FY23-24 Council Financial Policies

FINANCIAL POLICIES 
A key component of the FY23-24 budget is the adoption of the Council’s financial 
policies. This budget document includes the Council’s amended financial policies to 
be considered for approval as part of the in the FY23-24 budget adoption process.  
 
Council’s financial policies serve as the foundation for establishing a strong, 
sustainable financial plan. The policies provide broad policy guidance related to 
Fiscal Planning and Budgeting, Cash and Budget Appropriation Transfers, 
Expenditure Control, Capital Asset and Debt Management, and Fund Reserves and 
Structure.  
 
These five key financial policy areas are discussed on the following pages. For the 
purpose of these policies, a department is defined as a separate departmental unit 
presented in the City’s most recent organizational chart. A fund is defined as a 
balanced set of accounts which appears as a column for reporting purposes in 
either the “Basic Financial Statements” or the “Combining Financial Statements” 
section of the City’s Annual Comprehensive Financial Report (ACFR). 
 
Fiscal Planning and Budgeting  
Fiscal planning is the process of identifying resources and allocating them among 
numerous and complex competing purposes. The primary vehicle for this planning 
is the preparation, monitoring and analysis of the budget. It is essential to 
incorporate a long‐term perspective and to monitor the performance of the 
programs that are competing to receive funding.  
 
The City Manager will submit to the Council a proposed annual budget, based on 
Council’s established goals, and will execute the budget as finally adopted, pursuant 
to Title 42, Chapter 17, Article 3, Section 17105 of the Arizona Revised Statutes, as 
amended.  
 
1. Revenue and expenditure forecasts will be prepared annually and will include 
a Five-Year Forecast for each major operating fund (General Fund, Enterprise 
Funds, and certain Special Revenue Funds). These Five-Year Forecasts will be 
prepared at the beginning of the operating budget process and 1) provide a 
long-term view of current year budget decisions affecting the City and 2) 
provide an estimate of the fund balance and sensitivity to revenue and 
expenditures changes over the forecast period.  
 
a. The budget will be balanced, by fund, when all projected ongoing revenue 
sources exceed all ongoing expenses proposed for the current fiscal year 
and for the upcoming fiscal year. Use of the unassigned fund balance will 
occur only as authorized by Council and to address one‐time costs, not 
ongoing costs or planned utilization of fund balance.

b. Revenues will not be dedicated for specific purposes unless approved by 
Council or required by law. All non‐restricted revenues will be deposited in 
the General Fund and appropriated through the annual budget process.  
 
2. To ensure ongoing General Fund stability, the primary property tax levy will be 
evaluated each year to determine where it should be set. 
 
3. Any proposed new service or program initiative will be developed to reflect 
current Council policy directives and shall be considered in the context of balancing 
ongoing anticipated revenues against ongoing anticipated expenses. Proposals will 
follow all related Council Financial Policies.  
 
4. To ensure compliance with existing policy, all grant programs and any programs 
supplemented by outside funding will include a sunset provision consistent with the 
projected end of funding. Personnel paid with these funds will be considered 
temporary with no certainty of continued employment beyond the life of the funding 
unless otherwise approved by Council. Equipment and technology purchases with 
these kinds of funds are subject to the policies for the replacement funds.  
 
5. The City Manager’s recommended budget presented to Council will contain, at a 
minimum, the following elements:  
 
a. Revenue projections by major category, by fund;  
b. Expenditure projections by program levels and major expenditure category, 
by fund, including support provided to or received from other funds;  
c. Debt service principal and interest amounts;  
d. Proposed inter-fund transfers;  
e. Projected fund balance by fund;  
f. Proposed personnel staffing levels;  
g. Detailed schedule of capital projects;  
h. Any additional information, data, or analysis requested by Council.  
 
6. The operating budget will be based on the principle that current ongoing 
operating expenditures, including debt service and support for other funds, will be 
funded with current ongoing revenues. The enterprise funds (water/sewer, solid 
waste and landfill) and the transportation sales tax fund will pay the indirect cost 
charges for services provided by other funds. Additional funds may be added upon 
Council approval.  
 
