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HomeMy WebLinkAboutT14-20 Ordinance No. T14-20 AN ORDINANCE AMENDING THE 2019 BUDGET BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF ELGIN, ILLINOIS: Section 1. That the 2019 budget of the City of Elgin adopted in lieu of an appropriation ordinance be and is hereby amended in accordance with the schedule which is attached hereto and made a part hereof by reference. Section 2. That this ordinance shall be in full force and effect from and after its passage. David J. Kap or Presented: April 22, 2020 Passed: April 22, 2020 Vote: Yeas: 9 Nays: 0 Recorded: April 22, 2020 Published: April 23, 2020 Attes Kimberly DewisLCity Clerk 41 ► .00010 REPORT TO MAYOR & MEMBERS OF CITY COUNCIL ELGIN THE CITY IN THE SUBURBS- AGENDA ITEM: 0-7 MEETING DATE: April 22, 2020 ITEM: Amendments to the 2019 Budget Consistent with the Illinois Municipal Budget Law (No cost) OBJECTIVE: Provide budget amendments to reflect actual financial activity undertaken within the 2019 Budget. RECOMMENDATION: Adopt the proposed amendments to the 2019 Budget. The City's annual budgets are prepared using revenue estimates and expenditure recommenda- tions. This inherently speculative nature of budgeting makes it impossible to predict with com- plete accuracy the funding levels necessary for the coming fiscal year. The Illinois Municipal Budget Law requires the approval of year-end adjustments that reflect the actual financial and programmatic changes approved by the city council during the budget year. By amending the City budget in a retroactive fashion, the adjusted budget can reflect the actual funding requirements needed by the City. Amendments are required if the actual revenue or expenditure exceeds what was budgeted for the fiscal year. Under budget items are not normally amended. The most sig- nificant amendments have been previously reported to the city council. BACKGROUND Budget amendments are brought before the city council each year for consideration as required by the Illinois Municipal Budget Law. These adjustments are necessary to implement city council decisions made during the year and to reflect actual financial and programmatic changes that have occurred. While much of this information has been previously reported to the city council, this memorandum is designed to provide supplemental information regarding the proposed amendments to the 2019 Budget. OPERATIONAL ANALYSIS The annual budget must be adopted by the city council prior to the beginning of the fiscal year. The speculative nature of budgeting makes it impossible to predict with complete accuracy the funding levels necessary at the fiscal year's inception. Because the budget is prepared using rev- enue estimates and expenditure recommendations, it must be amended to reflect the actual fi- nancial activity undertaken during the year. By amending the City budget in a retroactive fashion, the adjusted budget can reflect the actual funding requirements needed by the City. Amendments are required if the actual revenue or expenditure exceeds what was budgeted for the fiscal year. For example, if a fund cost center expends over its budgeted amount, it is amended. When it comes in under budget, it is normally not amended. The City adopts budgets for seven fund types and each is reviewed and considered for budget amendments: • General Fund • Special Revenue Funds • Debt Service Fund • Capital Improvement Funds • Enterprise Funds • Internal Service Funds • Trust and Agency Funds Amendments to the 2019 Budget The following chart identifies the recommended amendments to the 2019 Budget.These amend- ments reflect the budget adjustments made throughout the course of the year. The analysis pro- vided for the adjustments in each fund type is not intended to be exhaustive, but rather to illu- minate the major components of the required adjustments. General Fund GENERAL FUND Original Amended Budget Budget Adjustment Note Total Revenues $120,446,440 $125,149,591 $4,703,151 1 Expenditures by department: Mayor and Council 291,790 291,580 (210) City Clerk 273,760 273,760 0) Office of the City Manager 1,551,600 1,372,150 (179,450) 2 311 Center 1,068,660 1,068,660 0 Economic Development 474,800 474,800 0 Legal 1,455,830 1,455,830 0 Boards/Commissions 522,300 569,323 47,023 3 City-sponsored Events 257,790 0 (257,790) 4 Finance 2,294,350 2,305,350 11,000 Human Resources 1,027,710 1,027,519 (191) Information Technology Systems 1,597,940 1597,940 0 i 2 Purchasing 370,320 370,320 0 Neighborhood Services 3,338,770 3,340,006 1,236 Community Development 397,450 396,944 (506) Police 45,714,500 45,832,031 117,531 5 Fire 29,463,350 29,476,350 13,000 Building Maintenance 3,193,040 3,193,040 0 Public Works 18,124,670 18,412,823 288,153 6 Non-Departmental 4,756,280 8,703,322 3,947,042 7 Financing Transfers 5,225,690 5,942,003 716,313 8 Total Expenditures $121,400,600 $126,103,751 $4,703,151 The majority of budget adjustments are transacted within the general fund. It should be noted that many of the budget adjustment requests involve expenditure line items within the same division and department. In these instances, the department's total budget allocation remains unchanged. Explanations for all departmental adjustments totaling more than $15,000 are pro- vided below. 