B1011 REDLINE VERSION FOR BOS 3-16-16.PDF

MARICOPA COUNTY INTERNAL POLICY
Policy Title:
Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
Board Agenda
C-49-15-021-6-00
Approved by: 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 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 may not incur
expenditures in excess of the amounts appropriated by the Board of Supervisors (Board) in the annual budget.
III. DEFINITIONS
A. Appropriated Budget: A budget adopted by the Board pursuant to statute that authorizes expending
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 by the Board during budget
development.
C. Assigned Fund Balance: Fund balance which reflects a government’s intended use of resources.
D. 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.
E. Carryforwardover: Allocated funds for a specific non-recurring project not spent during the Fiscal Year in
which they were approved. Carryover Carryforward is not allowed from one Fiscal Year to another without
Board approval and proper reconciliation.
F. 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).
G. Central Service Costs Allocation (CSCA): An allocation of Central Service Department’s’ Ccosts (e.g.,
Human Resources, Internal Audit) 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.
H. Committed Fund Balance: Fund balance whose use is constrained by limitations imposed by the
that the government imposes upon itself at its highest level of decision making authority (i.e., Board of
Supervisors).
I. 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.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
J.I. 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.
J. Detailed Budget: The Appropriated Budget calendarized by month, function, organizational unit,
program/activity/service, object/source and position as defined annually by the Office of Management and
Budget (OMB).
K. 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.
K.L. Discretionary Internal Service Cost: An amount billed to one Department by another
Department for internal services provided based on use.
L.M. Fiscal Year: The budgeting period used by the County that runs from July 1 through June 30.
M.N. 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.
N.O. Function: The classification of expenditures and revenues according to whether they aretheir
appropriation level including whether they are recurring or non-recurring., including projects.
O.P. Fund Balance: The difference between fund assets and fund liabilities. For the purpose of this
Policy, Fund Balance refers to cash balance.
P.Q. General Contingency: An allocation the Board may appropriate for unidentified and/or
unquantified expenses that are later identified and quantified during the Fiscal Year.
Q.R. General Fund: The fund associated with County financial resources that isserves as the primary
operating fund.
R.S. Indirect Costs: A cost to a Department for administrative overhead that is not readily assignable
to the objective specifically benefited.
S.T. Internal Service Cost: An amount associated with a specific service provided by one Department
for another.
U. Internal Service Department: A Department that provides services primarily to other County
Departments, (e.g., Equipment Services, Telecommunications, Reprographics).
V. Line Item Budget: A budget appropriated at a more restrictive level such as by object code, organization,
program 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.
T.W. Lump Sum Budget: A budget appropriated at the highest level (level (Dept, Fund and Function);
departments may manage expenditures at the highest level and may move funding between activities,
organizations and object codes.
U.X. 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.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
V.Y. Non-Discretionary Internal Service: A service that costs a flat fee per Fiscal Year to deliver
regardless of the number of uses or users; this is also referred to as a base level service.
W.Z. Non-General Fund: A fund that is restricted to specifically identified uses.
X.AA. On-going Revenues: Revenues that will be collected each year based on activity within the
economy and will be received at a moderately consistent level that can be estimated with a reasonable
level of accuracy“Revenues from economic activity that are generally consistent and estimable”.
Y.BB. One-time Revenues: Revenues that are derived from a singularn event, such as the sale of
property, or an economic anomaly that can be estimated or demonstrated to be unique.
Z.CC. Owning Department: The Department that owns the asset.
AA.DD. Reserves: A portion of the General Fund resources that the Board annually carrieds forward from
one Fiscal Year to the next to maintain a balanced budget in case of unanticipated expenditures and/or
revenue shortfalls.
BB.EE. Restricted Fund Balance: A Ffund balance which is subject to externally enforceable legal
restrictions.
CC.FF. 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.
DD.GG. Structurally Balanced Budget: A budget in which all recurring expenditures are fully supported
by recurring sources of revenue over the economic cycle.
HH. Unassigned Fund Balance: Fund balance which is not restricted, committed, or assigned, and/or any
negative fund balance.
