B1011 BUDGET ACCOUNTABILITY - DRAFT 4-12-18 REDLINE.DOCX

MARICOPA COUNTY INTERNAL POLICY
Policy Number: B1011
Policy Title:
Current Adoption
09-20-174-25-2018
BUDGETING AND ACCOUNTABILITY Date:
Current 09-20-201702-21-
Implementation Date: 184-25-2018
Board Agenda
Approved by: C-49-15-021-6-0203
Number:
BOARD OF SUPERVISORS Original Adoption
June 1994
Date:
I. PURPOSE
To direct development and management of Board approved budgets for appointed, elected and judicial
branch Departments as well as Special Districts, including the Maricopa County Flood Control District,
Maricopa County Library District and Maricopa County Stadium District (Special Districts) and to
ensure accountability and compliance with the law. This policy promotes financial stability while
providing Departments with flexibility in managing their allocated resources.
II. AUTHORITY
A.R.S. §42-17101 requires the County to prepare a schedule of estimated expenditures and revenues
each year, i.e., an annual budget. A.R.S. §42-17106 specifies that the County and its Special Districts,
including the Maricopa County Flood Control District, Maricopa County Library District and Maricopa
County Stadium District (Special Districts), may not incur expenditures in excess of the amounts
appropriated by the Board of Supervisors (Board) in the annual budget. The Board of Supervisors is
authorized to jointly adopt policies applying to the Special Districts under the Intergovernmental
Agreement (C-06-18-393-6-00), approved on April 11th, 2018.
III. DEFINITIONS
A. Appropriated Budget: A budget adopted by the Board pursuant to statute that authorizes
expending of funds or incurring obligations for a specific purpose.
B. Appropriation Level: The detail to which a budget is appropriated by the Board, such as
department and fund, project, or activity level, etc. Appropriation levels are defined annually in the
Budget Guidelines and Priorities adopted by the Board during budget development.
C. Appropriation Unit: The classification of expenditures and revenues according to their
Appropriation Level, including whether they are Operating or Non Recurring. Appropriation Units
are consolidated in the budget to a Group, Category and Class level. The budget is adopted by
the Board at the Appropriation Unit Group consolidation level, except where otherwise noted.
D. Assigned Fund Balance: Fund balance which reflects a government’s intended use of resources.
E. Board of Supervisors/Board of Directors (Board): For the purpose of this Policy, “Board” refers
to the Maricopa County Board of Supervisors and the Board of Directors of its respective Special
Districts including the Maricopa County Flood Control District, Maricopa County Library District and
Maricopa County Stadium District.

Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
F. Carryforward: Allocated funds for a specific non-recurring project not spent during the Fiscal Year
in which they were approved. Carryforward is not allowed from one Fiscal Year to another without
Board approval and proper reconciliation.
G. Central Service Cost: The overhead cost associated with internal services that cannot readily be
broken down by Departmental use (e.g., Finance, Procurement, Facilities Management services).
H. Central Service CostsCost Allocation (CSCA): An allocation of Central Service Departments’
Costs to all Funds through a consistent allocation methodology in proportion to the service or
benefit received. The Department of Finance (DOF) will annually prepare the CSCA plan.
I. Committed Fund Balance: Fund balance whose use is constrained by limitations imposed by the
Board of Supervisors.
J. Contingency: An allocation the Board may appropriate for unidentified and/or unquantified
expenses that are later identified and quantified during the Fiscal Year.
K. Department/Special Districts (Department): For the purpose of this Policy, “Department” refers
to any division of the County including elected and judicial branch offices and Special Districts
including the Maricopa County Flood Control District, Maricopa County Library District and
Maricopa County Stadium District.
L. Detailed Budget: The Appropriated Budget calendarized by month, appropriation unit, unit,
activity, object/source and positions as defined annually by the Budget Office.
M. Detention Fund: A Special Revenue Fund approved and funded by a voter initiative that can only
be used for detention related operational and capital expenses.
N. Discretionary Internal Service Cost: An amount billed to one Department by another Department
for internal services provided based on use, e.g. fuel or cell phones.
O. Fiscal Year: The budgeting period used by the County that runs from July 1 through June 30.
P. Fully Funded Position: An authorized position that is fully funded by on-going operational
revenues of the County, whether General Fund, Special Revenue Funds or Grant Revenues.
Q. Fund Balance: The difference between fund assets and fund liabilities. For most budgeted funds,
the Fund Balance equals the cash balance.
