Please find attached Ordinance 2015-08 which, if approved, will amend the current FY 2014-2015 Appropriations (Budget) Ordinance to formally authorize recommended adjustments to expenditures and operating transfers for the General Fund, Drug Fund, Debt Service Fund, Equipment Replacement Fund, Capital Projects Fund and the Insurance Fund.
A budget amendment is legally required when the total actual expenditures for a fund are expected to exceed the original total appropriation for the fund. The need for these amendments are typically identified by staff during the course of the fiscal year and then formally considered by the Board one time at the end of the fiscal year to ensure legal compliance. Often these amendments are needed to provide current year funding for capital projects and equipment that will be initiated or purchased in the new fiscal year beginning July 1, 2015. This amendment requires staff to identify and certify that additional revenue sources in the current fiscal year are available to fund the new expenditures.
The recommended amendments are summarized below:
General Fund (110)
Additional revenues of $1,985,000 reflect positive revenue collections in the current year over original budgeted estimates.
Proposed expenditure amendments are as follows:
- A special FY 2015 year-end appropriation transfer of $1,845,000 from the General Fund to the Capital Projects Fund funded through projected excess revenue collections in the current fiscal year to pay for certain proposed FY 2016 capital projects and equipment.
The projects include funding for upgrades and expansion of the City's radio communication system ($1,000,000 – page 41 of CIP), a replacement fire station alerting system known as Locution ($180,000 – page 43 of CIP), funding for Smith Park maintenance projects, including driveway widening, replacement of mansion roof and stabilization of the historic kitchen building ($400,000 – page 99 of CIP), Wikle Park off-site improvements ($125,000 – page 95 of CIP) and funding for design and construction of a traffic roundabout at the intersection of Crockett Road and Raintree Parkway/Green Hill Boulevard. ($140,000 – page 57 of CIP).
- A special FY 2015 year-end transfer of $3,000,000 from the General Fund unassigned fund balance to the Capital Projects fund to provide additional funding for several smaller transportation projects designed to improve safety and congestion delays during peak travel periods (see attachment A for project list).
- A special FY 2015 year-end transfer of $140,000 from the General Fund to the Equipment Replacement Fund for the FY 2016 purchase of a Bobcat excavator for the Parks Department ($55,000) and a chipper truck for the Public Works Department ($85,000). This transfer will be funded through projected excess revenue collections in the current fiscal year.
- An appropriation increase to the Codes Enforcement activity for $45,450 for two codes vehicles budgeted in FY 2014, but due to delays, delivered and paid for in FY 2015, with funding provided by the projected savings through the under-spending of budgeted FY 2015 General Fund appropriations.
The proposed total General Fund appropriation increase of $5,030,450 will leave a minimum projected General Fund unassigned fund balance as of June 30, 2015 of $28.9 million. The fund balance will exceed the stated budget policy objective of maintaining a minimum of 40% in reserves for future needs and emergencies. Please note it is likely that the final unrestricted fund balance will be higher because the exact amount will not be known until August 1, 2015 when the Halls Income Tax proceeds for FY 2015 are received from the State of Tennessee.
Drug Fund (126)
Increasing the appropriation for this fund by $15,355 for the purchase of four (4) truck vaults with "bumperchute" tents. These vaults were installed in the four new patrol SUV's as part of the planned 2015 vehicle replacement schedule. This purchase was approved at the September 22, 2014 City Commission meeting. Funding for the expenditure will be provided through the restricted Federal Forfeited Property fund balance (current balance as of May 2015 is $379,866).
Debt Service Fund (211)
Increasing the expenditure appropriation of the Debt Service Fund by $6,080 for the final interest payment associated with the Series 2003 G.O. Refunding Bonds that was inadvertently omitted from the FY 2015 budget appropriation.
Equipment Replacement Fund (310)
Additional revenue of $140,000 reflects the special year-end appropriation transfer from the General Fund as referenced above.
Capital Projects Fund (311)
Additional revenue of $4,845,000 reflects the special year-end appropriation transfers from the General Fund as referenced above.
Insurance Fund (320)
Additional revenue of $146,600 reflects stop loss (reinsurance) amounts received for payments of individual medical claims above the stop loss base amount of $70,000 and prescription drug rebates from Blue Cross ($65,800). Note that additional stop loss payments and prescription drug rebates may be received for claims incurred prior to June 30, 2015.
Increasing the appropriation of this fund by $400,000 for medical claims exceeding the budgeted estimate for FY 2015. This increase is due to a few significant claims (six covered individuals have incurred approximately $570,000 in claims paid this fiscal year) and does not represent an increasing claims trend across the group as a whole. The $400,000 increased appropriation includes a conservative 10% contingency (approximately $180,000) for any unknown medical situations that may arise prior to June 30, 2015. Funding will be provided through the payments received from our stop loss carrier as referenced above as well as the positive cash flow of the Insurance Fund as of June 30, 2015. Even with the increased medical claims, the health insurance division of the Insurance Fund is projected to show a healthy fund balance of $1,381,700 at June 30, 2015.
SUMMARY
The recommended budget appropriations amendments are primarily bookkeeping in nature to meet the legal requirements for compliance with annual budget appropriations. Whenever possible, budget amendments for the current fiscal year should be carried out before the end of the fiscal year and prior to the beginning of the independent audit for FY 2015.
Should the City Commission have any questions concerning this information, please contact the Finance Director.
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