HomeMy WebLinkAboutResolution No. 2026-017R CITY OF CLERMONT
a_,,,e_- RESOLUTION NO_2026-017R
A RESOLUTION OF THE CITY OF CLERMONT, LAKE COUNTY,
FLORIDA, ADOPTING THE MAY 2026 FINANCE DEPARTMENT
COMPREHENSIVE BUDGET POLICY; PROVIDING FOR FINDINGS,
FUTURE AMENDMENT BY RESOLUTION, ADMINISTRATIVE
CORRECTION OF SCRIVENER'S ERRORS, PUBLICATION AND
EFFECTIVE DATE_
WHEREAS, Chapter 166, Florida Statutes, authorizes municipalities to adopt ordinances
and resolutions in the exercise of its municipal powers; and
WHEREAS, in May 2026, a Finance Department Comprehensive Budget Policy (the
"Budget Policy") was provided to, among other things, serve as a Framework for the short-term
and long-term financial planning ofthe City's resources and facilitate the maintenance and Funding
oFthe City's capital needs; and
WHEREAS,the Budget Policy complies with federal,state,and local laws and is essential
to ensure that current programs, services, and capital assets are sustainable; and
WHEREAS, the Budget Policy is a tool used to inform decision-makers of financial
implications associated with current and proposed policies, projects, and programs as well as to
guide decisions in alignment with the City's strategic goals_
NOW, THEREFORE, BE IT RESOLVED,BY THE CITY COUNCIL OF THE CITY OF
CLERMONT,FLORIDA,as follows:
SECTION 1: FINDINGS
The above-stated WHEREAS clauses are hereby adopted by the City Council as findings in
support of the provisions herein.
SECTION 2: ADOPTION OF THE FINANCE DEPARTMENT COMPREHENSIVE
BUDGET POLICY
The City of Clermont hereby adopts the Budget Policy attached to this Resolution, and it is the
intention of the City Council that this Policy will be utilized by the City Manager to manage the
budgets as described therein_
SECTION 3: CONFLICT
All resolutions or parts of resolutions in conflict with any of the provisions of this Resolution are
hereby repealed.
S-
CLER' N, CITY OF CLERMONT
:: RESOLUTION NO.2026-017R
SECTION 4: SEVERABILITY
If any portion of this Resolution is declared invalid,the invalidated portion shall be severed from
the remainder of the Resolution, and the remainder of the Resolution shall continue in full force
and effect as if enacted without the invalidated portion, except in cases where such continued
validity of the remainder would clearly and without doubt contradict or frustrate the intent of the
Resolution as a whole.
SECTION 5: ADMINISTRATIVE CORRECTION
This Resolution may be re-numbered or re-lettered, and/or corrected for typographical and/or
scrivener's errors which do not affect the intent of said resolution, as authorized by the City
Manager or designee,without need of public hearing, by filing a corrected copy of same with the
City Clerk.
SECTION 6: EFFECTIVE DATE
This Resolution shall take effect immediately upon its adoption.
(
CITY OF CLERMONT
C� RESOLUTION NO. 2026-017R
NOW, THEREFORE BE IT RESOLVED, that the above said resolution of the City
Council of the City of Clermont, Lake County,Florida be adopted on this 9th day of June 2026.
