Ordinance 2016-05, if approved, will amend the current FY 2015-2016 Appropriations (Budget) Ordinance to formally authorize recommended adjustments to expenditures and operating transfers for the General Fund, Drug 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 reasons for these amendments are typically identified by staff during the course of the fiscal year and then the amendments are formally considered by the Board 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. The amendment process 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 $2,455,000 reflect positive revenue collections in the current year over original budgeted estimates.
Proposed expenditure amendments are as follows:
1. A special FY 2016 year-end appropriation transfer of $2,395,000 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 2017 capital projects and equipment. (See attachment A for projects list.) The projects include funding for upgrades and expansion of the City's radio communication system ($1,100,000 – page 41 of CIP), funding for construction of Flagpole and Wikle Parks ($300,000 – page 95 of CIP), funding for fiber installation on Wilson Pike, ($100,000 – page 37 of CIP), funding for traffic signal upgrades ($165,000 - page 77 CIP), additional funding for Crockett Roundabout ($100,000 - page 57 CIP), additional funding for Sunset/Ragsdale intersection ($300,000 - page 75 CIP), funding for Bikeway improvements ($150,000 - page 50 CIP), funding for Pavement Management System ($90,000 - page 73 CIP), and funding for Sidewalks ($90,000 - page 69 CIP).
2. A special FY 2016 year-end transfer of $60,000 from the General Fund to the Equipment Replacement Fund for the FY 2017 purchase of a mini-excavator for the Public Works Department ($60,000 - page 19 CIP).
3. A special FY 2016 year-end transfer of $7,800,000 from the General Fund unassigned fund balance to the Capital Projects Fund to provide additional funding for Sunset/Ragsdale Road intersection improvements ($4,800,000), construction of Flagpole and Wikle parks ($1,500,000) and construction of phase II Smith Park ($1,500,000). (See attachment A for project list.)
4. An appropriation increase of $117,991 to the Fire and Rescue activity for incidentals and overtime paid to City of Brentwood firefighters that were deployed to South Carolina to help with water rescue efforts due to the flooding caused by Hurricane Joaquin and Assistance to Fire Fighters Grant expenditures for 16 self-contained breathing apparatus, 32 air cylinders, two quick disconnect regulators, and 10 AV 3000 masks. Funding provided by FEMA reimbursement funds ($33,103) and Assistance to Fire Fighters Grant (84,888.)
5. An appropriation increase to the Public Works activity for $82,500, for the cost of brush disposal not budgeted in FY 2016.
The proposed total General Fund appropriation increase of $10,255,000 will leave a minimum projected General Fund unassigned fund balance as of June 30, 2016 of $26.3 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, 2016 when the Halls Income Tax proceeds for FY 2016 are received from the State of Tennessee.
Drug Fund (126)
An increase in the appropriation for this fund by $17,700 is proposed for the purchase of CID Audio/Video equipment with funding provided through extra revenue received through drug enforcement activities. This purchase was approved at the April 27, 2015 City Commission meeting but the purchase was not completed until FY 2016. Funding for the expenditure will be provided through the restricted Federal Forfeited Property fund balance (current balance as of May 2016 is $432,423).
Equipment Replacement Fund (310)
Additional revenue of $60,000 reflects the special year-end appropriation transfer from the General Fund as referenced above.
Capital Projects Fund (311)
Additional revenue of $10,195,000 reflects the special year-end appropriation transfers from the General Fund as referenced above.
Insurance Fund (320)
Additional revenue of $189,650 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 ($102,260). Note that additional stop loss payments and prescription drug rebates may be received for claims incurred prior to June 30, 2016.
An increase in the appropriation of this fund by $291,910 will cover potential medical claims and stop loss premiums that may exceed the budgeted estimate for FY 2016. As previously discussed, the additional claims do not represent an increasing claims trend across the group as a whole but are instead reflective of several larger claims. The increased appropriation also includes a contingency amount for any unknown medical situations that may arise prior to June 30, 2016. 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, 2016. The health insurance division of the Insurance Fund is projected to show a healthy fund balance of $1,285,700 at June 30, 2016.
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 2016.
Should the City Commission have any questions concerning this information, please contact the Interim Finance Director. |