EE.II. Zero Based Budget (ZBB): A process in which the baseline of each budget is zero until
expenditures are justified.
IV. BUDGET PRINCIPLES
A. Each year, the Board will establish priorities and guidelines 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.
A.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.
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.
C.D. The County uses a Llump sSum Bbudgeting method where Departments are allocated an
Appropriated Budget at the start of each Fiscal Year. Departments are expected to manage their allocated
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
funds according to their needs for the full Fiscal Year. Revisions to Appropriated Budgets are allowed only
with Board approval.
D.E. The Board appropriatesapproves the budget at the Department, Fund and Function level, unless
specifically noted.
E.F. The Board segregates a portion of the General Fund resources for budget stabilization 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.
F.G. The Board shallwill maintains the property tax levy to provide sufficient levels of service
for the County’s Operating Fund, Library District, Flood Control District and Debt Service Fund.
G.H. The stages of budget developmentThroughout the Fiscal Year the budget will be referred
to differently, depending on the current stage of development are as follows:
1. Baseline Budget: the budget provided to Departments or a modified Zzero- Bbased Bbudget is the
starting point for budget development.
2. Requested Budget: the budget that Departments submit to OMB and the Board for review.
3. Recommended Budget: the Requested Budget adjusted based on OMB 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.
V. ANNUAL BUDGET GUIDELINES
A. Departments will follow this policy, the annually published guidelines approved by the Board and the
instructions provided by OMB 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 eliminated inactivated.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
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.
2.3. 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 to be submitted utilizing the process outlined by the Facilities
Management Department.
3. Capital improvements willmay not be budgeted unless specifically approved by the Board.
4. The Board must approve changes toin project appropriations, and amendments to five-year CIP’s or
to other project plans.
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 to be 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.
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
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
b. Taxes and Assessments
c. Board-approved Special Projects or Initiatives
d. Major Technology Projects
e. Facilities Major Maintenance
f. Capital Improvement Projects
g. Vehicle & Equipment Replacement for the General and Detention Funds
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.
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
Office of Management and Budget under the direction of the County Manager and the Deputy County
Manager. The Deputy County Manager 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. Vehicle and Equipment Replacement
b. Desk Top/Lap Top Replacement
c. Outside Legal Counsel Billings
d. Economic Development Programs
e. Staffing Studies and Market Pay Contingencies
f. Capital and Technology Improvement Programs
G. Vehicle Replacement
1. Vehicle replacement for General and Detention Fund vehicles will be budgeted in the Non-
Departmental budget. Vehicle replacement for all nNon-General and nNon-Detention Fund vehicles
will be budgeted in Owning Department budgets.
2. The Department/Special District, working with 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 budgets. If a
Department/Special District determines upgrades are necessary, the Department/Special District has
two options: (a) pay for the upgrades from the Department’s/Special District’s current operating
budget; or (b) request upgrades and additions during the development of the Department’s/Special
District budget.
4. If the full cost of replacement is actually lower than originally estimated, the savings will revert to the
appropriate fund. Possible Ccost overruns will be absorbed by the appropriate vehicle replacement
budget.
5. OMB must approve all charges to the vehicle replacement budget.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
1. Exceptions
If, during the replacement process, the Department/Special District requires changes to the original
vehicle replacement request, the Department/Special District must request reconsideration of their
initial vehicle replacement plan. The criteria OMB will consider during the review of the
Department’s/Special District’s revised plan includes funding and the impact on current and future
costs for maintenance, operation and replacement. To assist OMB in performing a full analysis of the
revised replacement plan, Departments/Special Districts are requested to provide:
a. A justification statement which supports changes to be in the best interest of Maricopa County
citizens, enhances services provided to the citizens and benefits the County/County Special
District overall. This statement can also include information on changes in service levels which
require the use of a different vehicle class, the impact on current and future costs for
maintenance, operation and replacement as well as information on funding.
b. A spreadsheet which reflects the current vehicle replacement schedule with costs and the
proposed vehicle schedule with costs. The spreadsheet needs to reflect the increase or decrease
of cost for each vehicle and an explanation for the cost change.
c. A complete justification for any equipment additions to the replacement vehicles and how these
equipment additions enhance the service levels being provided to Maricopa County citizens.
d. OMB will review the request and provide the Department/Special District and Equipment Services
with final approval or disapproval of the proposed change to the Department’s/Special District’s
equipment vehicle replacement plan within three working days of receipt.