R. General Contingency: An allocation the Board may appropriate for unidentified and/or
unquantified expenses that are later identified and quantified during the Fiscal Year.
S. General Fund: The General Fund is the County’s primary operating fund. It accounts for all
financial resources of the general government, except those required to be accounted for in another
fund.
T. Indirect Costs: A cost to a Department for administrative overhead that is not readily assignable
to the objective specifically benefited.
U. Internal Service Cost: An amount associated with a specific service provided by one Department
for another.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
V. Internal Service Department: A Department that provides services primarily to other County
Departments, e.g., Equipment Services, Telecommunications.
W. Line Item Budget: A budget appropriated at a more restrictive level such as object code, unit or
activity. Line item budgets are monitored at the more restrictive appropriated level and may include
the review of all invoices, payments and journal vouchers.
X. Lump Sum Budget: A budget appropriated at the highest level (Dept., Fund and Appropriation
Unit Group); departments may manage expenditures at the highest level and may move funding
between activities, units and object codes.
Y. Non Departmental: A special Department code utilized for budgeting revenues and expenditures
of specific Board approved items that are not related to a specific department. Non Departmental
budgets will be established and maintained in the General Fund, the Detention Fund, and any other
fund with applicable revenues and expenditures.
Z. Non-Discretionary Internal Service: A service that costs a flat fee per Fiscal Year to deliver and
is not based on anticipated utilization; this is also referred to as a base level service.
AA.Non-General Fund: A fund that is restricted to specifically identified uses.
BB. On-going Revenues: Revenues from economic activity that are generally consistent and
estimable.
CC.BB. One-time Revenues: Revenues that are derived from a singular event, such as the sale
of property, or an economic anomaly.
DD.CC. Owning Department: The Department that owns the asset.
DD.Recurring Revenues: Revenues that are generally consistent and estimable.
EE. Reserves: Funding set aside to provide financial resources necessary in the event of unexpected
revenue shortfalls and/or unanticipated expenditures.
FF. Restricted Fund Balance: A fund balance which is subject to externally enforceable legal
restrictions.
GG. Special Revenue Fund: A fund that is used to account for the proceeds of specific revenue
sources that are restricted or committed to expenditures for specified purposes.
HH.Structurally Balanced Budget: A budget in which all recurring expenditures are fully supported
by recurring sources of revenue over the economic cycle.
II. Unassigned Fund Balance: Fund balance which is not restricted, committed, assigned, and/or
any negative fund balance.
JJ. Zero Based Budget (ZBB): A process in which the baseline of each budget is zero until
expenditures are justified.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
IV. BUDGET PRINCIPLES
A. Each year, the Board will establish guidelines and priorities for budget development and will adopt
Appropriated Budgets for all Departments.
B. The County determines the expected General Fund operating revenue for the upcoming Fiscal
Year and the budget guidelines that ensure that operating expenditures do not exceed expected
revenue over the economic cycle.
C. A Structurally Balanced Budget is required throughout the budget development and implementation
process. The County operating standard is that expected revenues will at all times equal on-going
expenditures over the economic cycle.
D. The Board may choose to approve operating fund transfers from the General Fund to provide
structural balance in other funds.
E. The County uses a Lump Sum Budgeting method where Departments are allocated an
Appropriated Budget at the start of each Fiscal Year. Departments are expected to manage their
allocated funds according to their needs for the full Fiscal Year. Revisions to Appropriated Budgets
are allowed only with Board approval.
F. The Board appropriates the budget at the Department, Fund and Appropriation Unit Group level,
unless specifically noted.
G. The Board segregates a portion of the General Fund resources for budget stabilizationcash flow
reserves which will be sufficient to minimize cash flow borrowing. It may also be used for future
year Capital Improvement Program (CIP) and technology expenses and/or appropriated for
contingencies in the current Fiscal Year.
H. The Board maintains the property tax levy to provide sufficient levels of service for the County’s
Operating Fund, Library District, and Flood Control District and Debt Service Fund.
I. The stages of budget development are as follows:
1. Baseline Budget: the budget provided to Departments or a modified Zero Based Budget is the
starting point for budget development.
2. Requested Budget: the budget that Departments submit to the Budget Office and the Board for
review.
3. Recommended Budget: the Requested Budget adjusted based on the Budget Office’s analysis
and Board guidance.
4. Adopted Budget: the final budget approved by the Board prior to the start of the Fiscal Year;
this is the initial Appropriated Budget.