7. The budget will not use one‐time (non‐recurring) sources to fund continuing 
(recurring) expenditures.

8. Addition of personnel will be requested only to meet existing program initiatives 
and policy directives after service needs have been thoroughly examined and only if 
increased net ongoing revenue is substantiated.  
 
9. The Budget and Finance Department and Human Resources Department will 
work together to manage position control. The number of full‐time and regular part‐
time employees on the payroll will not exceed the total number of full‐time 
equivalent positions that Council authorizes and adopts with the annual budget.  
 
10. Benefits and compensation will be administered in accordance with Council 
policy direction.  
 
a. Total compensation will be evaluated periodically for competitiveness.  
b. A cost containment strategy means total costs for health insurance 
premiums will be shared between the employer, employees and retirees. Total 
premiums will be evaluated on an annual basis to ensure they are reasonable, 
competitive and expected to address anticipated claims plus the maintenance 
of an adequate reserve for the Employee Benefits Fund. Funding will be based 
on an annual actuarial report and its 75% confidence funding level 
recommendation.  
c. A policy will be developed regarding the continuation of retiree health 
insurance after the completion of a comprehensive evaluation of the impact of 
GASB 67 and the presentation of results to Council.  
 
11. Ideas for improving the efficiency and effectiveness of the city's programs and 
the productivity of its employees will be considered during the budget process.  
 
12. Carryover of unspent appropriation from one fiscal year to the next is not 
automatic. The Budget and Finance Department staff will evaluate carryover 
requests and make recommendations to the City Manager. Recommended requests 
will be included in the City Manager’s budget presented to Council.  
 
13. Salary savings will be retained to the greatest extent possible to build fund 
balance. Salary savings may be used for expenses upon the City Manager or their 
designee’s, approval if within the same fund/department. Salary savings may be 
used for expenses between funds/departments upon Council approval within the 
last three months of the fiscal year.  
 
14. Total fund appropriation changes must be approved by the Council. These 
changes must also comply with the city's Alternative Expenditure Limitation in 
accordance with Article IX, Section 20, Constitution of Arizona and A.R.S. § 41‐563 
where final budget adoption sets the maximum allowable appropriation for the 
upcoming fiscal year.

15. The replacement of General Fund capital equipment and related support for 
technology, vehicles and telephonic equipment [except cell phones] will be 
accomplished through the use of a “rental rate structure” that is revised annually as 
part of the annual budget process.  
 
a. Any equipment purchased with grant funding will be considered for ongoing 
replacement and ongoing replacement premium funding only if specifically 
authorized by the City Manager and noted in the budget submittal.  
b. The ongoing replacement costs for new technology and new vehicle 
purchases will be incorporated into the upcoming fiscal year’s rental rate 
structure regardless of whether they are initially purchased through a lease or 
pay‐as‐you‐go funding.  
c. Replacements will be based on equipment lifecycle analyses by the Public 
Works Department for City vehicles, or the Budget and Finance Department 
for technology and telephonic systems.  
 
16. The City Council supports economic development objectives that support the 
creation and retention of quality jobs (25% greater than the median average wage in 
Maricopa County), add revenue, and enhance the quality of life in Glendale. City 
Council will consider incentives when the circumstances of the economic 
development opportunity warrant them necessary and appropriate for the 
opportunity and in the best interest of the City.  
 
Cash and Budget Appropriation Transfers 
 
1. Purpose & Restrictions 
 
The following policy is established to implement an effective and efficient process by 
which the adopted City budget may be amended. 
 
Throughout the course of the fiscal year, amendments to the budget are necessary 
to address new issues, increased prices, changes in scope of existing projects, and 
unforeseen issues affecting City operations. This policy applies to all cash and 
budget appropriation transfers initiated by the Mayor and City Council, the City 
Manager's Office, and/or departments. The City's Budget and Finance Department 
will process budget amendments in the financial management system, following 
appropriate authorization by the Mayor and City Council, the City Manager, and a 
Department Director. 
 
