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RESOLUTION NO. R-1314-40: A RESOLUTION OF COUNCIL OF THE CITY OF NORMAN, OKLAHOMA APPROPRIATING $65,569 FROM THE SPECIAL GRANTS FUND BALANCE; $5,824 FROM THE ROOM TAX FUND BALANCE; $741,032 FROM THE RISK MANAGEMENT FUND BALANCE; $138,757 FROM THE DEBT SERVICE FUND BALANCE; AND $103,472 FROM THE GENERAL OBLIGATION FUND BALANCE TO CLOSE OUT YEAR END ACCOUNTING ENTRIES FOR FYE 2013.
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BACKGROUND: At the end of each fiscal year, the Finance Department posts all year-end accounting entries. In order to help with this process, some division’s categories of expenses require a transfer to cover any negative balances in line-item accounts. Oklahoma statutes require that each fund be balanced at the object category of expenditures, which include: salaries and benefits; materials and supplies; services and maintenance; and capital equipment. City of Norman policy requires the City Manager’s approval for transfers of funds between departments, from salary and benefit category accounts, and transfers from operating accounts to capital equipment accounts. The City Manager has already approved needed year-end transfers under his authority. In some cases, however, some expenses cannot be covered from available allocations within the same fund and require an appropriation of fund balance. Oklahoma Statutes require that all appropriations of fund balance be approved by the City Council (governing body).
DISCUSSION: At fiscal year-end (FYE) 2013 we have found several funds are lacking the needed funds within existing appropriations to cover expenses made during the year, for varying reasons. These include the Special Grants Fund, Room Tax Fund, Risk Management Fund, Debt Service Fund and General Obligation (GO) Bond Fund.
In the Special Grants Fund, an additional $65,569 needs to be appropriated due to the reimbursement of federal grant funds for the Compressed Natural Gas (CNG) Facility. When the original grant was approved, $750,000 was appropriated from the Capital Fund to cover payments until grant funds were received from the Department of Commerce. The grant funds were received into the Special Grants Fund and need to be appropriated and transferred to the Capital Fund to reimburse the payment made.
In the Room Tax Fund, an additional $1,250 is needed to cover a higher-than-expected payment for debt service on the outstanding loan for improvements to the Westwood Golf Course (the parks capital improvement portion of the Room Tax pays debt service for the golf course improvements). An additional $4,574 appropriation is needed to cover room tax administration cost allocation charges. Higher cost allocation charges can be a result of several events. The primary reason cost allocation charges are higher than budget is due to unbudgeted salary and benefit increases from increases granted after the budget year has begun and after union agreements are made. A total appropriation of $5,824 is requested from the Room Tax Fund.
The Risk Management Fund is an internal service fund that accounts for the resources used to provide for the self-insurance and administration of worker’s compensation and unemployment Insurance claims, and to pay premiums on “stop-loss” insurance coverage for employee health claims and City-owned building damage and other property losses. The Risk Management Fund is in need of an additional appropriation of $741,032 primarily due to worker’s compensation and health claim payment cost increases. Over time, these additional costs will be paid from higher “premium” payments made from employees and various departmental allocations for employee benefits.
The over-budget condition in the General Debt Service Fund primarily relates to an unbudgeted increase in GO Bond Interest payments and charges, as repayment on bonds for the 2012 street projects have begun. A total appropriation of $138,757 is requested in the General Debt Service Fund.
The General Obligation Bond Fund needs an appropriation of $103,472 for an inter-fund transfer to the General Debt Service Fund. This difference is between what was budgeted and what was actually received in taxes.
STAFF RECOMMENDATION: Staff recommends the following appropriations from each fund balance and transfers be approved:
$65,569 from Special Grants Fund Balance (account number 022-0000-253.20-00) to Capital Fund Inter-fund Transfer (account number 022-3094-491.80-50)
$1,250 from Room Tax Fund Balance (account number 023-0000-253.20-00) to Westwood Interfund Transfers (account number 023-3042-451.80-29) and $4,574 from Room Tax Fund Balance (account 023-0000-253.20-00) to Management Cost Allocation Charges for Room Tax Administration (account 023-3040-415.49-01
$741,032 from Risk Management Fund Balance (account number 043-0000-253.20-00) to Health Claim Payments (account number 043-3005-415.44-20)
$138,757 from General Debt Service Fund Balance (account number 060-0000-253.20-00) to Interest - GO Bonds (account number 060-3050-470.71-01)
$103,472 from General Obligation Bond Fund Balance (account number 064-0000-253.20-00) to Transfer to Debt Service Fund (account number 064-3054-491.80-60)