordinance the term for which it shall adopt budgets in accordance with
this Article (City Charter Article V, Part 1, section 1).
On or before the first Monday in September, commencing in 2010 and every other year
thereafter, the City Manager shall file with the City Clerk a proposed budget for the City for
the ensuing two‐year term (City Charter Article V, Part 1, section 2). The Council shall, within
ten (10) days after the filing of said proposed budget with the City Clerk, set a time certain
for public hearing and cause notice of such public hearing to be given by publication. At the
hearing, all persons may appear and comment on any or all items and estimates in the
proposed budget. Upon completion of the public hearing the Council may revise the budget
estimates (City Charter Article V, Part 1, section 3).
Financial Policy 1 – Budget
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After said public hearing and before the last day of November preceding the budget term, the
Council shall adopt the budget for the ensuing term. The adoption of the budget shall be by
ordinance. Before the last day of November of each fiscal year, the Council shall appropriate
such sums of money as it deems necessary to defray all expenditures of the city during the
ensuing fiscal year. The appropriation of funds shall be accomplished by passage of the
annual appropriation ordinance. Such appropriation of funds shall be based upon the budget
as approved by the Council but need not be itemized further than by fund with the exception
of capital projects and federal or state grants which shall be summarized by individual project
or grant (City Charter Article V, Part 1, section 4).
Appropriations for each year of the two‐year budget will be approved by the City Council
annually. Appropriations for the 2nd year of the biannual budget are adopted during the
budget revision process. That process allows for adjustments to the originally adopted
biennial budget that address new Council priorities or support changing needs based on
economic conditions. The City Manager may present any budget adjustment
recommendations to the City Council in Work Sessions and then Council may amend the
budget and, as required by the State and City Charter, appropriate or authorize expenditures
for the coming fiscal year.
1.4 Roles and Responsibilities
All powers of the city and the determination of all matters of policy shall be vested in the
Council except as otherwise provided by the Charter. Without limitation of the foregoing, the
Council shall have power to adopt the budget of the city.
The City Manager shall be responsible to the Council for the proper administration of all
affairs of the City and to that end shall have power and be required to prepare the budget and
submit it to the Council and be responsible for its administration after adoption.
The City Manager and Chief Financial Officer, along with the other executive directors, known
as the Budget Lead Team (BLT), develop the guidelines, consistent with the policies, to be
used for budget preparation. During the development of the budget, various department and
division representatives may be called upon to provide their expertise.
From April through June, City staff from all departments and divisions prepares the Offers
(budget requests) for inclusion in the budget.
1.5 Budgeting Control System
No appropriation shall be made by the Council which exceeds the revenues, reserves or other
funds anticipated or available at the time of the appropriation, except for emergency
expenses incurred by reason of a casualty, accident or unforeseen contingency arising after
the passage of the annual appropriation ordinance (City Charter Article V, Part I, Section 8
(a)).
Financial Policy 1 – Budget
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Control of expenditures is exercised at the fund level. Fund managers are responsible for all
expenditures made against appropriations within their fund and can allocate available
resources within the fund.
All appropriations unexpended or unencumbered at the end of the fiscal year shall lapse to
the applicable general or special fund, except for:
appropriations for capital projects which shall not lapse until the completion of the
capital project; and
federal or state grants which shall not lapse until the expiration of the federal or state
grant (City Charter Article V, Part I, Section 11).
A. Budget Transfers
Between Funds or Capital Projects
During the fiscal year, the Council may, by ordinance, upon the recommendation of the City
Manager, transfer any unexpended and unencumbered appropriated amount or portion
thereof from one fund or capital project account to another fund or capital project account
provided that:
1) the purpose for which the transferred funds are to be expended remains unchanged;
2) the purpose for which the funds were initially appropriated no longer exists; or
3) the proposed transfer is from a fund or capital project account in which the amount
appropriated exceeds the amount needed to accomplish the purpose specified in the
appropriation ordinance (City Charter Article V, Part I, Section 10 (b)).
Within a Fund
Budget control is maintained at the departmental level. The Chief Financial Officer Manager
has the authority to approve departmental expenses greater than budget so long as expenses
are less than budget within a fund. In no case may the total expenditures of a particular fund
exceed that which is appropriated by the City Council (City Charter Article V, Part I, Section
10 (a)).
B. Applicable Amendments to the Budget
Budget Increases
There generally are four opportunities during the fiscal year for supplemental additions to
the current year annual appropriation approved by Council:
1) The first is through the encumbrance carry‐forward process whereby approved purchase
orders that cannot be executed prior to the end of the fiscal year will have available
budget carried forward into the new year.
Financial Policy 1 – Budget
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2) The second is usually adopted in March/April to re‐appropriate funds from the previous
year’s ending balance for projects or obligations that were approved but not completed
during that year.
3) The third opportunity in the 2nd half of the year is used to fine‐tune (clean‐up) the
current fiscal year for previously unforeseen events. In addition, if revenue is received
during the fiscal year from a source that was not anticipated at the time of budget
adoption or appropriation for the fiscal year, such as grants or implementation of a new
fee, Council may appropriate that unanticipated revenue for expenditure when received
anytime during the year.
4) Lastly, the Council, upon recommendation of the City Manager, may make supplemental
appropriations by ordinance at any time during the fiscal year; provided, however, that
the total amount of such supplemental appropriations, in combination with all previous
appropriations for that fiscal year, shall not exceed the then current estimate of actual
and anticipated revenues to be received by the city during the fiscal year. This provision
shall not prevent the Council from appropriating by ordinance at any time during the
fiscal year such funds for expenditure as may be available from reserves accumulated in
prior years, notwithstanding that such reserves were not previously appropriated (City
Charter Article V, Part I, Section 9).
Budget Decreases/Frozen Appropriations
The budget may be decreased below adopted appropriations during the fiscal year due to
changes in service demand, changes in economic conditions, and/or changes in Council goals.
Each service area is responsible for developing a plan to reduce appropriations, which will
be ready for implementation should the need arise. If the City Manager directs budget
reductions, Council will be informed and the appropriations will be “set aside” through
administrative action. While the appropriation amount is not changed, expenditures shall
not exceed the reduced amount recommended by the City Manager.
C. Order of Funding when Multiple Funding Sources Available
Sometimes a given project or program has multiple sources of funding available. Examples
of such projects include but are not limited to grant funded projects, jointly funded
projects/programs between governmental and proprietary funds, or projects/programs
where both dedicated tax revenues and General Fund tax revenues are available.
Unless stated otherwise within the authorizing ordinance, budget offer, or a contractual
agreement, funding sources will be applied in the order of most‐constrained to least‐
constrained in the judgment of City staff. For example, a project jointly funded by the
General Fund and the Natural Areas Fund would first fund project spending using all
available and appropriated Natural Areas revenues prior to spending appropriated General
Fund revenues. This is in an effort to maximize the benefit of available sources in
accordance with the principles described in section 1.2 above.
Financial Policy 1 – Budget
8
1.6 Balanced Budget Definition
All funds are required to balance. As such, total anticipated revenues must equal the sum of
budgeted expenditures for each fund. Revenues are derived from two sources: current
revenue charges and unallocated reserves carried forward from prior years.
1.7 Contingency Planning for Unanticipated Revenue Shortfalls
During times when the City experiences significant unanticipated revenue shortfalls, a
contingency plan will be developed that outlines the necessary steps to align expenditures to
meet the actual revenue received. The contingency plan will target the funds being impacted
by the revenue shortfall. In general, the priority order of the steps in our contingency
methodology are:
Align ongoing expenditures with anticipated ongoing revenue
Sweep vacancy savings and non‐service related savings such as fuel or utilities if under
budget
If a Contingency Reserve has been established, utilize a portion of that reserve
Develop a stop doing list utilizing the drilling platform prioritization.
At a Service Area level, reduce expenditures related to
o discretionary expenditures
o new hires/vacancies (postponement of posting positions)
o travel and training
o reduced levels of support to programs
Financial Management Policy 3
General Financial Policies Issue Date: May 19,
2015
Version: 34
Issued by: City Council
Financial Policy 3 – General Financial Policies
1
3.1 Administrative Charges
Certain General Fund departments render services to departments in other funds and shall
be equitably apportioned to those other funds. General Fund departments that do not have
a direct billing mechanism shall have their costs allocated using the formula outlined in this
section to other funds, and provide offsetting revenue in the General Fund.
A. General Fund Departmental Costs to be Allocated
Certain General Fund departmental costs to be allocated include City Council, City
Manager, City Clerk, City Attorney, Human Resources, and Finance. Any services in
these departments which are funded by user fees or dedicated revenues are excluded
from the allocation.
The amount of costs to be allocated is the current adopted budget for each of the
departments listed above less user fees and dedicated revenue. With a multi‐year
budget, the charge to each fund is increased by a determined percentage for the second
future year and then adjusted to the actual calculation with the next multi‐year budget.
B. How Costs Are Allocated
The Human Resources costs are allocated on a prorated basis to funds based on the total
number of budgeted full‐time‐equivalent positions in each fund.
Objective:
To outline the method and principles for allocation Administrative Charges; establishing the parameters for
the Medical and Retirement Program; Fund Organization; Cost Recovery and Fee Setting; and Capital
Improvement Program.
Applicability:
This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolution 2006‐006, updated by Resolution 2015‐055.
ATTACHMENT 2
Financial Policy 3 – General Financial Policies
2
All other General Fund administrative costs are allocated on a prorated basis to the
funds based upon adjusted expenditure budgets for the current year. Adjustments are
made to recognize the lower amount of administrative services required for Capital,
Debt Service, and Purchased Power payments. Capital project budgets are reduced by
two‐thirds and averaged over three years. Debt Service budgets are reduced by three‐
fourths and the entire Purchased Power budget is deducted from the Light & Power
budget.
C. All Funds Receive Allocations but Not All Funds Are Charged
While Administrative Charges are allocated among all City funds, only specified funds
are charged. Charges are not made to a fund if it is not self‐supporting, it is an
Governmental Internal Service fund, or if the funds role is merely to facilitate proper
accounting procedures. For example, the Sales and Use Tax fund and Debt Service fund
receive amounts which are then transferred to other funds. Charging these funds would
lead to double charging many transactions and would not correspond to the level of
service provided by the departments in the General Fund.
D. Review
During each budget process, the Administrative Charge calculation will be reviewed the
Budget Office. Minor refinements in the allocation formulas are made as needed.
Significant changes will be brought to the City Council for approval to assure that the
equitable apportionment meets requirements of the Code/Charter.
3.2 Medical Insurance and Retirement Plan
A. Medical Insurance
In 1981, the City of Fort Collins set up a partially self‐funded medical insurance program.
The objective of a self‐funding program is to reduce the cost of medical insurance by
assuming the risk for certain plan expenses. Assuming a portion of the risk lowers the
amount of charges compared to a conventional full insurance plan. For most of the last 33
years, the City has found this funding method to be a cost‐effective means of providing a
very desirable employee benefit.