5. Revised Budget: the Adopted Budget inclusive of approved changes during the Fiscal Year;
this is also referred to as the Appropriated Budget.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
V. ANNUAL BUDGET GUIDELINES
A. Departments will follow this policy, the annually published guidelines approved by the Board and
the instructions provided by the Budget Office in preparing budget requests.
B. Restricted Use Funding Sources
1. Grants and Special Revenue Funds will be used wherever possible for direct programmatic
costs and appropriate indirect and Central Service Costs. Departments will report to the Board
non-appropriated funding sources available to support their operations and programs.
Investigatory or security issues will be addressed individually.
2. Grant, donation or intergovernmental agreement (IGA) revenues must be supported by an
itemized list of each revenue source. Current Fiscal Year funding levels can be used for the
next Fiscal Year budgeting for recurring grants and IGAs, but may not include an increase from
the current Fiscal Year.
3. Where appropriate, services and programs will be supported by user fees. Fees should be
developed based on current market conditions and on full cost recovery including Indirect
Costs. Fees and fee revenue will be reviewed annually in conjunction with the budget
development process. Additional revenue from proposed fee increases may not be budgeted
until fees have been approved by the Board.
C. Position Funding
1. Positions must be fully funded at all times. In order to create new positions, Departments must
first verify on-going, full-year funding. If a position loses funding, it shall be inactivated.
2. Departments will demonstrate that positions are fully funded during the budget development
process and continue to demonstrate the funding in the forecast process throughout the year
and into future Fiscal Years’ operational budgets.
3. Personal service budgets shall include an allowance for salary and benefit savings based on
an analysis of trends, prior years’ turnover rates and recent market adjustment
implementations.
D. Capital Improvement Program (CIP) Budget
1. Each year the Board will develop and approve a five-year CIP budget. Project requests for
inclusion in the CIP will include the on-going operating costs associated with the project and
may include a contingency allocation in the amount of 10% of the total project cost or
$1,000,000, whichever is less.
2. Capital Improvement requests are submitted utilizing the process outlined by the Facilities
Management Department.
3. Capital improvements will not be budgeted unless specifically approved by the Board.
4. The Board must approve changes to project appropriations, to five-year CIP’s or to other project
plans.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
E. Major Maintenance
1. The annual operating budget should provide for the adequate and prioritized maintenance of
facilities and major equipment from current revenues.
2. Major Maintenance requests are submitted utilizing the process outlined by the Facilities
Management Department.
3. Major maintenance projects for General and Detention Fund facilities will be budgeted in the
Facilities Management Department budget. Major maintenance projects for Non-General Fund
and Non-Detention Fund facilities will be budgeted in the Owning Department budgets.
4. The annual budget should provide for the adequate and prioritized replacement and
maintenance of County wide technology software and hardware.
F. Non Departmental Budget
1. Non Departmental revenue: General revenues that are not related to specific programs,
activities or departments will be budgeted and reported in Non Departmental. Such revenues
include, but are not limited to, the following:
a. Property Taxes
b. State Shared Sales Taxes
c. State Shared Vehicle License Taxes
d. Jail Excise Taxes
e. Payments in Lieu of Taxes
2. Non Departmental expenditures: General expenditures that benefit the County as a whole, are
not specific to a single department, are best managed outside of a specific department and are
budgeted in Non Departmental. These expenditures include, but are not limited to, the
following:
a. General Debt Service
b. Taxes and Assessments
c. Board-approved Special Projects or Initiatives
d. Major Technology Projects
e. Capital Improvement Projects
3. Non Departmental contingency appropriations: The purpose of a contingency appropriation is
to maintain a reserve of expenditure authority from which specific amounts can be transferred
to other appropriated budgets after adoption of the annual budget to cover emergency or critical
items.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
a. Contingency appropriations may be established within Non Departmental for the General
Fund, Detention Fund, and other funds as appropriate.
b. Contingency appropriations may be established for Non Recurring appropriations as well
as for Operating appropriation purposes.
c. Contingency appropriations may be undesignated for future general purposes or they may
be reserved by line item for specific anticipated issues.
d. The Board of Supervisors must approve all transfers from contingency appropriations.
4. Administration of Non Departmental budget: Non Departmental budgets will be administered
by the Budget Office under the direction of the Assistant County Manager. The Budget Director
or designee must authorize all expenditures prior to incurring obligations or making payments.
