Financial Management Policies

1. Budget and Financial Management Policies
2. Accounting, Auditing, and Financial Reporting Policies
3. Debt Management and Reserve Policies
   
   

BUDGET AND FINANCIAL MANAGEMENT POLICIES

Specific Objective
The effective delivery of necessary services so as to minimize the financial burden on the taxpayers while maintaining the integrity of the City’s finances.

Policy Statements

1. The City will develop and incorporate financial, service, and program performance measures into its budgeting process.
   
2. Budget documentation will include a concise summary and guide to key issues for both the operating and capital budgets.
   
3. Charges for services and fees will be utilized in financing governmental goods and services where feasible.
   
4. Current revenues will be sufficient to support current expenditures. The City will avoid budgetary procedures that utilize existing cash balances to meet current expenditures
   
5. The City will endeavor to maintain a diversified and stable revenue system.
   
6. A review of user fees charged for general governmental services will be made periodically to determine that all user fees and charges are at a level related to the cost of providing these services.
   
7. Annually, the increase of actual revenue for the levy of property tax, excluding taxable value gained through annexation, new construction, and increases mandated by the voters or other governmental jurisdictions, generally will not exceed ten percent.
   
8. All enterprises of the City will be expected to maintain revenue sufficient to cover all direct and indirect costs, including an allowance for depreciation over the long-term and a rate stabilization fund.
   
9. The City will implement a payment in lieu of taxes (PILOT) for its enterprises.
   
10. Annually, all departments will be required to provide a five-year capital equipment replacement schedule.
    
11. The City will annually budget for all of its capital improvements.
    
12. The City will annually adopt a five-year capital improvement project plan.
    
13. An Unreserved, Undesignated Fund Balance (Targeted Fund Balance) within the General Fund equal to twenty-five (25) percent of the following fiscal year’s budgeted expenditures shall be maintained as an operating reserve.
    
14. The City will develop specific goals and criteria for its economic development incentives.
    

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ACCOUNTING, AUDITING, AND FINANCIAL REPORTING POLICIES

Specific Objective
To establish and maintain the highest standard of financial accounting reporting, and auditing.

Policy Statements

1. The City will maintain an accounting system that will enable the presentation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP).
   
2. Annually the City will prepare and publish a comprehensive annual financial report (CAFR).
   
3. The City will supplement its CAFR with a more easily understood “popular” report (PAFR).
   
4. The City will obtain an annual audit of its financial statements in accordance with (Generally Accepted Auditing Standards) GAAS.
   
5. Periodically, the City will undertake a full-scale competitive process for the selection of its independent auditors.
   
6. Full disclosure will be provided in the financial statements and bond representations.
   
7. Periodically, the City will review its capitalization threshold policies to determine their applicability to the current financial environment.
   
8. Periodically, the City will perform a physical inventory of its capital fixed assets.
   

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DEBT MANAGEMENT AND RESERVE POLICIES

Specific Objective
To provide future generations the ability to construct facilities through borrowed capital without imposing a severe financial burden.

Policy Statements

1. The City will determine the least costly financing method for all new projects.
   
2. Any capital project financed through the issuance of debt will be programmed so as to be paid off completely within the expected useful life of the project.
   
3. The City will utilize intergovernmental contributions, when available, to finance capital improvements that are consistent with the City’s plans and priorities.
   
4. Prior to undertaking a capital project, a projection of the ongoing operations and maintenance costs will be analyzed in relations to operating budget forecasts.
   
5. Pay as you go financing of capital improvements will be utilized where feasible. Enterprise funds should develop reserves to pay for new capital improvements.
   
6. Total general obligation debt will not exceed five (5) percent of the City’s actual assessed value as required by Iowa law.
   
7. The City will maintain a CIP Mini Fund at a minimum level of $1,000,000 from which the investment earnings will be allocated annually to fund capital improvement projects as determined by the City Council. Additional funding may be available on an annual basis as a result of the Targeted Fund Balance process.
   
8. Where possible and when financially prudent, the City will use special assessment and revenue bonds, instead of general obligation bonds.
   
9. General obligation debt will be issued and abated by non-property tax revenue in those instances where debt capacity is available and it is financially advantageous to the City.
   
10. The City will maintain effective communications with bond rating agencies concerning its financial condition. The City will follow a policy of full disclosure on its financial reports and bond prospectus.
    

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