To administer the self‐funded and insured portions of the medical insurance plans, the City
conducts a competitive proposal process every five years or more often if required. The
insurance contracts are reviewed annually for both performance and cost. The types of
services contracted for include plan administrative services, stop‐loss protection against
Financial Policy 3 – General Financial Policies
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larger claims, life and accidental death and dismemberment insurance, and long‐term
disability coverage.
B. Retirement Programs
The City of Fort Collins contributes to two types of retirement plans: a Defined Benefit Plan
and Defined Contribution Plans.
1. Defined Benefit Plan ‐ the General Employees Retirement Plan (Plan). The pension
plan is closed to new participants as of 1/1/1999.
The Plan document approved by the City Council outlines the details of the program. A
Board meets monthly to oversee the program. Board members, in consultation with annual
actuary report and other information, make recommendations to City Council for any plan
changes that may be needed from time to time. The Plan currently calls for the employer
(City or PFA) to contribute 10.5%. Because the plan is underfunded, a Supplemental
Contribution is made at a fixed dollar amount each year. The Supplemental amount is
reevaluated every 2 years in conjunction with the budget cycle and based on the latest
actuarial valuation report.
2. 401(a) and 457 Money Purchase Plans. Also known as Defined Contribution Plans,
the contribution rates are as follows:
401 a 457
Employee Group Employer Employee Waiting Employer Employee Waiting
Classified Employees 6.5% 3.0% 6 months 0.0% optional no wait
Classified Employees hired
on or before 3/31/07
7.5% 3.0% 6 months 0.0% optional no wait
Unclassified Management 6.5% 6.0% 6 months 0.0% optional no wait
Unclassified Management
hired on or before 3/31/07
7.5% 6.0% 6 months 0.0% optional no wait
Direct Reports of City Council 10.0% 0.0% no wait match up to
3%
optional no wait
Service Area Directors 10.0% 0.0% no wait match up to
3%
optional no wait
Police & Dispatch (per union
agreement) *
8.0% 8.0% no wait match up to
3%
optional 6
months
Community Service Officer 7.5% 3.0% 6 months 0.0% optional no wait
* All employee groups vest immediately, except Police and Dispatch who follow schedule in
union agreement.
Employee contributions to the 457 plan are limited to the amounts published by the IRS.
Financial Policy 3 – General Financial Policies
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The City will contract with a third party administrator to provide the Defined Contribution Plans.
City Staff comprised of both Finance and HR will oversee the program and performance of the third
party administrator.
3.3 Fund Organization
Funds for accounting and financial reporting purposes have their own balance sheet and income
statement.
The organization of the City’s Funds is designed to enhance accountability and transparency,
comply with Generally Accepted Accounting Principles, meet grant requirements, comply with City
Code/Charter and comply with Colorado statutes. In City Article V, Part III, Section 25 the Financial
Officer is empowered to create funds as appropriate.
The number of funds established should be the minimum needed for legal and operating
requirements. Unnecessary funds can result in inflexibility, undue complexity and inefficient
financial administration.
The City’s funds are organized at two levels of groupings; Fund Groups and Fund Types.
Fund Groups
Governmental Funds Used to account for activities primarily supported by taxes, grants and similar
revenue sources.
Proprietary Funds Used to account for activities that receive significant support from fees and
charges.
Fiduciary Funds Used to account for resources that a City holds as a trustee or agent on behalf of an
outside party that cannot be used to support the City’s own programs.
Within each Fund Group are Fund Types.
Governmental Fund Types
General Fund Main operating fund used to account for and report all financial resources not
accounted for and reported in another fund.
Special Revenue
Funds
Used to account for and report the proceeds of specific revenue sources that are
restricted, committed or assigned to expenditure for specific purposes, other than
debt service or capital projects.
Debt Service Funds Used to account for and report resources that are restricted, committed or
assigned to expenditure for principal and interest.
Capital Project Funds Used to account for and report resources that are restricted, committed or
assigned to expenditure for capital outlays, including the acquisition or
construction of capital facilities or other capital assets.
Financial Policy 3 – General Financial Policies
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Proprietary Fund Types
Enterprise Funds Used to account and report any activity for which a fee is charged to external users
of goods and services
Internal Service
Funds
Used to account and report any activity for which a fee is charged to other funds,
departments, or agencies of the City and its component units on a cost
reimbursement basis.
Fiduciary Fund Types
Pension Trust Fund Used to account and report resources that are required to be held in trust for the
members and beneficiaries of defined benefit plans.
Agency Funds Used to report resources held by the City in a purely custodial capacity.
The following is a list of all funds of the City, including legally separate entities but from a financial
reporting perspective are treated as a component unit of the City.
Group and Type Legal Ref. Name
Governmental
General Fund City 100 General Fund
Special Revenue Fund City 250 Capital Expansion Fund
Special Revenue Fund City 251 Sales & Use Tax Fund
Special Revenue Fund Separate 252 General Improvement District #1
Special Revenue Fund City 254 Keep Fort Collins Great Fund
Special Revenue Fund City 255 Community Capital Improvement
Program
Special Revenue Fund City 272 Natural Areas Fund
Special Revenue Fund City 273 Cultural Services & Facilities
Special Revenue Fund City 274 Recreation Fund
Special Revenue Fund City 275 Cemeteries Fund
Special Revenue Fund City 276 Perpetual Care Fund
Special Revenue Fund City 277 Museum Fund
Special Revenue Fund City 280 Community Development Block
Special Revenue Fund City 281 Home Investment Partnership
Special Revenue Fund City 290 Transit Services Fund
Special Revenue Fund City 291 Street Oversizing Fund
Special Revenue Fund City 292 Transportation Services Fund
Special Revenue Fund Separate 293 GID #15 ‐ Skyview
Special Revenue Fund City 294 Parking Fund
Special Revenue Fund City 300 Timberline/Prospect SID #94
Debt Service City 303 Debt Service Fund
Debt Service City 304 Capital Leasing Corporation
Capital Projects Fund City 400 Capital Projects Fund
Capital Projects Fund City 270 Neighborhood Parkland Fund
Capital Projects Fund City 271 Conservation Trust Fund
Proprietary
Financial Policy 3 – General Financial Policies
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Enterprise Fund City 500 Golf Fund
Enterprise Fund City 501 Light & Power Fund
Enterprise Fund City 502 Water Fund
Enterprise Fund City 503 Wastewater Fund
Enterprise Fund City 504 Storm Drainage Fund
Internal Service Fund City 601 Equipment Fund
Internal Service Fund City 602 Self‐Insurance Fund
Internal Service Fund City 603 Data And Communications Fund
Internal Service Fund City 604 Benefits Fund
Internal Service Fund City 605 Utility Customer Service & Admin
Fiduciary
Pension Trust Fund City 700 Employees' Retirement Fund
Governmental
Special Revenue Fund Separate 800 URA ‐ N. College District
Special Revenue Fund Separate 801 URA ‐ Prospect South TIF District
Special Revenue Fund Separate 803 URA ‐ Mall Fund
Special Revenue Fund Separate 820 DDA Operating Fund
Special Revenue Fund Separate 822 DDA Debt Service Fund
3.4 Cost Recovery and Fee Setting
A. Enterprise Funds shall rely on charges and user fees to recover their costs, rather than
taxes. Utility rates will be based upon the cost of service approach to reflect full distribution
of costs to appropriate rate classes in order to effect equitable sharing of costs. Rates shall
be established and maintained at a level sufficient to maintain positive net income in each of
the utility funds after paying the full cost of operating and maintaining the utilities and
keeping them in good repair and working order. Such rates shall also be sufficient to enable
each utility, where applicable, to meet rate requirements of City or utility enterprise bond
ordinances.
B. The Internal Service Funds shall operate under the following guidelines.
1. Internal service fund charges are limited to the recovery of the cost of the service, including
depreciation, rather than making a profit. Each fund's prior year financial statements and
estimates of future costs form the basis for the calculation of charges.
2. Charges should be set at a level to avoid significant adverse financial impacts on their
customers. Fund customers and independent experts should be allowed to review and make
Financial Policy 3 – General Financial Policies
7
recommendations about the level of charges. The Finance Department should approve the
analysis and conclusions used to set rates.
3. Internal service funds should compete with similar services offered by the private sector.
The City staff will compare rates every five years. If not competitive with the private sector, the
Finance Department will analyze whether the private sector should provide the service.
4. Internal service funds may build up reserves. Customer‐approved master plans and
independent third‐party actuarial reviews (for the Benefit and Self‐Insurance funds) guide the
level of reserves. Fund managers may spend reserves only for their approved purpose.
5. The City may buy equipment and facilities for the internal service funds through lease‐
purchase financing. Management's decision to recommend lease‐purchase financing depends
on: (1) cash flow needs; (2) budget constraints; (3) benefit to cost analysis; and (4) level of
reserves.
6. Except for the Utilities Customer Service and Administration Fund, Internal service funds
operate under the same guidelines and constraints as the General Fund and other governmental
funds of the City. The Utilities Customer Service and Administration Fund shall operate under
the guidelines of the Utilities Services Funds.
C. Cultural Services & Facilities Fund Fee Policy
1. Total revenue from fees and charges shall cover a minimum of 55% of Lincoln
Center Operation and Maintenance and Performing and Visual Arts Programming Budgets.
This includes revenues generated at the Lincoln Center from rentals, equipment,
concessions and other miscellaneous sources and all total direct revenues from the
Performing and Visual Arts Programming. A transfer from the General Fund will make up
the difference between total revenue and expenditures.
2. The Cultural Services and Facilities Administration and Museum budgets provide
minimal financial support. These programs are funded primarily by a transfer from the
General Fund.
3. Major capital improvements and renovations will be financed through sources other
than Cultural Services and Facilities Fund.
4. Solicitation of funds through donations, fund‐raising events, and non‐traditional
sources shall be encouraged by the City staff, Lincoln Center League, the Cultural Resources
Board and the City Council. Funding collected for any special purpose shall be earmarked
for that purpose and those funds will be processed through the Fort Collins Foundation.
Financial Policy 3 – General Financial Policies
8
D. Recreation Fund Rates and ChargesFee Policy
Recreation Rates and Charges shall cover between 68% to 75% of all operating costs, with the
difference to be covered by the City’s General Fund and/or 50% of the Keep Fort Collins Great
portion dedicated to Parks & Recreation. Equipment and rolling stock shall be considered
operating costs in the application of this policy. Recreation Rates and Charges shall not be expected
to cover major capital items such as facility and land acquisitions, major renovations to facilities or
other costs such as utilities, custodial or grounds maintenance.
The following fee policy for the Recreation Fund was adopted by Resolution 1990‐132 on
September 4, 1990. The goal of the policy is to provide for a more equitable distribution of the
costs of recreational programs between program users and General Fund tax dollars.
Costs associated with the Recreation Fund shall be defined as either Program Costs or Community
Good Costs.
1. Program costs are directly associated with the activities and facilities used by the citizens,
and include the following:
(a) Activity Costs
(1) part time staff
(2) materials
(3) equipment
(4) participant transportation
(5) other costs directly associated with conducting activities
(b) Facility Operation and Maintenance Costs
(1) minor repairs
(2) custodial equipment and supplies
(3) building utilities
(4) specialized items
(5) other operations and maintenance costs directly associated with operating facilities
Fees should cover the cost of the direct program experience and facilities used. However, fees may
be established in accordance with the market value of the recreational services provided. The fees
charged will not exceed the cost of providing direct services to program users.