Procedures will be established for setting adequate appropriations for the following items:
a. Desk Top/Lap Top Replacement
b. Outside Legal Counsel Billings
c. Economic Development Programs
d. Staffing Studies and Market Pay Contingencies
e. Capital and Technology Improvement Programs
G. Vehicle Replacement
1. Vehicle replacement for General and Detention Fund vehicles will be budgeted in the
Equipment Services budget. Vehicle replacement for all Non-General and Non-Detention Fund
vehicles will be budgeted in Owning Department budgets.
2. Equipment Services prepares a needs assessment to determine which vehicles require
replacement for upcoming Fiscal Years.
3. Vehicle replacement will be funded only for the current equivalent equipment class, make,
model, and equipment extras. Upgrades are not funded under the vehicle replacement budget.
If a Department determines upgrades are necessary, the Department has two options: (a) pay
for the upgrades from the Department’s current operating budget; or (b) request upgrades and
additions during the development of the Department’s budget.
4. If the full cost of replacement is lower than originally estimated, the savings will revert to the
appropriate fund. Cost overruns will be absorbed by the appropriate vehicle replacement
budget.
VI. BUDGET DEVELOPMENT BY STAGE
A. Baseline Budgets
1. Departments are required to participate in the strategic planning process. Strategic plans and
performance measures, along with direction from the Board, will be the primary basis for
funding decisions.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
2.1.The Board and the Budget Office set a baseline budget for each non-grant, operating,
appropriated, and non-grant funded budget.
3.2.Departments are either given a baseline budget or are directed to build a budget using a
modified Zero Based Budget model or another alternative model.
4.3.Appropriated Budgets are not guaranteed from one Fiscal Year to the next.
B. Requested Budgets
1. Departments shall submit Requested Budgets for review and analysis by the Budget Office.
2. Departments shall verify funding for all purchase requisitions, contracts and agreements.
Departments shall not recommend approval of any agreements that commit the County to
expenditures for which future funding is not identified.
3. All budget requests shall be submitted at a detailed level as defined in the Budget Office’s
annual instructions.
C. Recommended Budgets
The Recommended Budget is the budget submitted to the Board by the Budget Office for action
after reviewing and revising Department requested budgets based on the Board and County
Manager directives.
D. Adopted Budget
The Adopted Budget is the final budget approved by the Board prior to the start of the Fiscal Year
and is the initial Appropriated Budget.
E. Appropriated Budgets
The Appropriated Budget is the Adopted budget plus any amendments/adjustments approved by
the Board throughout the Fiscal Year.
F. Budget Development Constraints
1. Internal Service Departments will develop fees and charges based on recovery of actual costs
for the services they provide. Non-discretionary internal services will be charged at the
department/fund level. Discretionary Internal Service Costs are the responsibility of the
requesting Department.
2. Where allowable, grant and Special Revenue Funds will pay the applicable Central Service
Cost Allocation (CSCA) charges unless the Board approves a variance. CSCA charges for
Non-General and Detention Fund Departments, except Grants and Internal Service
Departments, will be based on a full-cost allocation. Grant and Internal Service Department
CSCA charges will be determined in accordance with 2 CFR Part 225 (OMB Circular A-87).200.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
VII. BUDGET/MAINTENANCE
A. General Statements
1. Departments shall maintain detailed revenue and expenditure budgets.
2. Detailed budgets shall equal Appropriated Budgets.
3. Departments have the flexibility to incur expenditures that vary from their Detailed Budgets as
long as Departments comply with their Appropriated Budget and absorb unanticipated
spending increases.
4. Directors and program managers must review new, unfunded or under-funded program
mandates from the state and federal government, determine the fiscal impact to their
Appropriated Budgets and identify funding solutions. All non-recurring funding, e.g., CIP
funding, will undergo a reconciliation process at year-end and the Carryforward budget will be
adjusted by the Board.
5. Reconciliation of non-recurring expenses, including projects, will occur annually at the end of
the Fiscal Year and must be adjusted and approved by the Board as soon as possible after the
third close of the Fiscal Year but no later than October 31st of each calendar year.
B. Revised Budget:
1. The Board may require Departments to wait until the end of the Fiscal Year before acting on
Department requests for increases or contingency transfers to Appropriated Budgets.
2. During the Fiscal Year, Appropriated Budgets may only be changed with Board approval.
3. The Budget Office will ensure that all Detailed Budgets equal the Appropriated Budget,
including any revisions made to the Appropriated Budget during the Fiscal Year.
