Ordinance 2018-10, if approved, will amend the current FY 2017-2018 Appropriations (Budget) Ordinance to formally authorize recommended adjustments to expenditures and operating transfers for the General Fund, Post Employment Benefits Fund, Debt Service Fund, Equipment Replacement Fund, Capital Projects Fund, Facilities Maintenance 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 $6,350,000 reflect positive revenue collections in the current year over original budgeted estimates.

Proposed expenditure amendments are as follows:

1. A special FY 2018 year-end appropriation transfer of $6,305,000 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 2019 and beyond capital projects and equipment. (See attachment A for projects list) 
2. A special FY 2018 year-end appropriation transfer of $1,400,000 from the General Fund unassigned fund balance to the Capital Projects Fund to provide additional funding for completion of the Sunset - Ragsdale Road Realignment project (page 81 - CIP).
3. A special FY 2018 year-end transfer of $45,000 from the General Fund to the Equipment Replacement Fund for the FY 2019 purchase of a chipper machine for the Public Works Department (page 19 - CIP).
4. An appropriation increase of $49,635 and $13,375 to the Fire and Rescue activity for incidentals and overtime paid to City of Brentwood firefighters that were deployed to Houston, Texas and Florida for mutual aid emergency service operations and support for the hurricane Harvey and hurricane Irma.  Funding provided by FEMA reimbursement funds ($63,010).
5. An appropriation increase in the Legal activity of $65,915 for accrued terminal leave payments in FY 2018.
6. An appropriation increase in the City Recorder activity of $26,139 for accrued terminal leave payments in FY 2018.    

The proposed total General Fund appropriation increase of $6,350,000 from current year revenues and $1.4 million from the fund balance transfer will leave a minimum projected General Fund unassigned fund balance as of June 30, 2018 of $35.3 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, 2018 when the Hall Income Tax proceeds for FY 2018 are received from the State of Tennessee.

Post Employment Benefits Fund (127)

Increasing the appropriation for this fund by $92,045 for the transfer to the General Fund for reimbursement of accrued terminal leave payments for the Legal and City Recorder activities in FY 2018 as referenced above.

Debt Service Fund (211)

Increasing the revenue proceeds for the Debt Service Fund by $2,197,000 associated with the 2017A G.O. Refunding Bonds. This represents the proceeds received that will be used to pay off the callable portions of the Series 2011 G.O. Bonds.  The refunding produced estimated net present value savings of $84,045. 

Increasing the expenditure appropriation of the Debt Service Fund by $2,211,000 associated with the 2017A G.O Refunding Bonds for payment to the bond trustee, underwriter discount and issuance costs.



Equipment Replacement Fund (310)

Additional revenue of $45,000 reflects the special year-end appropriation transfer from the General Fund as referenced above.


Capital Projects Fund (311)

Additional revenue of $7,705,000 reflects the special year-end appropriation transfers from the General Fund as referenced above.

Facilities Maintenance Fund (312)

Additional revenue of $114,000 from the Library Foundation for meeting room renovation.

An increase in the appropriation of this fund for the Fire and Rescue activity Station 2 and 4 unanticipated maintenance ($30,000) and Library meeting room renovations ($142,000).


Insurance Fund (320)

Additional revenue of $159,185 reflects stop loss (reinsurance) amounts received for payments of individual medical claims above the stop loss base amount of $70,000 ($80,210) and excess prescription drug rebates from Blue Cross above the budgeted amount ($78,975).   Note that additional stop loss payments and prescription drug rebates may be received for claims incurred prior to June 30, 2018.

An increase in the appropriation of this fund by $159,185 will cover potential medical claims that may exceed the budgeted estimate for FY 2018, including any unknown medical situations that may arise prior to June 30, 2018.  Funding will be provided through the payments received from our stop loss carrier and excess prescription rebates as referenced above as well as the positive cash flow of the Insurance Fund as of June 30, 2018. The health insurance division of the Insurance Fund is projected to have a fund balance of approximately $1.9 million as of June 30, 2018. Also, an increase in the appropriation of this fund ($60,000) will cover potential Workers Compensation claims that may exceed the original budget for FY 2018.

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 2018.

Should the City Commission have any questions concerning this information, please contact the Finance Director or City Treasurer.