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 baseis for funding
decisions.
2. Budget development starts with tThe Board and OMB setting a baseline budget for each operating,
appropriated, and non-grant funded budget.
3. Departments are either given either a baseline budget or are directed to build a budget using a
modified zZero- bBased bBudget model or another alternative model.
Baseline budgets may or may not reflect the previous Fiscal Year Revised Budget.
4. 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 OMB.
2. Departments shall verify funding for all purchase requisitions, or other 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 OMB’s annual instructions.
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
C. Recommended Budgets
1. The Recommended Budget is the budget OMB submits to the Board for action after reviewing and
revising Department requested budgets based on the Board and County Manager directives.
D. Adopted Budget
1. 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
1. The Appropriated Budget is the Adopted budget plus any amendments/adjustments approved by the
Board throughout the Fiscal Year.Appropriated Budgets are not guaranteed from one Fiscal Year to
the next.
2. Appropriated Budgets may only be changed during the Fiscal Year with Board approval.
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 grant 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).
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 Ddetailed Bbudgets 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 Ccarry-forward 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 the each calendar year.
B. Revised Budget:
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
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 during the Fiscal Year with Board
approval.
3. OMB 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 OMB 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 OMB. OMB will help the Department develop 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 They may also aadopt Appropriated Budgets for that Department at the program/activity and/or
object of expenditure level.
If there is significant risk that a Department will exceed its annual appropriation, the Board may place
the Department on a Line Item Budget.
5.6. If, at the end of the Fiscal Year, a Department exceeds its Appropriated Budget or creates financial
liabilities for the County at the end of the Fiscal Year, the Department will prepare a corrective action
plan thatwhich it will present to the Board.
a. At the close of the Fiscal Year, DOFthe Department of Finance (DOF) will prepare and submit to
the Board a comprehensive report of all audited actual expenditures and expenditures relative to
theall Ddepartment’s appropriated budgets.
The report will include an explanation of each instance in which expenditures exceeded
Appropriated Budgets.
b. OMB will review theIf as a result of audit findings,a Department does exceeds its annual
Appropriated Budget or audit findings reveal that the Department has createsd a County
liabilitiesy, that result from audit findings, the Department’s expenditures will be reviewed by OMB
to identify the causes of the excessesoverrun.
i. The Department will works with OMB to presentreport its findings and, along with a
recommended corrective action plan to the Board for action.
ii. The corrective action plan may include but will not be limited to an adopted Appropriated
Budget for the Department. at the level of program/activity and/or object of
expenditure.placing the Department on a Line Item Budget.
6. A written explanation and corrective action plan may also be required for negative variances in other
funds. DOF and/or OMB will report material variances in other funds to the Board.
C. Forecasting
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
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 OMB will forecast all elements of the budget based on OMB’s requirements.
3. Each month a Department’s expenditures and revenues shall be monitored and reported on a monthly
basis in order to determine the estimated fund balances and availability of funding for one-time needs,
to be approved by the Board for future Fiscal Years, for General and Detention Funds.
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. ProposedThese 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.
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 stabilization 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.
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 unassigned Fund Balances
2. Second, expenditures will draw on assigned Fund Balances (if applicable)
3. Third, expenditures will draw on committed Fund Balances
4. Fourth, expenditures will draw on 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
Initial Version.
This policy will replace and combine the content of B1001, B1006,
1 10 Dec 2014 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 dd mmm yyyy This policy incorporates content from former Policy B4002 regarding
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Policy Title: Policy Number: B1011
BUDGETING AND ACCOUNTABILITY
Current Adoption
POLICY 12-10-2014
Date:
Vehicle Replacement as well as B1008 regarding administration of Non-
Departmental budgets.
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