4. Departments may not exceed their annual Appropriated Budgets.
5. Any Department with a negative year-to-date expenditure, negative year-end Budget Office
forecast, or negative revenue variance in the General Fund, Detention Fund, or any fund that
requires General Fund subsidies, must provide a written explanation and corrective action plan
to the Department of Finance (DOF) and the Budget Office. The Budget Office will help the
Department refine its corrective action plan based on the Department’s need and current
situation.
Departments shall be required to reduce expenditures to offset any shortfall in their budgeted
revenue. If there is a significant risk that a Department will exceed its annual appropriation, the
Board may place the Department on a Line Item Budget.
6. If, at the end of the Fiscal Year, a Department exceeds its Appropriated Budget or creates
financial liabilities for the County, the Department will prepare a corrective action plan that it
will present to the Board.
a. DOF will prepare and submit to the Board a comprehensive report of all audited actual
expenditures and expenditures relative to the Department’s appropriated budgets.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
b. The Budget Office will review the Department’s expenditures to identify the causes of the
overrun.
i. The Department will work with the Budget Office to present its findings and a
recommended corrective action plan to the Board for action.
ii. The corrective action plan may include, but will not be limited to, placing the
Department on a Line Item Budget.
C. Forecasting
1. Forecasting is a process of reviewing actual expenditures and revenue values and estimating
the remaining Fiscal Year’s expenditures and revenues.
2. Departments and the Budget Office will forecast, at a minimum on a quarterly basis, all
elements of the budget based on the Budget Office’s requirements.
3. Each month a Department’s expenditures and revenues shall be monitored and reported in
order to determine the estimated fund balances and availability of funding for one-time needs.
D. Budget Maintenance Constraints
1. Appropriated Budgets supported by grants, donations or IGAs must be amended by the Board
if expenditures are forecasted to exceed the appropriation level. Proposed amendments must
be supported by an updated reconciliation of all revenue sources that demonstrates the
proposed amendment is fully funded.
2. Appropriated Budgets must be reduced if revenue is forecasted to be significantly less than the
current budget.
3. Actual fund transfers from the General Fund to other funds will be the lesser of the budgeted
amount or the actual amount necessary to maintain structural balance based on actual
revenues and expenditures at year-end.
VIII. FUND BALANCE
A. Fund Balances will be estimated and included in the annual budget. Fund Balances may be
appropriated for the following specific uses:
1. Acquisition of fixed assets
2. Retirement of outstanding debt
3. Fiscal stabilizationCash flow reserve by offsetting operating revenue shortfalls due to economic
downturns, with adjustments to restore the structural balance of the budget over the economic
cycle.
B. One-time revenues from the sale of real property, less amounts for contingent liabilities such as
environmental clean-up, will be set aside for capital improvements or to retire debt used to finance
capital improvements.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY Current Adoption 09-20-20174-25-
Date: 2018
C. In cases where an expenditure can be funded by more than one component of the Fund Balance,
funding will be used in the following order:
1. First, expenditures will draw on restricted unassigned Fund Balances
2. Second, expenditures will draw on committed assigned Fund Balances (if applicable)
3. Third, expenditures will draw on assigned committed Fund Balances (if applicable)
4. Fourth, expenditures will draw on unassigned restricted Fund Balances
D. Fund Balances may be utilized after an expenditure limitation carry forward analysis is completed
with the Department of Finance.
Revision History
Version Revision Date Description of Revision
1 10 Dec 2014 Initial Version.
This policy will replace and combine the content of B1001, B1006, B1007 and B3001.
This new, comprehensive budgeting policy is more direct, succinct and clearly reflects
the overall budget process. (C-49-15-021-6-00)
2 04 May 2016 Incorporate sections for vehicle replacement and non-departmental budgets as well as
appropriate revisions of policy definitions and related sections. Improved readability by
consolidating all relevant information into a single budget policy. (C-49-15-021-6-01)
3 20 Sept 2017 Clean up language to match the new Performance Budgeting System terminology;
delete references to Reprographics; clarify reserves; allows for general fund support of
other funds for structural balance; change of name for Budget Office; vehicle
replacement no longer in Non Departmental; reference to fund balance transfers. (C-49-
15-021-6-02)
4 21 Feb 201825 Clean up references to cash flow reserves. Other minor definition cleanup. Delete
Apr 2018 reference to Strategic Planning and Performance Measures. (C-49-15-021-6-03).
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