1. Revenue adjustments were made in the amount of $4,703,151. The budget was in- creased by $4,000,000 to advance fund public safety pensions for 2020. The budget was also increased by approximately$324,000 to return funds expended in prior years to the City's motor fuel tax fund. Adjustments totaling $197,000 were made to reflect the use of funds from escrow accounts. Funds are placed in escrow accounts when they are designated for future expenditures and require a budget adjustment so the funds can be spent. Examples of escrow funds include funds set aside for sanitary sewer review by engineering firms, funds for police department programs and roadway impact fees. The remainder of the adjustments are the result of purchase orders rolled from 2018. The need to roll purchase orders is the result of two circumstances. The first situation relates to projects approved by council, late in the year, after the next year's budget has been prepared, necessitating this type of budget adjustment. In addition, projects are occasionally estimated to be completed in the current year, but delays in complet- ing the projects requires that a budget adjustment be made to carry the project over to the next fiscal year. 2. The budget was decreased to recognize the transfer of one full time and one part- time positon, as well as expenditures for certain city special events, to the recreation fund. After the 2019 budget was adopted, it was determined that the special events division would be transferred to and managed under the parks and recreation depart- ment. 3. The boards and commissions budget was increased to reflect the increase in the pur- chase of service agreement with the Elgin Area Convention and Visitors Bureau ap- proved by city council in May 2019. In addition, the budget was increased to make 3 unexpended 2018 funding to the cultural arts commission available for an art pur- chase. 4. The budget was eliminated within the general fund to reflect the transfer of the spe- cial events division to parks and recreation. After the 2019 budget was adopted, it was determined that the special events division would be transferred to and managed un- der the parks and recreation department. 5. The police department budget was increased to reflect the use of contingency funds to purchase the LiveScan Station Touch-Print Fingerprint system. This purchase was not budgeted for and was required to be in compliance with State of Illinois mandates for the submission of fingerprint and criminal history records. The budget was also increased for the acceptance of the Powering Safe Communities grant which provided for cameras in City parks. Increases to expenditure budgets were also made for the Kids United program which reflects the use of escrow funds set aside for this program. Corresponding revenue adjustments were made for both of these items. 6. The commodities budget within the public works street maintenance budget was in- creased for road salt purchases that could not be expended through the motor fuel tax fund. The public works engineering division budget was increased to reflect the expenditure of escrow funds deposited by developers to fund the cost of future sani- tary sewer reviews. 7. The general fund's "non-departmental" category includes expenditures that are not directly related to the operations of other departments and capital purchases. Exam- ples of costs charged to this category include employee programs, lobbyist fees, an allocation for property insurance and banking and agency fees. In addition, this cate- gory includes the general fund's contingency account. Adjustments reducing the con- tingency line item are completed when transfers are processed to cover expenditures in other departments. In August of 2019, city council approved a recommendation to advance fund a portion of the City's 2020 required contribution to public safety pen- sions in the amount of$4,000,000.This budget was increased for the pension funding. 8. The budget for financing transfers includes transfers made from the general fund to other City funds. The financing transfers to the recreation fund were increased to off- set the transfer of special events expenditures from the general fund to the recreation fund. The offsetting decreases were seen in the city manager's office and City spon- sored events budgets. In addition, a one-time transfer was made to the motor fuel tax fund to return funds related to the reconciliation of prior years' expenditures. 10 16 ..1 Special Revenue Funds SPECIAL REVENUE FUNDS Original Adjusted Adjustment Notes Budget Budget Revenues $53,805,890 $55,511,757 $1,705,867 1 Expenditures $53,730,740 $55,436,607 $1,705,867 2 Special revenue funds are established to account for specific resources (other than expendable trusts or major capital projects) that are legally restricted to expenditures for specified purposes. 