For non-departmental operations, it may be necessary to transfer certain 
unanticipated amounts during the course of a fiscal year for unforeseen 
expenditures. These contingency appropriation transfers are not specific to any 
particular department and are established each fiscal year to cover unforeseen 
operation expenses, revenue shortages, or capital project acceleration as approved

by Council. These funds can only be directed by Council during the fiscal year. 
Similar to contingency, the Council approves appropriations for Miscellaneous 
Grants which are not specific to any particular department and are established to 
cover unanticipated grants received during the fiscal year. The policy covering these 
types of transfers is covered in the Contingency & Miscellaneous Grant 
Appropriation Transfers section below. 
 
Article VI, Section 11 of the City Charter establishes the legal restriction for budget 
appropriation transfers and reads as follows:  
The city manager may at any time transfer any unencumbered appropriation 
balance or portion thereof between general classifications of expenditures within an 
office, department or agency. At the request of the city manager and within the last 
three months of the fiscal year, the council may by ordinance transfer any 
unencumbered appropriation balance or portion thereof from one office, 
department or agency to another. 
2. Policy 
Based on the purpose and restrictions surrounding cash and budget transfers, the 
following policy sets forth the restrictions surrounding cash and budgetary 
appropriation transfers. 
a. Cash Transfers - Cash transfers between funds can only be authorized by 
Council in the last three months of the fiscal year. 
 
b. Cash & Appropriation Transfers Between Funds - Cash and associated budget 
appropriation transfers between funds can only be authorized by Council in 
the last three months of the fiscal year. 
 
c. Appropriation Transfers 
 
i. Between Funds- Budget appropriation transfers between funds can only be 
authorized by Council approval in the last three months of the fiscal year. 
 
ii. Between Departments- Budget appropriation transfers between 
departments can only be authorized by Council approval in the last three 
months of the fiscal year. 
 
iii. Within the Same Fund, Within the Same Department- Budget appropriation 
transfers within the same fund and within the same department can be 
authorized by City Manager approval throughout the fiscal year.

iv. Between Capital/Improvement Projects 
 
(1) Between Departments - Capital improvement project budget 
appropriation transfers for projects managed between departments 
can be only authorized by Council approval in the last three months 
of the fiscal year. 
 
(2) Within Departments - Capital improvement project budget 
appropriation transfers within the same department, and the same 
fund, can be authorized by City Manager approval throughout the 
fiscal year. 
 
 
d. Restricted Fund Transfers - Cash and/or appropriation transfers into, and out 
of, restricted funds can only be authorized by Council approval. Only transfers 
within the intent of the restricted funds will be approved by Council. For 
restricted fund transfers, the Council shall be provided with  
i. justification that such transfers are consistent with restricted fund 
purposes,  
ii. assurance that the transfer has been legally reviewed by the City 
Attorney, and  
iii. assurance that the transfer meets the restrictions set out in this 
transfer policy. 
 
e. Contingency & Miscellaneous Grant Appropriation Transfers- These types of 
transfers are not specific to any particular department: 
i. Contingency- Contingency budget appropriation transfers can be 
authorized by Council throughout the fiscal year. 
ii. Miscellaneous Grants- Miscellaneous Grant appropriation transfers can 
be authorized by the City Manager throughout the fiscal year.

f. Approval of Expenditures in Excess of Budget Appropriations - There may be 
emergency situations where a transfer is required before it is possible to 
obtain formal Council approval. In such cases, the Budget and Finance 
Department will advise the City Manager of the emergency condition and 
request approval. Upon approval, the Budget and Finance Department will 
seek Council ratification at the first possible Council meeting. 
•Authorization Level - Council
Cash and/or Appropriation Transfers 
Between Funds
•Authorization Level - Council
Appropriation Transfers Between Funds/Same 
and/or Different Departments
•Authorization Level - Council
Appropriation Transfers Between Capital 
Improvement Projects/Different Departments
•Authorization Level - Council
Contingency Appropriation
•Authorization Level  - City Manager
Appropriation Transfers Between Same 
Fund/Same Department
•Authorization Level  - City Manager
Miscellaneous Grants
•Authorization Level  - City Manager
Appropriation Transfers Between Capital 
Improvement Projects/Same Department

EXPENDITURE CONTROL  
Management will ensure compliance with the City Council adopted budget.  
 