Financial Policy 3 – General Financial Policies
9
2. Community Good costs are those costs that are necessary to provide a program but are not
directly experienced by the user. Such costs include the following:
(a) full time recreation staff
(b) office operation costs such as telephone and computer charges
(c) training costs
(d) dues and subscriptions
(e) insurance
(f) office supplies and equipment
(g) other costs not directly experienced by the users
The General Fund shall cover "Community Good" costs. General Fund will also cover deficits in
programs that cannot recover all their costs through fees. Generally, these include programs
designed for special populations where it is not feasible to cover the total cost of participation, or
programs, like youth sports where Council policy requires a fee discount. Because costs that are
defined as "Community Good" costs are supported by the General Fund, they are subject to the
same operational guidelines as established for other General Fund budgets.
3.5 Capital Improvement Program
1. Each Service Area or Department shall develop multi‐year Master Plans for capital
improvements. On a city‐wide basis, staff shall compile a 10 year Capital Improvement
Plan and update it every two years. Estimates of operating and maintenance costs
should be included;
2. Appropriation requests must include not only the cost of construction or acquisition
and the funding sources, but an estimate of operating and maintenance costs;
3. Capital improvements projects will be administered in accordance with the Capital
Projects Procedures Manual;
4. Appropriations for capital improvements will be constructed and expenditures incurred
only for the purpose as approved by City Council;
5. Staff should seek out grants and partnerships whenever appropriate.
3.6 Using State Allocation of Private Activity Bonds
Financial Policy 3 – General Financial Policies
10
A. Background: Conduit debt is issued in a local government’s name, but the resources for
repayment come from individuals or entities that are not part of government. Entities seek
conduit debt because of the government’s ability to issue debt at favorable tax‐exempt
rates. Private Activity Bonds (PAB) are a form of conduit debt.
Colorado’s Private Activity Bond allocation program is established by the Colorado Private
Activity Bond Ceiling Allocation Act, Section 24‐32‐1701, et seq., C.R.S. Pursuant to Section
24‐32‐1706, annually the City of Fort Collins is offered a portion of the State ceiling as a
local government. If the City does not issue bonds or assign bond capacity to an entity for a
local project by September 15th annually, the cap automatically reverts back to the state’s
pool.
Historically, the City has provided this capacity on a first come first serve basis. It has not
been uncommon for the City to receive no requests. Because more partners are using
programs that can benefit from the lower interest rate that PAB’s offer, the City is
establishing this process.
B. Purpose: PAB’s allow certain private sector activities to receive lower interest rates. PAB’s
may be used for affordable housing development and rehabilitation, specific economic
development programs and for industrial development purposes, among other permitted
uses. The City will attempt to find local uses for this development tool.
C. Communication: Information about the program should be placed on the City’s website
(fcgov.com). Consideration for other advertising and communication methods may be
appropriate.
D. Awarding and Assigning: Awarding PAB and Assigning PAB allocations are different
processes. Assigning PAB to another qualified issuer is strongly preferred. This is to reduce
the administrative investments and leverage the efficiency of qualified issuers who award
PAB’s regularly. If an entity applies for a direct award under the City’s name, staff will
attempt to find a qualified issuer that agrees to accept an assignment from the City and
issue the PAB under their own authority.
E. Application due date: Written applications to use of Fort Collin’s annual PAB allocation are
due in theto the City’s Chief Sustainability Officer by MayMarch 15th.
F. Application Elements:
a. The following items are required when applying for both assignments and direct
awards.
Financial Policy 3 – General Financial Policies
11
i. A request letter signed by applicant describing the project the PAB would be
used for and including: the applicant’s name, address, phone, email address,
and principal contact.
ii. Amount of allocation being requested.
iii. Bond counsel firm name, address, phone, email address and principal
contact.
iv. Description of Applicant’s local projects and years of operation
v. Number of years’ entity has been doing business in State of Colorado
vi. Provide a Certificate of Good Standing from the Secretary of State’s office.
vii. Description of assets to be purchased or constructed and expenses
incidental to the project, including the sale of bonds.
viii. Explanation of how the project aligns with City objectives.
ix. Number of housing units and target demographics
x. Statement from competent bond counsel that the project is eligible for
qualified private activity bonds.
b. The following additional items are required in applications for direct awards of PAB:
Debt Information
xi. Name, address, phone of principal contact of the proposed underwriter or
lender.
xii. Anticipated timetable for bond transaction.
xiii. Estimated bond redemption and interest payment schedule
xiv. Indicate the type of letter of credit or similar instrument, which will back the
debt
xv. Disclose if the applicant is involved in any litigation which may affect the
validity or repayment of the bonds.
Financial Information
xvi. Audited financial statements for the applicant for the last three years and
interim statements for the current year. If not available, please explain why.
xvii. Projection of future revenues, expenditures and debt service coverage for
the next five years supported by a feasibility study.
Other
xviii. Describe the arrangements that will ensure compliance with arbitrage
reporting and payment requirements.
xix. Name, address and principal contact person for applicant’s local bank.
xx. Briefly describe any potential conflicts of interest of personal/ professional/
political relationships between the applicant’s officers and/or directors or
applicant’s operations and the City of Fort Collins.
xxi. Any other information which provides evidence of the applicant’s ability to
repay the bonds and complete the project.
Debt Security
xxii. All arbitrage calculations and payments must be performed by the trustee
under the terms of the trust agreement or by any such other arrangement
Financial Policy 3 – General Financial Policies
12
that will insure compliance. The City must be provided with copies of 8088‐
T’s filed with the IRS.
xxiii. The private entity must provide the City with information on the status of
the debt annually and upon any material event.
xxiv. The bond documents must indemnify the City against IRS assessments and
legal fees arising from the financing.
xxv. The issuer’s agent will be responsible for all continuing disclosure
requirements.
c. Items missing from application may result in disqualification from consideration.
G. Fees: There are no fees for applications that request assignments to another qualifying
issuer. However, the following fees apply to applications requesting a direct award of PAB
from the City of Fort Collins.
a. Issuance fee equal to the greater of: A. 0.25% of the par amount of the debt, or B.
$5,000. The fee is capped at $25,000.
b. The cost of a review of the financing by an independent fiscal agent (to be selected
by the City)
c. Any other direct cost incurred by the City related to the financing.
d. There will not be additional issuance fees for any amendment or modification of the
original transaction even if it requires official action by City Council, except for
actual direct costs of the City.
H. Review Process
a. PAB Committee: Applications will be reviewed by a committee of at least 3 people.
Members will include at least one representative each from Social Sustainability,
Economic Health City Manager’s Office and Finance. Representatives from other
departments, such as the City Manager’s Office will be added as needed. Service
Area Directors will make the necessary appointments to the PAB Committee.
b. At a minimum, the following factors should be considered by the PAB Committee
when making a recommendation:
i. How well the project applied for meets the land use, economic development
and/or affordable housing goals of the City of Fort Collins.
ii. Project feasibility and timing.
iii. Leverage of other investment into the project.
iv. Maintenance of or increase in local tax base.
v. Competing uses for the City’s allocation.
vi. Whether the City’s allocation should be used in multiple projects.
vii. Whether the application should be considered by any City Board or
commission.
c. The PAB Committee will decide on a recommendation no later than July 15.
d. City Council shall approve all PAB assignments or direct awards. The PAB
Committee shall submit their recommendations to the City Council no later than
August 15.
Financial Policy 3 – General Financial Policies
13
Financial Policy 3 – General Financial Policies
14
Getting Help
Please contact the Controller with any questions at 970.221.6772.
Financial Management Policy 5
Fund Balance Minimums Issue Date: July 15, 2014
Version: 34
Issued by: City Council
Financial Policy 5 – Fund Balance Minimums
1
5.1 Governmental Funds and Fund Balances
To set minimum fund balances so as to mitigate risks, maintain good standing with
rating agencies, and ensure cash is available when revenue is unavailable. The policy is
sets minimum fund balances, not targets or maximum balances. Each fund should be
evaluated by staff to determine the appropriateness of maintaining fund balances above
the minimums set in this policy. Contingencies for severe weather, prolonged drought,
and anticipated capital spending should be considered independently from this policy.
The Equity on balance sheet of a governmental fund is called Fund Balance. The current
classifications of Fund Balance in governmental funds are primarily based on the origin
of the constraints. The following categories are in decreasing order of constraints.
Non‐Spendable Permanent endowments or assets in a non‐liquid form
Restricted Involve a third party: State Legislation or
Contractual Agreements
Committed Set by formal action of the City Council
Assigned By staff, and/or residual balances in a Special Revenue Fund
Unassigned Remaining balances in the General Fund
Objective:
To set minimum fund balances as to mitigate risk, maintain good standing with rating agencies, and ensure
cash is available when revenue is unavailable. The policy sets minimum fund balances, not targets or
maximum balances. Each fund should be evaluated by staff to determine the appropriateness of
maintaining fund balances above the minimums set in this policy. Contingencies for severe weather,
prolonged drought, and anticipated capital spending should be considered independently from this policy.
Applicability:
Funds—This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolutions 1994‐174, 2008‐038 and 2014‐058.
ATTACHMENT 3
Financial Policy 5 – Fund Balance Minimums
2
Minimums outlined in section 5.2 relate only to Assigned and Unassigned balances.
5.2 Proprietary Fund and Working Capital
Internal Service Funds and Enterprise Funds are accounted for nearly identical to the
private sector. The balance sheets include long term assets and long term liabilities.
The resulting Equity section on their balance sheet, called Net Position, is not always a
good measure of spendable financial resources. To get to spendable financial resources,
a common calculation is to take Current Assets and subtract Current Liabilities, with the
net result called Working Capital.
To further refine, for purposes of this policy, certain required restrictions are further
subtracted and result in Available Working Capital. Some examples of required
restrictions are unspent monies for Art in Public Places, Water Rights, and existing
appropriations for capital projects. The minimums outlined in section 5.5 relate to
Available Working Capital.
5.3 Minimum Balances
The following Minimum Balances refers to Assigned and Unassigned Fund Balances in
governmental funds and Available Working Capital in the Internal Service Funds and
Enterprise Funds.
A. General Fund
60 Day Liquidity Goal ‐ The Commitment for Contingency should be at least 60 days
(17%) of the subsequent year’s originally adopted budgeted expenditures and transfers
out. The calculation for the minimum level shall exclude expenditures and transfers out
for large and unusual one‐time items.
Important note – the 60 Day Liquidity Goal is in addition to the Restricted Balance
required by Article X, Section 20 of the State Constitution. This reserve must equal 3%
of non‐exempt revenue and can only be used for declared emergencies. Fiscal
emergencies are specifically excluded by the State Constitution as qualifying use of this
reserve.
B. Special Revenue Funds
No minimum balance is required.