1. The budget for community development block grant revenue (CDBG) was increased by $583,430 to reflect 2019 grant year CDBG program revenue. Revenues within the drug asset forfeiture and E911 funds were increased $316,830 and $15,150 respec- tively, to recognize the use of deferred revenues that had been assigned to future purchases. The parks and recreation budget was increased $392,450 to reflect the increase in the transfer from the general fund for special events expenditures and $152,980 for the use of escrow funds. The remaining adjustments to the special rev- enue budgets were the result of rolling over purchase orders from the prior year to the current budget year. 2. CDBG budgeted expenditures were increased for the 2019 grant year approved pro- jects. The expenditure budgets within the drug asset forfeiture and E911 funds were adjusted to account for police and fire department equipment purchases. Increases to the expenditure budget for parks and recreation include the transfer of special events expenditures and recognizes the use of Elgin Cyclones Swim Team escrow funds for swim team expenses. Purchase order rollovers account for the remaining adjustments to the special revenue expenditure budgets. Debt Service Fund DEBT SERVICE FUND Original Adjusted Adjustment Notes Budget Budget Revenues $3,782,740 $3,782,740 $0 Expenditures $3,782,740 $3,782,740 $0 The debt service fund accounts for the accumulation and payment of the principal and interest on long-term debt. i 5 Capital Improvement Funds CAPITAL IMPROVEMENT FUNDS Original Adjusted Adjustment Notes Budget Budget Revenues $9,686,180 $17,591,404 $7,905,224 1 Expenditures $9,686,180 $17,591,404 $7,905,224 1 Capital improvement funds are used to account for the acquisition and construction of major capital facilities and infrastructure other than those financed by enterprise funds. These projects normally span more than one year. In a given year, the budget may be much higher than what is actually spent due to changing work schedules that can delay a project into the following fiscal year. In these instances, the subsequent year's expenditures are greater than anticipated and require budget adjustments. 1. The adjustments to revenue and expenditures within the capital improvement funds are the result of rolling over purchase orders from the prior year to the current budget year. Projects anticipated to be completed in 2018 were completed in 2019 requiring an adjustment to the budget. In addition, a budget adjustment was made as the result of the issuance of$9.0 million of general obligation bonds for infrastructure improve- ments. Enterprise Funds ENTERPRISE FUNDS Original Adjusted Adjustment Notes Budget Budget Revenues $36,421,810 $37,055,782 $633,972 1 Expenditures $37,087,400 $37,721,372 $633,972 1 Enterprise funds account for operations that are financed and operated in a manner similar to private business where the intent is that the costs of providing goods or services to the general public be financed or recovered primarily through user charges. 1. Adjustments within the utility fund to revenue and expenditure budgets were made as a result of carrying over the outstanding balance of open purchase orders created in 2018. Internal Service Funds INTERNAL SERVICE FUNDS Original Adjusted Adjustment Notes Budget Budget Revenues $24,362,460 $24,801,819 $439,359 1 Expenditures $23,164,650 $23,604,009 $439,359 1 A 6 Internal service funds are used to account for the financing of goods or services provided by one department to other departments of the government unit, on a cost reimbursement basis. 1. Adjustments within the equipment replacement fund to revenue and expenditure budgets were made as a result of carrying over the outstanding balance of open purchase orders for public safety vehicles created in 2018. Trust and Agency Funds TRUST AND AGENCY FUNDS Original Adjusted Adjustment Notes Budget Budget Revenue $36,213,920 $36,213,920 $0 Expenditures $18,751,090 $18,751,090 $0 Fiduciary funds are used to account for assets held in a trustee or agency capacity for others and which cannot be used to support the City's own programs. INTERESTED PERSONS CONTACTED None. FINANCIAL ANALYSIS The budget amendments will adjust the 2019 adopted budget and better reflect the actual finan- cial transactions that occurred throughout the course of the year. Sufficient funding sources ex- isted at the time the adjustments were processed. BUDGET IMPACT FUND(S) ACCOUNT(S) PROJECT#(S) AMOUNT AMOUNT BUDGETED AVAILABLE N/A N/A N/A N/A N/A LEGAL IMPACT None. ALTERNATIVES The city council could choose to not amend the 2019 Budget; however,this would be inconsistent with sound financial management practices. NEXT STEPS Amend the 2019 Budget Originators: Debra Nawrocki, Chief Financial Officer/Budget Officer Final Review: William A. Cogley, Corporation Counsel/Chief Development Officer Richard G. Kozal, City Manager ATTACHMENTS A. Adjusted 2019 Budget