1. Expenditures will be controlled by an annual appropriated budget. Council will 
establish appropriations through the budget process. Council may transfer these 
appropriations as necessary through the budget amendment process as previously 
described.  
 
2. The purchasing system will provide commodities and services in a timely manner 
to avoid interruptions in the delivery of services. All purchases will be made in 
accordance with the procurement code, purchasing policies, guidelines and 
procedures and applicable state and federal laws. The city may join various 
cooperative purchasing agreements to obtain supplies, equipment and services at 
the best value.  
 
3. A system of internal controls and procedures using best practices will be 
maintained for the procurement and payment processes.  
 
4. The State of Arizona sets a limit on the expenditures of local jurisdictions. 
Compliance with these expenditure limitations is required. The city will submit an 
audited expenditure limitation report as defined by the Uniform Expenditure 
Reporting System (A.R.S. Section 41‐1279.07) along with audited financial 
statements to the State Auditor General within the required timeframe.  
 
CAPITAL ASSET AND DEBT MANAGEMENT  
 
Long term debt is used to finance capital projects with long useful lives. Financing 
capital projects with debt provides for an “intergenerational equity” because the 
actual users of the capital asset pay for its cost over time, rather than one group of 
users paying in advance for the costs of the asset.  
 
The city will not give or loan its credit in aid of, nor make any donation, grant, or 
payment of any public funds, by subsidy or otherwise, to any individual, association, 
or corporation, except where there is a clearly identified public purpose and the city 
either receives direct consideration substantially equal to its expenditure or provides 
direct assistance to those in need. Long-term debt will not be used to fund current 
operations or smaller projects that can be financed from current revenues or 
resources.  
 
1. A 10-year Capital Improvement Plan (CIP) will be updated annually as part of the 
budget process. It will include projected life cycle costing. Only the first year of the 
plan will be appropriated. The remainder will be projections to be addressed in 
subsequent years.

a. Life cycle costing is a method of calculating the total cost of a physical 
asset throughout its life. It is concerned with all costs of ownership and takes 
into account all of the costs incurred by an asset from its acquisition to its 
disposal, including design, installation, operating, and maintenance costs.  
 
2. The 10-year CIP will address capital needs in the following order:  
 
a. to improve existing assets;  
b. to replace existing assets;  
c. to construct new assets.  
 
3. All projects will be evaluated annually by a multi-departmental team regarding  
 
a. accuracy of the projected costs;  
b. consistency with the General Plan and Council policy goals;  
c. long-range master plans;  
d. ability to finance initial capital costs;  
e. ability to finance life cycle costs;  
f. ability to cover the associated additional ongoing operating costs.  
 
4. All projects funded with general obligation bonds will be undertaken only with 
voter approval as required through a bond election.  
 
a. General Obligation debt is supported by secondary property tax revenues. 
The secondary property tax revenues assessed are based upon the ability to 
finance the City’s debt service obligations and the rate is dependent upon the 
revenue requirements and the assessed valuation of taxable property. At a 
minimum, the general obligation debt service fund balance will be at least 
10% of the next fiscal year's property tax supported debt service.  
 
5. Non-voter approved debt supported by General Fund revenues such as Municipal 
Property Corporation (MPC) bonds, excise tax bonds, and lease obligations will be 
used only when a dedicated ongoing revenue source is identified to pay the 
associated debt service obligations. This type of debt service will not exceed 10% of 
the 5-year average of the General Fund’s operating revenue available to support the 
debt service obligations.  
 
a. For FY23-24, debt service is 19.9% of the General Fund operating revenue 
as defined above.  
 
6. For non-voter approved debt, the following considerations will be made prior to 
the pledging of projected revenues for the ongoing payment of associated ongoing 
debt service obligations:

a. The project requires ongoing revenue not available from other sources.  
b. Matching monies are available that may be lost if not applied for in a 
timely manner.  
c. Catastrophic conditions.  
 