Financial Policy 5 – Fund Balance Minimums
3
C. Debt Service Funds
No minimum balance is required.
D. Capital Project Funds
No minimum balance is required.
E. Enterprise Funds
Enterprise funds focus on working capital rather than fund balance.
Enterprise Funds shall maintain a minimum Available Working Capital equal to 25% of
Operating Expenses, less Depreciation. Exception1: In the case of L&P, operating
expenses will include purchased renewable energy for resale but will not include
regular purchased power for resale (i.e. Platte River Power Authority). Exception 2: In
the case of Golf, the minimum fund balance will be 12.5%.
Important note – The Water Fund holds a balance for Restricted Water Rights. The
balance equals the amount of cash in‐lieu‐of water rights payments and raw water
surcharges less any expenses for acquiring water rights and water storage;
The enterprises funds should also be accumulating available working capital above
these minimums for the purposes of funding future capital projects.
F. Internal Service Funds
Each fund is a unique operation and will maintain a minimum Available Working Capital
as follows:
601 Equipment Fund 8.3% Of annual operating expenses, excluding
depreciation
602 Self‐Insurance Fund * 25.0% Of annual operating expenses
603 Data & Communications
Fund
0.0% N/A
604 Benefits Fund 30.0% Of annual medical and dental expenses
605 Utility Customer Service
Fund
0.0% N/A
* Self Insurance Fund will be measured against Available Unrestricted Net Position
instead of Available Working Capital.
Financial Policy 5 – Fund Balance Minimums
4
5.4 Below Minimum
When circumstances result in balances below the minimum, staff should develop a plan
to restore minimums fund balances and present it to Council Finance Committee.
Financial Policy 5 – Fund Balance Minimums
5
Definitions
Non Spendable Fund Balances: Applicable to governmental funds. Permanent endowments or assets in a
non‐liquid form such as long term inter‐agency loans.
Restricted Fund Balances: Applicable to governmental funds. Involve a third party such as State
Legislative requirements, voter ballot language, or the Contractual Agreements with parties
external to the City.
Committed Fund Balances: Applicable to governmental funds. Involve a of formal action by the City
Council. An example is traffic calming revenues are required to be spent on traffic calming
activities. Any unspent monies at end of year are classified as Committed to Traffic Calming in the
General Fund.
Assigned Fund Balances: Are applicable to governmental funds. Assignments can be made by senior
management. They represent the intent to use the monies for a specific purpose. An example of this
it this the one time Harmony Road monies transferred by the State to the City. Although required to
be used on Harmony Road, staff intends to use the monies only on Harmony Road improvements.
These monies are considered when measuring compliance with minimum fund balances.
Unassigned Fund Balances: Are applicable only to the General Fund. These monies are considered when
measuring compliance with minimum fund balances.
Working Capital: Is a term applicable to Internal Service and Enterprise Funds. It is the difference
between Current Assets and Current Liabilities. Not all Working Capital is available. Available
Working Capital does not include Restrictions for debt, Art in Public Places, approved capital
appropriations, and other restrictions.
Unrestricted Net Position: Is a term applicable to Internal Service and Enterprise Funds. Not all
Unrestricted Net Position is available. Available Unrestricted Net Position does not include
Restrictions for debt, unused Art in Public Places monies, approved capital appropriations, and
other commitmentsrestrictions.
Liquidity: Assets range from cash to land. The more easily and quickly an asset can be converted to cash
determines its relative liquidity.
Reserves: A legacy term that previously referred to fund balances, or fund balances set aside for a specific
purpose. It is no longer used on financial statements.
Fund Balance: Is a term applicable to Governmental Funds. Fund balance or Equity is the difference
between Assets and Liabilities. Since governmental funds do not have long term assets and long
term debt on their balance sheet, fund balance is similar and approximates working capital in the
Financial Policy 5 – Fund Balance Minimums
6
Getting Help
Please contact the Controller with any questions at 970.221.6772.
1 Attachment 4
Fund Balance Minimums Policy – Municipal Golf Comparison
Greeley Longmont Loveland Fort Collins
Fund Balance
Minimum Policy
$ 0
$ 0
Equal to three
highest months
spending
25% current
12.5% proposed
Subsidy Free water,
occasional
General Fund
support for Debt
Service
Free water None None
Volume: 18-hole
equivalent
51,610
71,960
82,663
81,326
Data collected by D. Gorkowski
ATTACHMENT 4
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Finance Committee Minutes
10/16/17
10:00 am - noon
CIC Room - City Hall
Council Attendees: Mayor Wade Troxell, Ross Cunniff, Ken Summers
Staff: Darin Atteberry, Mike Beckstead, Jeff Mihelich, Travis Storin, John Voss, John Duval,
Andres Gavaldon, Josh Birks, Laurie Kadrich, Josh Birks, Mark Jackson, Chad Crager, Brad
Buckman, Lawrence Pollack, Jo Cech, Dean Klingner, Sue Beck-Ferkiss, Rachel Springob,
Bob Adams
Others: Kevin Jones (Chamber of Commerce), Dale Adamy (Citizen), Kelly Evans (Executive
Director Neighbor to Neighbor)
Meeting called to order at 10:02 am
Ken Summers moved to approve the Minutes from the September 18th Council Finance Committee Meeting.
Ross Cunniff seconded the motion. Minutes approved.
Agenda Review; URA North College strategy is scheduled for the December Council Finance Committee meeting
- Council Finance does not provide a public comment forum at CFC - CAG looking for some engagement /
discussion - will have more conversation with them - Josh will reach out to Neil to understand their expectations.
A. Financial Management Policy Updates - Budget, Investment, Fund Balances, PAB
John Voss
EXECUTIVE SUMMARY: Once a year a portion of Financial Policies are reviewed and updated is
needed. Staff is committed to reviewing each policy no less than every 3 years. Policies up for review
are Revenue, Fund Balance Minimums and Investment Policies. Additionally, the General Financial
Policy staff is recommending changes with the addition of a new section and topic, Using Private
Activity Bonds.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does Council Finance Committee support the changes as recommended?
2. Does Council Finance Committee recommend presenting the proposed policy changes to City
Council?
BACKGROUND/DISCUSSION
ATTACHMENT 5
2
Revenue Policy 1 has a handful of minor language changes as the addition of two topics. One adds to
the Budget Control System 1.5 a new subsection C. Order of Funding when Multiple Funding Sources
Available. The language reflects a long-standing practice and clarification for when exceptions are
allowed. The other addition is section 1.7 Contingency Planning for Unanticipated Revenue
Shortfalls. This is meant to capture recent discussions with the City Council and the Executive Lead
Team about responses to follow in the event of unanticipated revenue shortfalls.
General Policy 3 covers numerous topics that do not warrant their own standalone policy. Updates
section 3.3 Fund Organization to reflect current active funds. Section 3.4 D. Recreation Fund Fee Policy
to reflect current practices. Most significantly a new section is proposed, 3.6 Using State Allocation of
Private Activity Bonds. Because of increased interest by the private sector, it was agreed that a policy is
needed to provide a structured framework for the use of Private Activity Bonds.
Fund Balance Minimums 5 has two minor recommended changes. One lowers the minimum available
working capital in the Golf from 25% to 12.5%. The second change is to the Self Insurance Fund;
instead of measuring against Available Working Capital the standard will use Available Unrestricted Net
Position.
Discussion / Next Steps;
ACTION ITEM: Darin Atteberry; Does that square with golf industry standards in terms of reserve
policies?
Mike Beckstead; We will check to see if there is an industry standard
Mayor Troxell; overall 2 year cycle - how is plays out - how one feeds into the next
Mike Beckstead: Policy 9 includes that process information.
Darin Atteberry; how our various key processes fit together - the 2 year calendar begins with Council
election / Council retreat / Council goal setting / Strategic Planning / BFO - easy to read graphic
representation of how this fits together - this was not clearly defined 5 years ago
Mike Beckstead; management practice vs process - How do we make BFO better?
Always operational things we change - the Calendar was one of those operational tools
Could easily go in policy - I have no reservation in adding it - We could put the chart in the policy
Darin Atteberry; if it ever gets amended to change that process would require some consideration on
the part of Council - I see the value in both
Mayor Troxell; It may not belong in the policy but it does provide continuity it does tie together
Mike Beckstead; 15 strategic policies - there is a short 6-7 page write up of that key process – operating
key processes everyone across the city follows
ACTION ITEM:
Darin Atteberry; Requested that Staff send the chart out to the Council Finance Committee under
separate cover at a different time. Include a few thought provoking questions and we will discuss it
further.
3
Travis Storin; Policy 8 Investment Policy - 4 objectives in place now -
We received a request to add a 5th
objective in regards to Social Responsibility
Terms are rather broad - how to administer this – tremendous breadth of social issues we are facing
- No easy way to do this
Pool of AA- pool has diminished considerably - 27 that we can select from now - one could find
something objectionable about each. Staff is not recommending adding a 5th
objective at this time.
Ken Summers: I am not in favor of adding a 5th
objective. We did this at the state level but it was on a
much more specific level. You get into trouble with nebulous statements - leaving that up to individual
interpretation of what that might be.
Ross Cunniff: I agree with Ken on the Social Responsibility objective - Don’t support the general vague
- I don’t want to direct any further work from staff until we have had a broader conversation with
Council.
Mayor Troxell; I am right there as well - As we discuss it further we might think of it in a broader
context - how we approach things as a city with our triple bottom line lense. I appreciate the list of
AAA and AA rated -
To define Socially Responsible – all about objectivity – tobacco, oil and fire arms
Coke - tooth decay – diabetics. How do I do a triple bottom line on an investment like that?
Ken Summers: I don’t think it is worth it - we are doing good – let’s stay the course - Staff is well aware
of our priorities and I am good with that
Mayor Troxell; Coke and Walmart are transforming their processes to be more
Coke trying to be net zero in their water use. Walmart in their supply chain - sustainability in their
supply chain. Leading corporate citizens are environmentally dialed in and pushing best practices as it
relates to sustainability.
Ross Cunniff; Documented sustainability plan of some sort - that means a broader Council discussion
that would justify more staff work not ready to say go forward
Mike Beckstead; we will bring these 4 forward for Council endorsement at some future time.
