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Budget Process Executive Summary Department of Finance & Administration TELEPHONE (785) 309-5735 FAX (785) 309-5738 Rod Franz, Director TDD (785) 309-5747 300 West Ash Street, Suite 206 e-mail: rod.franz@salina.org P.O. Box 736 Website: www.salina-ks.gov Salina, Kansas 67402-0736 ____________________________________________________________________________________________ EXECUTIVE SUMMARY STUDY SESSION – APRIL 25, 2011 Budget Process Each year the City of Salina goes through the process of planning for services to be provided (police and fire protection, parks, recreation programs, waste pickup, delivering water to each household, and others) and establishing how to pay for those services. This plan for the services to be delivered is called the annual budget, and it covers one year of operation, starting in January and running through December. The operating budget for the current year (2011) is $72,462,496. In addition to this operating budget, a schedule for future major capital improvements is prepared. These include major street construction (and reconstruction), water and sewer line extensions, park and recreational improvements, etc. This is normally a multi-year plan; and can also total to several millions of dollars in addition to the annual operating budget. This is clearly a group of important decisions for the City, and citizen comments and suggestions are welcome and encouraged. The annual budget is normally adopted in August (for the following calendar year), and there are a number of news articles covering the public discussions that occur in July and August of each year. However, the process of preparing the budget starts well before this time. Preparation of the budget normally includes a revision of the current year budget as well as a determination of the next year’s budget. In March, the Finance Department prepares budget instructions, guidelines, and forms; and distributes those to the operating departments in early April. Throughout April and May the operating departments (Police, Parks, Fire, Street, etc.) prepare requests for their areas of responsibility. Departmental requests consist of several major parts, each of which requires separate justification: vehicles, equipment, major building maintenance/improvements, and technology res ources. Any new personnel or programs also need specific justification. Departments at this time also verify the existing personnel authorization and cost projections provided by the Finance Department. Other operating expenses, such as supplies, small tools, and other materials and services are also projected into the budget year. Any major changes require supporting justification. While the Departments are completing the operating expenditure requests, the Finance Department prepares the revenue pr ojections for all funds, the debt service projections, and integrates the financial effects of the Capital Improvement program into the operating budget. The Finance Department also calculates employee benefits costs, and is responsible for accumulating a nd documenting information received from various outside agencies: Saline County, the State of Kansas, the League of Municipalities, Retirement systems, etc. The deadline for completion of the Departmental budget requests is normally set for about the rd 3 week in May. The Finance Department compiles this information, reviews the requests to insure that all necessary items are complete and accurate, and calculates the projected fund balances for the end of the current year and the budget year. All information is submitted to the City Manager’s office for review and adjustment by early June. The City Manager reviews the information, consults with departmental staff, considers requests for new programs or staff, and adjusts the budget requests to be consistent with adopted budgetary policies and with the short and long term goals and objectives of the community. The Capital Improvement program may also be modified at this point, should that be necessary to create a workable operating budget. The Cit y Manager composes the transmittal letter to the City Commission in which the major decision points or issues in the currently proposed budget are identified. This portion of the process is normally finished by late June. The results are then passed back to the Finance Department, whom assembles the final proposed budget into a document for distribution to the City Commission and release to the public. Local policy requires that the proposed budget be distributed to the City Commission on or before July 10. The City Commission will hold a series of study sessions starting in June for discussion of background and preliminary issues. After the proposed budget is presented in July, City Commission study sessions continue, addressing specific issues for t he budget year. Any element of the budget is subject to City Commission review and modification at this point of the process. All of these study sessions are open to the public. Kansas law requires that the City Commission hold a formal public hearing on the budget before adoption, and that a public notice be published at least 10 days in advance of the hearing. , Typically, the hearing is held on or before August 15th and the notice of hearing is published in late July or early August. In Salina, the practice has been to adopt all legislation required implementing the new budget after the close of the hearing. This will include an ordinance adopting the budget, a resolution appropriating the budget (which gives the staff permission to implement the a dopted budget), and may include a number of other documents, including fee resolutions, an ordinance providing that a tax increase is necessary, and a pay plan resolution, among others. Once the budget is adopted, the City Clerk’s office will “certify” th e document to the County th Clerk. This process must be completed by August 25 of each year. The final step of the operating budget process is preparation of a budget document, which is distributed to City Commissioners, City Staff, and other interested parties. After the adoption of the operating budget, our five-year Capital Improvements Program (CIP) is normally reviewed and updated to incorporate any new needs or requests. Any projects that are desirable that cannot be funded are placed in an “identified but unfunded” or “further review” list. Should funding become available, these projects may be added to the schedule. Other projects may be eliminated from consideration entirely. Capital projects are normally financed through issuance of lon g term bonds, through special sales tax proceeds, and sometimes through current cash balances. Staff normally assembles the draft program, processes it through various staff reviews, as well as submitting it to the Planning Commission and the Community Ar t and Design Committee. The program as developed is then presented to the City Commission for consideration. The City Commission may add, delete, or re-schedule projects as they deem appropriate. The Capital Improvements Program should be adopted by Dec ember, and covers the following five year period. In 2011, we will be preparing the 2012 through 2016 Capital Improvement Program.