7. Short-term borrowing or lease/purchase contracts should be considered for 
financing major operating capital equipment only when:  
 
a. The repayment term does not exceed the expected useful life of the 
equipment to be purchased;  
b. An ongoing revenue source is identified to pay the annual debt service; and  
c. The Budget and Finance Director, along with the city's financial advisors, 
determine that this is in the city's best financial interest.  
 
8. These policies are in addition to the policies incorporated in the Debt 
Management Plan.  
 
FUND RESERVES AND STRUCTURE  
 
Fund balance is an important indicator of the City’s financial position. Adequate 
fund balances are maintained to allow the City to continue to providing services to 
the community in case of economic downturns and/or unexpected emergencies or 
requirements. To ensure the continuance of sound financial management of public 
resources, committed, assigned, or unassigned General Fund, fund balance will be 
maintained to provide resources to address emergencies, sudden loss of revenue, or 
unexpected downturns in the economy. Use of fund balances will be limited to 
address unanticipated, non-recurring needs and planned future one-time or non-
recurring obligations. Unassigned balances may, however, be used to allow time to 
restructure operations and must be approved by the City Council.  
 
1. The minimum fund balance in the General Fund, which is defined as the 
unassigned amount, shall total 25% of the total annual ongoing revenues.  
a. Inclusive in the 25% General Fund unassigned fund balance, a Budget 
Stabilization Reserve will be maintained at 10% of the General Fund operating 
revenues to be used in the event of unexpected revenue shortfalls if needed, 
and to be adjusted at year end.  
b. Inclusive in the 25% General Fund unassigned fund balance, an Operating 
Reserve (established in FY14-15) for amounts over the General Fund Budget 
Stabilization Reserve and which will increase incrementally each year until it 
reaches at least 15% of the General Fund operating revenues by FY20-21, 
which is the ensuing five fiscal years. Any usage of this reserve must be 
approved by the majority of the City Council, and the City shall strive to 
replenish the Operating Reserve the following fiscal year. Examples of

potential usage would be to provide funding to deal with fluctuations in fiscal 
cycles and Council approved operating requirements.  
 
1. The minimum fund balance in the General Fund, which is defined as the 
unassigned amount, shall total 25% of the total budgeted ongoing expenditures for 
the upcoming fiscal year. Any usage of the unassigned fund balance category must 
be approved by a majority of the City Council. The unassigned fund balance should 
only be used in the event of unexpected revenue shortfalls, unforeseen 
circumstances, and emergencies. Any usage of this reserve should be replenished 
within the subsequent fiscal year if possible. The replenishment period may be 
extended, based on circumstances, for as long as five years.   
 
2. For the Water and Sewer Enterprise Fund; 
 
a. The target for fund balance will be 50% of operating expenses. 
 
b. The Senior Lien Debt Service Coverage Ratio target will be 1.85. 
 
c. The target for Days Cash on Hand will be 250 days.  
 
3. The minimum fund balance in the Solid Waste Enterprise Fund will be maintained 
at 10% of operating revenues. 
 
4. The minimum fund balance in the Landfill Enterprise Fund will be maintained at 
15% of operating revenues. 
 
5. For the other major governmental operating funds, the minimum unassigned fund 
balance shall be as follows: 
 
a. PSST 5% of operating revenue  
b. HURF 15% of operating revenue 
c. Others: 10% of operating revenue 
 
6. If a situation arises where fund balance at the end of the current fiscal year is less 
than the Council approved fund balance level, the deficiency should be 
replenished in the coming fiscal years, not to exceed a total of five consecutive 
years.  
 
7. The City Manager may establish additional assigned fund balance reserves for 
certain anticipated obligations or other purposes.  
 
8. Any balance in excess of the fund balance reserves may be used to support one-
time expenditures. Council approval is required to use these funds to supplement 
"pay as you go” capital outlay, one-time operating expenditures, or to prepay 
existing debt.

9. The fund balance for the various Trust Funds will be based on annual actuarial 
reports and the target funding level must be at the 75% confidence funding level.  
 
10. Separate fund balance operating reserves may be required by bond issuance 
documents for those funds with outstanding bonded debt. These requirements will 
not be viewed as additional fund balance needs unless they are greater than those 
established by these goals.