-1-
RESOLUTION 2017-101
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING AMENDMENTS TO THE CITY’S FINANCIAL MANAGEMENT POLICIES
WHEREAS, City Council has adopted Financial Management Policies for the City
pursuant to Resolution 1994-174 (the “Financial Policies”); and
WHEREAS, Resolution 1994-174 provides that City Council may adopt amendments to
the Financial Policies, which the Council has done several times over the years; and
WHEREAS, the City’s Chief Financial Officer and City Manager are recommending new
amendments to the Financial Policies; and
WHEREAS, the City is committed to sound and efficient financial planning and
management consistent with the best practices as established by the Government Financial
Officers Association (“GFOA”); and
WHEREAS, the new “Financial Management Policy 1- Budget Policy”, with its
recommended amendments, is attached and incorporated by reference as Exhibit “A” (the
“Budget Policy”); and
WHEREAS, the Budget Policy is being revised to include new provisions pertaining to
monthly budgeting, order of funding when multiple funding sources are available and
contingency planning for unanticipated revenue shortfalls; and
WHEREAS, the new “Financial Management Policy 3 – General Financial Policies”,
with its recommended amendments, is attached and incorporated by reference as Exhibit “B”
(the “General Financial Policies”); and
WHEREAS, the General Financial Policies is being revised to update the list of the
City’s funds, to revise the policy for setting the rates and charges for the Recreation Fund and to
add policies for using the allocation of private activity bonds that the State offers to the City each
year; and
WHEREAS, the new “Financial Management Policy 5 – Fund Balance Minimums”, with
its recommended amendments, is attached and incorporated by reference as Exhibit “C” (the
“Fund Balance Policy”); and
WHEREAS, the Fund Balance Policy is being revised to reduce the minimum working
capital requirement in the Golf Fund from 25% to 12.5% and to change the minimum fund
balance standard for the Self Insurance Fund from “available working capital” to “available
unrestricted net position,” as this latter term is defined in the Fund Balance Policy; and
WHEREAS, the Council Finance Committee has reviewed the Budget Policy, the
General Financial Policies and the Fund Balance Policy, as they have been revised, and voted to
recommend that the Council approve each of them; and
-2-
WHEREAS, the City Council wishes to amend the Financial Polices, as most recently
updated on December 20, 2016, in Resolution 2016-096, by adopting the revised Budget Policy,
the General Financial Policies and the Fund Balance Policy in pursuit of the City’s objectives of
sound and efficient financial planning and management consistent with GFOA’s best practices.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS, as follows:
Section 1. That the City Council hereby makes and adopts the determinations and
findings contained in the recitals set forth above.
Section 2. That the City Council hereby approves and adopts the Budget Policy, the
General Financial Policies and the Fund Balance Policy, as amended by this Resolution.
Section 3. That the Budget Policy shall replace and supersede the “Financial
Management Policy 1 – Budget Policy,” the General Financial Policies shall replace and
supersede the “Financial Management Policy 3 – General Financial Policies” and the Fund
Balance Policy shall replace and supersede the “Financial Management Policy 5 – Fund Balance
Minimums,” as these three policies now read in the Financial Policies, and the Financial Policies,
as previously amended and as amended herein, shall hereafter remain unchanged and in full
force and effect until the same are amended or repealed by subsequent action of the City
Council.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this
21st day of November, A.D. 2017.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
Financial Management Policy 1
Budget Policy
Issue Date:
Version: 3
Issued by: Budget
Director
Financial Policy 1 – Budget
1
1.1 Overview
The Fort Collins City Charter establishes time limits and the essential content of the City
Manager’s proposed budget, however the budget preparation process is not prescribed, but
is developed by the City Manager with input from the City Council.
The fiscal year of the City is the calendar year. The City may adopt budgets for a budget
term of one fiscal year or more. After the Charter amendment in 1997 allowing the budget
term to be more than one fiscal year, the Council has adopted two-year budgets that
correspond with the election cycle.
The budget is a 2-year plan by which the City Council sets the financial and operational
priorities for the City - through the budget, services are implemented. The budget along with
the annual appropriation ordinance provides the basis for the control of expenditures. The
State Constitution and the City Charter provide the basic legal requirements and time lines
for the process. Council goals, ordinances and resolutions provide additional direction and
respond to the needs of the community.
1.2 Principles for Budget Planning
The City provides a wide variety of services to the residents of the community. It is in the
power of the City Council to adopt a budget and manage the available resources to best meet
the service needs for the overall good of the community (City Charter Article II, Section 5 (c)).
Objective:
Governments allocate scarce resources to programs and services through the budget process. As a
result, it is one of the most important activities undertaken by governments. The purpose of this
policy is to establish parameters and provide guidance governing the budget for the City of Fort
Collins (City).
Applicability:
This budget policy applies to all funds and Service Areas of the City.
Authorized by:
City Council Resolution 2014-058
EXHIBIT A
Financial Policy 1 – Budget
2
In 2005 the City Council, on recommendation from the City manager, endorsed the Budgeting
for Outcomes budget process. At a high level, the budgeting for outcomes methodology can
be summarized as:
1. Determine how much money is available. The budget should be built on expected
revenues. This would include base revenues, any new revenue sources, and the
potential use of fund balance.
2. Prioritize results. The results or outcomes that matter most to citizens should be
defined. Elected leaders should determine what programs are most important to their
constituents.
3. Allocate resources among high priority results. The allocations should be made in a
fair and objective manner.
4. Conduct analysis to determine what strategies, programs, and activities will best
achieve desired results.
5. Budget available dollars to the most significant programs and activities. The
objective is to maximize the benefit of the available resources.
6. Set measures of monthly progress, monitor, and close the feedback loop. These
measures should assign monthly budget, spell out the expected results and outcomes
and how they will be measured.
7. Check what actually happened. This involves using performance measures to
compare actual versus budgeted results, and financial measures for budget versus
actual results on a monthly basis.
8. Communicate performance results. Internal and external stakeholders should be
informed of the results in an understandable format.
At that time, the City Council also identified the key outcomes it believed should be used in
the new budget process. In addition, the 2005-2007 Policy Agenda sets forth the
implementation and continued improvement of the collaborative budget process, aligning
spending with desired outcomes.
In 2012, the City Council passed resolution 2012-076 promoting improved results through
performance measures and data-driven decision making. In reference to the budget, an
outcome-based performance measurement system will help ensure that available resources
are used to achieve excellent results at low cost to the taxpayers and will enhance the citizen’s
understanding of the City and the services it provides.
1.3 Scope
A. Comprehensiveness
The proposed budget shall provide a complete financial plan for each fund of the city and
shall include appropriate financial statements for each type of fund showing comparative
figures for the last completed fiscal year, comparative figures for the current year, and the
Financial Policy 1 – Budget
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City Manager's recommendations for the ensuing budget term (City Charter Article V, Part 1,
Section 2). In addition, the City of Fort Collins Budget Document may include items such as:
1) Statement of organization-wide strategic goals.
2) A description of the budget process, including a timeline.
3) A Glossary of Budget Terms.
4) A City of Fort Collins organizational chart.
5) Letter from the City Manager.
6) Budget Overview which may include:
a) The economic outlook;
b) Revenue assumptions;
c) Summary of use of reserves;
d) Budget priorities and highlights.
7) Copy of signed appropriation ordinance and a schedule of 2nd year proposed
appropriations.
8) Revenue, expense and changes in fund balance summaries.
9) Summary of employee full-time equivalent staffing by service area and department.
10) A section for each of the key strategic Outcomes, which may include:
a) Information indicating how the Offers in the Outcome are funded, by fund;
b) Major key purchases;
c) Major enhancements purchased;
d) Detailed listing of all offers funded and unfunded;
e) Strategic objectives of the Outcome.
11) Fund Statements.
12) Overview of debt position.
13) Current Capital Improvement Plan.
14) Summary of changes to user fees.
15) Summary of property tax mill levy and assessments.
The annual appropriation ordinance shall also include the levy in mills, as fixed by the
Council, upon each dollar of the assessed valuation of all taxable property within the city,
such levy representing the amount of taxes for city purposes necessary to provide,
during the ensuing fiscal year, for all properly authorized expenditures to be incurred
by the city, including interest and principal of general obligation bonds. If the Council
fails in any year to make said tax levy as above provided, then the rate last fixed shall be
the levy fixed for the ensuing fiscal year and the Financial Officer shall so certify (City
Charter Article V, Part 1, section 5).
B. Budget Form
The City of Fort Collins uses the Budgeting For Outcomes model to create the City budget. A
new budget is designed from the ground up based on the results desired in each of the
Outcomes defined by the City. The BFO budget-building process includes four steps:
Financial Policy 1 – Budget
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1) Determine how much revenue will be available (the price people pay);
2) Determine the priorities of the City and its citizens and the results to be achieved;
3) Allocate the revenue needed to achieve the desired results;
4) Determine which budget items will best produce the desired results at the price allocated.
C. Basis of Budgeting
All budgetary procedures conform to state regulations and to generally accepted accounting
principles. The basis or principle used for budgeting is the same as that used for accounting,
with a few exceptions, and varies according to the fund type.
Governmental Funds use the modified-accrual basis of accounting. This means that revenues
are recognized when they are earned, measurable and available. Expenditures are recognized
in the period that liabilities are due and payable. The budgetary basis is the same and is used
in the General Fund, Special Revenue and Debt Service Funds, and Capital Project Funds.
Proprietary and Fiduciary Funds use the full accrual basis of accounting. Revenues are
recognized when they are earned and expenses are recognized when liabilities are incurred.
However, the budgetary basis in these funds is primarily based on the modified-accrual
approach. Instead of authorizing budget for depreciation of capital assets, the budget
measures and appropriates cash outflows for capital acquisition and construction, which is a
modified-accrual approach. In full accrual based accounting debt proceeds are recorded as
liabilities rather than a revenue (funding source). For these reasons, a reconciliation and
adjustment is made on these fund statements to show the difference between the budgetary
basis and the accounting basis.
D. Budget Calendar
The fiscal and accounting year shall be the same as the calendar year. "Budget term" shall
mean the fiscal year(s) for which any budget is adopted and in which it is to be administered.
Council shall set by ordinance the term for which it shall adopt budgets in accordance with
this Article (City Charter Article V, Part 1, section 1).
On or before the first Monday in September, commencing in 2010 and every other year
thereafter, the City Manager shall file with the City Clerk a proposed budget for the City for
the ensuing two-year term (City Charter Article V, Part 1, section 2). The Council shall, within
ten (10) days after the filing of said proposed budget with the City Clerk, set a time certain
for public hearing and cause notice of such public hearing to be given by publication. At the
hearing, all persons may appear and comment on any or all items and estimates in the
proposed budget. Upon completion of the public hearing the Council may revise the budget
estimates (City Charter Article V, Part 1, section 3).
Financial Policy 1 – Budget
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After said public hearing and before the last day of November preceding the budget term, the
Council shall adopt the budget for the ensuing term. The adoption of the budget shall be by
ordinance. Before the last day of November of each fiscal year, the Council shall appropriate
such sums of money as it deems necessary to defray all expenditures of the city during the
ensuing fiscal year. The appropriation of funds shall be accomplished by passage of the
annual appropriation ordinance. Such appropriation of funds shall be based upon the budget
as approved by the Council but need not be itemized further than by fund with the exception
of capital projects and federal or state grants which shall be summarized by individual project
or grant (City Charter Article V, Part 1, section 4).
Appropriations for each year of the two-year budget will be approved by the City Council
annually. Appropriations for the 2nd year of the biannual budget are adopted during the
budget revision process. That process allows for adjustments to the originally adopted
biennial budget that address new Council priorities or support changing needs based on
economic conditions. The City Manager may present any budget adjustment
recommendations to the City Council in Work Sessions and then Council may amend the
budget and, as required by the State and City Charter, appropriate or authorize expenditures
for the coming fiscal year.
1.4 Roles and Responsibilities
All powers of the city and the determination of all matters of policy shall be vested in the
Council except as otherwise provided by the Charter. Without limitation of the foregoing, the
Council shall have power to adopt the budget of the city.
The City Manager shall be responsible to the Council for the proper administration of all
affairs of the City and to that end shall have power and be required to prepare the budget and
submit it to the Council and be responsible for its administration after adoption.
The City Manager and Chief Financial Officer, along with the other executive directors, known
as the Budget Lead Team (BLT), develop the guidelines, consistent with the policies, to be
used for budget preparation. During the development of the budget, various department and
division representatives may be called upon to provide their expertise.
From April through June, City staff from all departments and divisions prepares the Offers
(budget requests) for inclusion in the budget.
1.5 Budgeting Control System
No appropriation shall be made by the Council which exceeds the revenues, reserves or other
funds anticipated or available at the time of the appropriation, except for emergency
expenses incurred by reason of a casualty, accident or unforeseen contingency arising after
the passage of the annual appropriation ordinance (City Charter Article V, Part I, Section 8
(a)).
Financial Policy 1 – Budget
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Control of expenditures is exercised at the fund level. Fund managers are responsible for all
expenditures made against appropriations within their fund and can allocate available
resources within the fund.
All appropriations unexpended or unencumbered at the end of the fiscal year shall lapse to
the applicable general or special fund, except for:
• appropriations for capital projects which shall not lapse until the completion of the
capital project; and
• federal or state grants which shall not lapse until the expiration of the federal or state
grant (City Charter Article V, Part I, Section 11).
A. Budget Transfers
Between Funds or Capital Projects
During the fiscal year, the Council may, by ordinance, upon the recommendation of the City
Manager, transfer any unexpended and unencumbered appropriated amount or portion
thereof from one fund or capital project account to another fund or capital project account
provided that:
1) the purpose for which the transferred funds are to be expended remains unchanged;
2) the purpose for which the funds were initially appropriated no longer exists; or
3) the proposed transfer is from a fund or capital project account in which the amount
appropriated exceeds the amount needed to accomplish the purpose specified in the
appropriation ordinance (City Charter Article V, Part I, Section 10 (b)).
Within a Fund
Budget control is maintained at the departmental level. The Chief Financial Officer has the
authority to approve departmental expenses greater than budget so long as expenses are less
than budget within a fund. In no case may the total expenditures of a particular fund exceed
that which is appropriated by the City Council (City Charter Article V, Part I, Section 10 (a)).
B. Applicable Amendments to the Budget
Budget Increases
There generally are four opportunities during the fiscal year for supplemental additions to
the current year annual appropriation approved by Council:
1) The first is through the encumbrance carry-forward process whereby approved purchase
orders that cannot be executed prior to the end of the fiscal year will have available
budget carried forward into the new year.
Financial Policy 1 – Budget
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2) The second is usually adopted in March/April to re-appropriate funds from the previous
year’s ending balance for projects or obligations that were approved but not completed
during that year.
3) The third opportunity in the 2nd half of the year is used to fine-tune (clean-up) the
current fiscal year for previously unforeseen events. In addition, if revenue is received
during the fiscal year from a source that was not anticipated at the time of budget
adoption or appropriation for the fiscal year, such as grants or implementation of a new
fee, Council may appropriate that unanticipated revenue for expenditure when received
anytime during the year.
4) Lastly, the Council, upon recommendation of the City Manager, may make supplemental
appropriations by ordinance at any time during the fiscal year; provided, however, that
the total amount of such supplemental appropriations, in combination with all previous
appropriations for that fiscal year, shall not exceed the then current estimate of actual
and anticipated revenues to be received by the city during the fiscal year. This provision
shall not prevent the Council from appropriating by ordinance at any time during the
fiscal year such funds for expenditure as may be available from reserves accumulated in
prior years, notwithstanding that such reserves were not previously appropriated (City
Charter Article V, Part I, Section 9).
Budget Decreases/Frozen Appropriations
The budget may be decreased below adopted appropriations during the fiscal year due to
changes in service demand, changes in economic conditions, and/or changes in Council goals.
Each service area is responsible for developing a plan to reduce appropriations, which will
be ready for implementation should the need arise. If the City Manager directs budget
reductions, Council will be informed and the appropriations will be “set aside” through
administrative action. While the appropriation amount is not changed, expenditures shall
not exceed the reduced amount recommended by the City Manager.
C. Order of Funding when Multiple Funding Sources Available
Sometimes a given project or program has multiple sources of funding available. Examples
of such projects include but are not limited to grant funded projects, jointly funded
projects/programs between governmental and proprietary funds, or projects/programs
where both dedicated tax revenues and General Fund tax revenues are available.
Unless stated otherwise within the authorizing ordinance, budget offer, or a contractual
agreement, funding sources will be applied in the order of most-constrained to least-
constrained in the judgment of City staff. For example, a project jointly funded by the
General Fund and the Natural Areas Fund would first fund project spending using all
available and appropriated Natural Areas revenues prior to spending appropriated General
Fund revenues. This is in an effort to maximize the benefit of available sources in
accordance with the principles described in section 1.2 above.
Financial Policy 1 – Budget 8
1.6 Balanced Budget Definition
All funds are required to balance. As such, total anticipated revenues must equal the sum of
budgeted expenditures for each fund. Revenues are derived from two sources: current
revenue charges and unallocated reserves carried forward from prior years.
1.7 Contingency Planning for Unanticipated Revenue Shortfalls
During times when the City experiences significant unanticipated revenue shortfalls, a
contingency plan will be developed that outlines the necessary steps to align expenditures to
meet the actual revenue received. The contingency plan will target the funds being impacted
by the revenue shortfall. In general, the priority order of the steps in our contingency
methodology are:
• Align ongoing expenditures with anticipated ongoing revenue
• Sweep vacancy savings and non-service related savings such as fuel or utilities if under
budget
• If a Contingency Reserve has been established, utilize a portion of that reserve
• Develop a stop doing list utilizing the drilling platform prioritization.
• At a Service Area level, reduce expenditures related to
o discretionary expenditures
o new hires/vacancies (postponement of posting positions)
o travel and training
o reduced levels of support to programs
Financial Management Policy 3
General Financial Policies
Issue Date:
Version: 4
Issued by: City Council
Financial Policy 3 – General Financial Policies
1
3.1 Administrative Charges
Certain General Fund departments render services to departments in other funds and shall
be equitably apportioned to those other funds. General Fund departments that do not have
a direct billing mechanism shall have their costs allocated using the formula outlined in this
section to other funds, and provide offsetting revenue in the General Fund.
A. General Fund Departmental Costs to be Allocated
Certain General Fund departmental costs to be allocated include City Council, City
Manager, City Clerk, City Attorney, Human Resources, and Finance. Any services in
these departments which are funded by user fees or dedicated revenues are excluded
from the allocation.
The amount of costs to be allocated is the current adopted budget for each of the
departments listed above less user fees and dedicated revenue. With a multi-year
budget, the charge to each fund is increased by a determined percentage for the second
future year and then adjusted to the actual calculation with the next multi-year budget.
B. How Costs Are Allocated
The Human Resources costs are allocated on a prorated basis to funds based on the total
number of budgeted full-time-equivalent positions in each fund.
Objective:
To outline the method and principles for allocation Administrative Charges; establishing the parameters for
the Medical and Retirement Program; Fund Organization; Cost Recovery and Fee Setting; and Capital
Improvement Program.
Applicability:
This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolution 2006-006, updated by Resolution 2015-055.
EXHIBIT B
Financial Policy 3 – General Financial Policies
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All other General Fund administrative costs are allocated on a prorated basis to the
funds based upon adjusted expenditure budgets for the current year. Adjustments are
made to recognize the lower amount of administrative services required for Capital,
Debt Service, and Purchased Power payments. Capital project budgets are reduced by
two-thirds and averaged over three years. Debt Service budgets are reduced by three-
fourths and the entire Purchased Power budget is deducted from the Light & Power
budget.
C. All Funds Receive Allocations but Not All Funds Are Charged
While Administrative Charges are allocated among all City funds, only specified funds
are charged. Charges are not made to a fund if it is not self-supporting, it is an
Governmental Internal Service fund, or if the funds role is merely to facilitate proper
accounting procedures. For example, the Sales and Use Tax fund and Debt Service fund
receive amounts which are then transferred to other funds. Charging these funds would
lead to double charging many transactions and would not correspond to the level of
service provided by the departments in the General Fund.
D. Review
During each budget process, the Administrative Charge calculation will be reviewed the
Budget Office. Minor refinements in the allocation formulas are made as needed.
Significant changes will be brought to the City Council for approval to assure that the
equitable apportionment meets requirements of the Code/Charter.
3.2 Medical Insurance and Retirement Plan
A. Medical Insurance
In 1981, the City of Fort Collins set up a partially self-funded medical insurance program.
The objective of a self-funding program is to reduce the cost of medical insurance by
assuming the risk for certain plan expenses. Assuming a portion of the risk lowers the
amount of charges compared to a conventional full insurance plan. For most of the last 33
years, the City has found this funding method to be a cost-effective means of providing a
very desirable employee benefit.
To administer the self-funded and insured portions of the medical insurance plans, the City
conducts a competitive proposal process every five years or more often if required. The
insurance contracts are reviewed annually for both performance and cost. The types of
services contracted for include plan administrative services, stop-loss protection against
larger claims, life and accidental death and dismemberment insurance, and long-term
disability coverage.
Financial Policy 3 – General Financial Policies
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B. Retirement Programs
The City of Fort Collins contributes to two types of retirement plans: a Defined Benefit Plan
and Defined Contribution Plans.
1. Defined Benefit Plan - the General Employees Retirement Plan (Plan). The pension
plan is closed to new participants as of 1/1/1999.
The Plan document approved by the City Council outlines the details of the program. A
Board meets monthly to oversee the program. Board members, in consultation with annual
actuary report and other information, make recommendations to City Council for any plan
changes that may be needed from time to time. The Plan currently calls for the employer
(City or PFA) to contribute 10.5%. Because the plan is underfunded, a Supplemental
Contribution is made at a fixed dollar amount each year. The Supplemental amount is
reevaluated every 2 years in conjunction with the budget cycle and based on the latest
actuarial valuation report.
2. 401(a) and 457 Money Purchase Plans. Also known as Defined Contribution Plans,
the contribution rates are as follows:
401 a 457
Employee Group Employer Employee Waiting Employer Employee Waiting
Classified Employees 6.5% 3.0% 6 months 0.0% optional no wait
Classified Employees hired
on or before 3/31/07
7.5% 3.0% 6 months 0.0% optional no wait
Unclassified Management 6.5% 6.0% 6 months 0.0% optional no wait
Unclassified Management
hired on or before 3/31/07
7.5% 6.0% 6 months 0.0% optional no wait
Direct Reports of City Council 10.0% 0.0% no wait match up to
3%
optional no wait
Service Area Directors 10.0% 0.0% no wait match up to
3%
optional no wait
Police & Dispatch (per union
agreement) *
8.0% 8.0% no wait match up to
3%
optional 6
months
Community Service Officer 7.5% 3.0% 6 months 0.0% optional no wait
* All employee groups vest immediately, except Police and Dispatch who follow schedule in
union agreement.
Employee contributions to the 457 plan are limited to the amounts published by the IRS.
Financial Policy 3 – General Financial Policies
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The City will contract with a third party administrator to provide the Defined Contribution Plans.
City Staff comprised of both Finance and HR will oversee the program and performance of the third
party administrator.
3.3 Fund Organization
Funds for accounting and financial reporting purposes have their own balance sheet and income
statement.
The organization of the City’s Funds is designed to enhance accountability and transparency,
comply with Generally Accepted Accounting Principles, meet grant requirements, comply with City
Code/Charter and comply with Colorado statutes. In City Article V, Part III, Section 25 the Financial
Officer is empowered to create funds as appropriate.
The number of funds established should be the minimum needed for legal and operating
requirements. Unnecessary funds can result in inflexibility, undue complexity and inefficient
financial administration.
The City’s funds are organized at two levels of groupings; Fund Groups and Fund Types.
Fund Groups
Governmental Funds Used to account for activities primarily supported by taxes, grants and similar
revenue sources.
Proprietary Funds Used to account for activities that receive significant support from fees and
charges.
Fiduciary Funds Used to account for resources that a City holds as a trustee or agent on behalf of an
outside party that cannot be used to support the City’s own programs.
Within each Fund Group are Fund Types.
Governmental Fund Types
General Fund Main operating fund used to account for and report all financial resources not
accounted for and reported in another fund.
Special Revenue
Funds
Used to account for and report the proceeds of specific revenue sources that are
restricted, committed or assigned to expenditure for specific purposes, other than
debt service or capital projects.
Debt Service Funds Used to account for and report resources that are restricted, committed or
assigned to expenditure for principal and interest.
Capital Project Funds Used to account for and report resources that are restricted, committed or
assigned to expenditure for capital outlays, including the acquisition or
construction of capital facilities or other capital assets.
Financial Policy 3 – General Financial Policies
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Proprietary Fund Types
Enterprise Funds Used to account and report any activity for which a fee is charged to external users
of goods and services
Internal Service
Funds
Used to account and report any activity for which a fee is charged to other funds,
departments, or agencies of the City and its component units on a cost
reimbursement basis.
Fiduciary Fund Types
Pension Trust Fund Used to account and report resources that are required to be held in trust for the
members and beneficiaries of defined benefit plans.
Agency Funds Used to report resources held by the City in a purely custodial capacity.
The following is a list of all funds of the City, including legally separate entities but from a financial
reporting perspective are treated as a component unit of the City.
Group and Type Legal Ref. Name
Governmental
General Fund City 100 General Fund
Special Revenue Fund City 250 Capital Expansion Fund
Special Revenue Fund City 251 Sales & Use Tax Fund
Special Revenue Fund Separate 252 General Improvement District #1
Special Revenue Fund City 254 Keep Fort Collins Great Fund
Special Revenue Fund City 255 Community Capital Improvement
Program
Special Revenue Fund City 272 Natural Areas Fund
Special Revenue Fund City 273 Cultural Services & Facilities
Special Revenue Fund City 274 Recreation Fund
Special Revenue Fund City 275 Cemeteries Fund
Special Revenue Fund City 276 Perpetual Care Fund
Special Revenue Fund City 277 Museum Fund
Special Revenue Fund City 280 Community Development Block
Special Revenue Fund City 281 Home Investment Partnership
Special Revenue Fund City 290 Transit Services Fund
Special Revenue Fund City 291 Street Oversizing Fund
Special Revenue Fund City 292 Transportation Services Fund
Special Revenue Fund Separate 293 GID #15 - Skyview
Special Revenue Fund City 294 Parking Fund
Special Revenue Fund City 300 Timberline/Prospect SID #94
Debt Service City 304 Capital Leasing Corporation
Capital Projects Fund City 400 Capital Projects Fund
Capital Projects Fund City 270 Neighborhood Parkland Fund
Capital Projects Fund City 271 Conservation Trust Fund
Proprietary
Enterprise Fund City 500 Golf Fund
Enterprise Fund City 501 Light & Power Fund
Enterprise Fund City 502 Water Fund
Financial Policy 3 – General Financial Policies
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Enterprise Fund City 503 Wastewater Fund
Enterprise Fund City 504 Storm Drainage Fund
Internal Service Fund City 601 Equipment Fund
Internal Service Fund City 602 Self-Insurance Fund
Internal Service Fund City 603 Data And Communications Fund
Internal Service Fund City 604 Benefits Fund
Internal Service Fund City 605 Utility Customer Service & Admin
Fiduciary
Pension Trust Fund City 700 Employees' Retirement Fund
Governmental
Special Revenue Fund Separate 800 URA - N. College District
Special Revenue Fund Separate 801 URA - Prospect South TIF District
Special Revenue Fund Separate 803 URA - Mall Fund
Special Revenue Fund Separate 820 DDA Operating Fund
Special Revenue Fund Separate 822 DDA Debt Service Fund
3.4 Cost Recovery and Fee Setting
A. Enterprise Funds shall rely on charges and user fees to recover their costs, rather than
taxes. Utility rates will be based upon the cost of service approach to reflect full distribution
of costs to appropriate rate classes in order to effect equitable sharing of costs. Rates shall
be established and maintained at a level sufficient to maintain positive net income in each of
the utility funds after paying the full cost of operating and maintaining the utilities and
keeping them in good repair and working order. Such rates shall also be sufficient to enable
each utility, where applicable, to meet rate requirements of City or utility enterprise bond
ordinances.
B. The Internal Service Funds shall operate under the following guidelines.
1. Internal service fund charges are limited to the recovery of the cost of the service, including
depreciation, rather than making a profit. Each fund's prior year financial statements and
estimates of future costs form the basis for the calculation of charges.
2. Charges should be set at a level to avoid significant adverse financial impacts on their
customers. Fund customers and independent experts should be allowed to review and make
recommendations about the level of charges. The Finance Department should approve the
analysis and conclusions used to set rates.
Financial Policy 3 – General Financial Policies
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3. Internal service funds should compete with similar services offered by the private sector.
The City staff will compare rates every five years. If not competitive with the private sector, the
Finance Department will analyze whether the private sector should provide the service.
4. Internal service funds may build up reserves. Customer-approved master plans and
independent third-party actuarial reviews (for the Benefit and Self-Insurance funds) guide the
level of reserves. Fund managers may spend reserves only for their approved purpose.
5. The City may buy equipment and facilities for the internal service funds through lease-
purchase financing. Management's decision to recommend lease-purchase financing depends
on: (1) cash flow needs; (2) budget constraints; (3) benefit to cost analysis; and (4) level of
reserves.
6. Except for the Utilities Customer Service and Administration Fund, Internal service funds
operate under the same guidelines and constraints as the General Fund and other governmental
funds of the City. The Utilities Customer Service and Administration Fund shall operate under
the guidelines of the Utilities Services Funds.
C. Cultural Services & Facilities Fund Fee Policy
1. Total revenue from fees and charges shall cover a minimum of 55% of Lincoln
Center Operation and Maintenance and Performing and Visual Arts Programming Budgets.
This includes revenues generated at the Lincoln Center from rentals, equipment,
concessions and other miscellaneous sources and all total direct revenues from the
Performing and Visual Arts Programming. A transfer from the General Fund will make up
the difference between total revenue and expenditures.
2. The Cultural Services and Facilities Administration and Museum budgets provide
minimal financial support. These programs are funded primarily by a transfer from the
General Fund.
3. Major capital improvements and renovations will be financed through sources other
than Cultural Services and Facilities Fund.
4. Solicitation of funds through donations, fund-raising events, and non-traditional
sources shall be encouraged by the City staff, Lincoln Center League, the Cultural Resources
Board and the City Council. Funding collected for any special purpose shall be earmarked
for that purpose and those funds will be processed through the Fort Collins Foundation.
Financial Policy 3 – General Financial Policies
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D. Recreation Fund Rates and Charges Policy
Recreation Rates and Charges shall cover between 68% to 75% of all operating costs, with the
difference to be covered by the City’s General Fund and/or 50% of the Keep Fort Collins Great
portion dedicated to Parks & Recreation. Equipment and rolling stock shall be considered
operating costs in the application of this policy. Recreation Rates and Charges shall not be expected
to cover major capital items such as facility and land acquisitions, major renovations to facilities or
other costs such as utilities, custodial or grounds maintenance.
3.5 Capital Improvement Program
1. Each Service Area or Department shall develop multi-year Master Plans for capital
improvements. On a city-wide basis, staff shall compile a 10 year Capital Improvement
Plan and update it every two years. Estimates of operating and maintenance costs
should be included;
2. Appropriation requests must include not only the cost of construction or acquisition
and the funding sources, but an estimate of operating and maintenance costs;
3. Capital improvements projects will be administered in accordance with the Capital
Projects Procedures Manual;
4. Appropriations for capital improvements will be constructed and expenditures incurred
only for the purpose as approved by City Council;
5. Staff should seek out grants and partnerships whenever appropriate.
3.6 Using State Allocation of Private Activity Bonds
A. Background: Conduit debt is issued in a local government’s name, but the resources for
repayment come from individuals or entities that are not part of government. Entities seek
conduit debt because of the government’s ability to issue debt at favorable tax-exempt
rates. Private Activity Bonds (PAB) are a form of conduit debt.
Colorado’s Private Activity Bond allocation program is established by the Colorado Private
Activity Bond Ceiling Allocation Act, Section 24-32-1701, et seq., C.R.S. Pursuant to Section
Financial Policy 3 – General Financial Policies
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24-32-1706, annually the City of Fort Collins is offered a portion of the State ceiling as a
local government. If the City does not issue bonds or assign bond capacity to an entity for a
local project by September 15th annually, the cap automatically reverts back to the state’s
pool.
Historically, the City has provided this capacity on a first come first serve basis. It has not
been uncommon for the City to receive no requests. Because more partners are using
programs that can benefit from the lower interest rate that PAB’s offer, the City is
establishing this process.
B. Purpose: PAB’s allow certain private sector activities to receive lower interest rates. PAB’s
may be used for affordable housing development and rehabilitation, specific economic
development programs and for industrial development purposes, among other permitted
uses. The City will attempt to find local uses for this development tool.
C. Communication: Information about the program should be placed on the City’s website
(fcgov.com). Consideration for other advertising and communication methods may be
appropriate.
D. Awarding and Assigning: Awarding PAB and Assigning PAB allocations are different
processes. Assigning PAB to another qualified issuer is strongly preferred. This is to reduce
the administrative investments and leverage the efficiency of qualified issuers who award
PAB’s regularly. If an entity applies for a direct award under the City’s name, staff will
attempt to find a qualified issuer that agrees to accept an assignment from the City and
issue the PAB under their own authority.
E. Application due date: Written applications to use of Fort Collin’s annual PAB allocation are
due to the City’s Chief Sustainability Officer by March 15th.
F. Application Elements:
a. The following items are required when applying for both assignments and direct
awards.
i. A request letter signed by applicant describing the project the PAB would be
used for and including: the applicant’s name, address, phone, email address,
and principal contact.
ii. Amount of allocation being requested.
iii. Bond counsel firm name, address, phone, email address and principal
contact.
iv. Description of Applicant’s local projects and years of operation
v. Number of years’ entity has been doing business in State of Colorado
vi. Provide a Certificate of Good Standing from the Secretary of State’s office.
Financial Policy 3 – General Financial Policies
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vii. Description of assets to be purchased or constructed and expenses
incidental to the project, including the sale of bonds.
viii. Explanation of how the project aligns with City objectives.
ix. Number of housing units and target demographics
x. Statement from competent bond counsel that the project is eligible for
qualified private activity bonds.
b. The following additional items are required in applications for direct awards of PAB:
Debt Information
xi. Name, address, phone of principal contact of the proposed underwriter or
lender.
xii. Anticipated timetable for bond transaction.
xiii. Estimated bond redemption and interest payment schedule
xiv. Indicate the type of letter of credit or similar instrument, which will back the
debt
xv. Disclose if the applicant is involved in any litigation which may affect the
validity or repayment of the bonds.
Financial Information
xvi. Audited financial statements for the applicant for the last three years and
interim statements for the current year. If not available, please explain why.
xvii. Projection of future revenues, expenditures and debt service coverage for
the next five years supported by a feasibility study.
Other
xviii. Describe the arrangements that will ensure compliance with arbitrage
reporting and payment requirements.
xix. Name, address and principal contact person for applicant’s local bank.
xx. Briefly describe any potential conflicts of interest of personal/ professional/
political relationships between the applicant’s officers and/or directors or
applicant’s operations and the City of Fort Collins.
xxi. Any other information which provides evidence of the applicant’s ability to
repay the bonds and complete the project.
Debt Security
xxii. All arbitrage calculations and payments must be performed by the trustee
under the terms of the trust agreement or by any such other arrangement
that will insure compliance. The City must be provided with copies of 8088-
T’s filed with the IRS.
xxiii. The private entity must provide the City with information on the status of
the debt annually and upon any material event.
xxiv. The bond documents must indemnify the City against IRS assessments and
legal fees arising from the financing.
xxv. The issuer’s agent will be responsible for all continuing disclosure
requirements.
c. Items missing from application may result in disqualification from consideration.
Financial Policy 3 – General Financial Policies
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G. Fees: There are no fees for applications that request assignments to another qualifying
issuer. However, the following fees apply to applications requesting a direct award of PAB
from the City of Fort Collins.
a. Issuance fee equal to the greater of: A. 0.25% of the par amount of the debt, or B.
$5,000. The fee is capped at $25,000.
b. The cost of a review of the financing by an independent fiscal agent (to be selected
by the City)
c. Any other direct cost incurred by the City related to the financing.
d. There will not be additional issuance fees for any amendment or modification of the
original transaction even if it requires official action by City Council, except for
actual direct costs of the City.
H. Review Process
a. PAB Committee: Applications will be reviewed by a committee of at least 3 people.
Members will include at least one representative each from Social Sustainability,
Economic Health and Finance. Representatives from other departments, such as the
City Manager’s Office will be added as needed. Service Area Directors will make the
necessary appointments to the PAB Committee.
b. At a minimum, the following factors should be considered by the PAB Committee
when making a recommendation:
i. How well the project applied for meets the land use, economic development
and/or affordable housing goals of the City of Fort Collins.
ii. Project feasibility and timing.
iii. Leverage of other investment into the project.
iv. Maintenance of or increase in local tax base.
v. Competing uses for the City’s allocation.
vi. Whether the City’s allocation should be used in multiple projects.
vii. Whether the application should be considered by any City Board or
commission.
c. The PAB Committee will decide on a recommendation no later than July 1.
d. City Council shall approve all PAB assignments or direct awards. The PAB
Committee shall submit their recommendations to the City Council no later than
August 15.
Financial Policy 3 – General Financial Policies
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Getting Help
Please contact the Controller with any questions at 970.221.6772.
Financial Management Policy 5
Fund Balance Minimums
Issue Date:
Version: 4
Issued by: City Council
Financial Policy 5 – Fund Balance Minimums
1
5.1 Governmental Funds and Fund Balances
To set minimum fund balances so as to mitigate risks, maintain good standing with
rating agencies, and ensure cash is available when revenue is unavailable. The policy is
sets minimum fund balances, not targets or maximum balances. Each fund should be
evaluated by staff to determine the appropriateness of maintaining fund balances above
the minimums set in this policy. Contingencies for severe weather, prolonged drought,
and anticipated capital spending should be considered independently from this policy.
The Equity on balance sheet of a governmental fund is called Fund Balance. The current
classifications of Fund Balance in governmental funds are primarily based on the origin
of the constraints. The following categories are in decreasing order of constraints.
Non-Spendable Permanent endowments or assets in a non-liquid form
Restricted Involve a third party: State Legislation or
Contractual Agreements
Committed Set by formal action of the City Council
Assigned By staff, and/or residual balances in a Special Revenue Fund
Unassigned Remaining balances in the General Fund
Objective:
To set minimum fund balances as to mitigate risk, maintain good standing with rating agencies, and ensure
cash is available when revenue is unavailable. The policy sets minimum fund balances, not targets or
maximum balances. Each fund should be evaluated by staff to determine the appropriateness of
maintaining fund balances above the minimums set in this policy. Contingencies for severe weather,
prolonged drought, and anticipated capital spending should be considered independently from this policy.
Applicability:
Funds—This policy applies to all City funds. It does not apply to URA, DDA, PFA and Library.
Authorized by:
City Council Resolutions 1994-174, 2008-038 and 2014-058.
EXHIBIT C
Financial Policy 5 – Fund Balance Minimums
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Minimums outlined in section 5.2 relate only to Assigned and Unassigned balances.
5.2 Proprietary Fund and Working Capital
Internal Service Funds and Enterprise Funds are accounted for nearly identical to the
private sector. The balance sheets include long term assets and long term liabilities.
The resulting Equity section on their balance sheet, called Net Position, is not always a
good measure of spendable financial resources. To get to spendable financial resources,
a common calculation is to take Current Assets and subtract Current Liabilities, with the
net result called Working Capital.
To further refine, for purposes of this policy, certain required restrictions are further
subtracted and result in Available Working Capital. Some examples of required
restrictions are unspent monies for Art in Public Places, Water Rights, and existing
appropriations for capital projects. The minimums outlined in section 5.5 relate to
Available Working Capital.
5.3 Minimum Balances
The following Minimum Balances refers to Assigned and Unassigned Fund Balances in
governmental funds and Available Working Capital in the Internal Service Funds and
Enterprise Funds.
A. General Fund
60 Day Liquidity Goal - The Commitment for Contingency should be at least 60 days
(17%) of the subsequent year’s originally adopted budgeted expenditures and transfers
out. The calculation for the minimum level shall exclude expenditures and transfers out
for large and unusual one-time items.
Important note – the 60 Day Liquidity Goal is in addition to the Restricted Balance
required by Article X, Section 20 of the State Constitution. This reserve must equal 3%
of non-exempt revenue and can only be used for declared emergencies. Fiscal
emergencies are specifically excluded by the State Constitution as qualifying use of this
reserve.
B. Special Revenue Funds
No minimum balance is required.
Financial Policy 5 – Fund Balance Minimums
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C. Debt Service Funds
No minimum balance is required.
D. Capital Project Funds
No minimum balance is required.
E. Enterprise Funds
Enterprise funds focus on working capital rather than fund balance.
Enterprise Funds shall maintain a minimum Available Working Capital equal to 25% of
Operating Expenses, less Depreciation. Exception1: In the case of L&P, operating
expenses will include purchased renewable energy for resale but will not include
regular purchased power for resale (i.e. Platte River Power Authority). Exception 2: In
the case of Golf, the minimum fund balance will be 12.5%.
Important note – The Water Fund holds a balance for Restricted Water Rights. The
balance equals the amount of cash in-lieu-of water rights payments and raw water
surcharges less any expenses for acquiring water rights and water storage;
The enterprises funds should also be accumulating available working capital above
these minimums for the purposes of funding future capital projects.
F. Internal Service Funds
Each fund is a unique operation and will maintain a minimum Available Working Capital
as follows:
601 Equipment Fund 8.3% Of annual operating expenses, excluding
depreciation
602 Self-Insurance Fund * 25.0% Of annual operating expenses
603 Data & Communications
Fund
0.0% N/A
604 Benefits Fund 30.0% Of annual medical and dental expenses
605 Utility Customer Service
Fund
0.0% N/A
* Self Insurance Fund will be measured against Available Unrestricted Net Position
instead of Available Working Capital.
Financial Policy 5 – Fund Balance Minimums
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5.4 Below Minimum
When circumstances result in balances below the minimum, staff should develop a plan
to restore minimums fund balances and present it to Council Finance Committee.
Financial Policy 5 – Fund Balance Minimums
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Definitions
Non Spendable Fund Balances: Applicable to governmental funds. Permanent endowments or assets in a
non-liquid form such as long term inter-agency loans.
Restricted Fund Balances: Applicable to governmental funds. Involve a third party such as State
Legislative requirements, voter ballot language, or the Contractual Agreements with parties
external to the City.
Committed Fund Balances: Applicable to governmental funds. Involve a of formal action by the City
Council. An example is traffic calming revenues are required to be spent on traffic calming
activities. Any unspent monies at end of year are classified as Committed to Traffic Calming in the
General Fund.
Assigned Fund Balances: Are applicable to governmental funds. Assignments can be made by senior
management. They represent the intent to use the monies for a specific purpose. An example of this
it this the one time Harmony Road monies transferred by the State to the City. Although required to
be used on Harmony Road, staff intends to use the monies only on Harmony Road improvements.
These monies are considered when measuring compliance with minimum fund balances.
Unassigned Fund Balances: Are applicable only to the General Fund. These monies are considered when
measuring compliance with minimum fund balances.
Working Capital: Is a term applicable to Internal Service and Enterprise Funds. It is the difference
between Current Assets and Current Liabilities. Not all Working Capital is available. Available
Working Capital does not include Restrictions for debt, Art in Public Places, approved capital
appropriations, and other restrictions.
Unrestricted Net Position: Is a term applicable to Internal Service and Enterprise Funds. Not all
Unrestricted Net Position is available. Available Unrestricted Net Position does not include unused
Art in Public Places monies, approved capital appropriations, and other commitments.
Liquidity: Assets range from cash to land. The more easily and quickly an asset can be converted to cash
determines its relative liquidity.
Reserves: A legacy term that previously referred to fund balances, or fund balances set aside for a specific
purpose. It is no longer used on financial statements.
Fund Balance: Is a term applicable to Governmental Funds. Fund balance or Equity is the difference
between Assets and Liabilities. Since governmental funds do not have long term assets and long
term debt on their balance sheet, fund balance is similar and approximates working capital in the
private sector and enterprise funds.
Financial Policy 5 – Fund Balance Minimums
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Getting Help
Please contact the Controller with any questions at 970.221.6772.