CITY OF CLERMONT
Tim Murry, Mayor
ATTEST:
Tracy Ackroy Howe, MMC
City Clerk
Approved as to form anji legality
j�iMW. gh, City Attorney
1
CDER ONT
Choice of Champions
Finance Department
Comprehensive Budget Policy
May 2026
Table of Contents
Overviewof Budget Policies..........................................................................................................................5
BudgetAdministration Policy.........................................................................................................................6
Scope& Principles..................................................................................................................................6
Rolesand Responsibilities:.....................................................................................................................6
Preparation&Adoption:.........................................................................................................................7
BudgetaryControl...................................................................................................................................8
Monitoring& Reporting....................................................................................................................... l 1
Capital Improvement Planning(CIP)Policy.................................................................................................. 12
Purposeof the CIP................................................................................................................................ 12
CapitalPlan Development: ................................................................................................................... 12
Capital Improvement Funding: ............................................................................................................. 13
Multi-Year Capital Projects.................................................................................................................. 13
Capital Improvement Plan Amendments.............................................................................................. 13
UserFee&Charges Policy........................................................................................................................... 14
Purpose.................................................................................................................................................. 14
ConsiderationFactors............................................................................................................................ 14
Process of Establishing New Fees and Charges.................................................................................... 14
DebtManagement Policy.............................................................................................................................. 15
Overview............................................................................................................................................... 15
Purposesfor Debt Issuance................................................................................................................... 15
DebtService Structure.......................................................................................................................... 15
DebtLimitations................................................................................................................................... 15
Professional Services........................................................................................................................... 16
Investment of Debt Proceeds............................................................................................................... 16
DisclosureRequirements..................................................................................................................... 16
Policy Implementation and Amendments............................................................................................. 16
Fund Balance Reserve Policy....................................................................................................................... 17
Background........................................................................................................................................... 17
Purpose.................................................................................................................................................. 17
Fund Balance Definitions...................................................................................................................... 17
Reserve Requirements........................................................................................................................... 18
SpendingOrder of Fund Balances........................................................................................................ 18
Replenishment of Reserve Deficits....................................................................................................... 18
AnnualReview...................................................................................................................................... 18
Glossaryof Key Terms................................................................................................................................. 19
Exhibit A—Department Matrix....................................................................................................................22
Overview of Budget Policies
Budget Administration Policy
This Policy is intended to require that systematic procedures be used in the development,review,adoption,
monitoring,and revision of the City's annual budget,and to set forth the general nature of those procedures.The
City Manager shall establish,maintain and revise such detailed procedures as appropriate.It is intended to
provide flexibility,establish adequate controls through budget monitoring and periodic reporting,and ensure
that the overall distribution of resources achieves the results contemplated by the City Council.
Capital Improvement Planning Policy
The purpose of General Government's Capital Improvement Planning Policy is to:
• Facilitate the timely construction,replacement and maintenance of City-owned capital assets and
provide a framework for developing,maintaining and funding the capital needs of General
Government.
• Inform the public regarding future needs and the timing of City projects.
• Enhance the City's credit rating by anticipating needs,thus avoiding the adverse fiscal impact of
unforeseen emergencies and maximizing the potential use of intergovernmental funding.
• Ensure General Government's future service delivery by developing a pay-as-you-go funding basis
for asset replacement and maintenance;after the initial funding phase of 30 years or less,the
funding for all asset replacements and maintenance is on hand and available as needed.
User Fee Policy
The purpose of a User Fees and Charges policy is to provide guidance and incorporate best practices in
establishing fees and charges that adequately recover costs incurred for services rendered to individuals
directly benefiting from the services.
Debt Management Policy
The Debt Management Policy establishes parameters for issuing debt and managing a debt portfolio that
encompass existing legal,economic,financial and capital market conditions,the City's capital improvement
needs,and its ability to repay financial obligations as they become due.The policy:
• Guides the City in policy and debt issuance decisions.
• Assists the City in maintenance,acquisition and replacement of appropriate capital assets for present
and future needs.
• Promotes sound financial management.
• Enhances the City's credit rating.
Fund Balance Policy
It is essential that governments maintain adequate levels of fund balance to mitigate current and future risks
(e.g.,revenue shortfalls and unanticipated expenditures)and to ensure stable tax rates.While the primary
focus is on the General Fund,financial resources available in other funds should also be considered in
assessing the adequacy of unrestricted fund balance in the general fund.
Comprehensive Budget Policy 5
Budget Administration Policy
Scope&Principles
The budget is the primary financial planning tool for the City.It is used to set forth the City's estimates of
resources available to fund services and to specify the way in which those resources will be applied.Unless
otherwise noted,the Budget Policy shall apply to all funds of the City which are accounted for in the City's
Annual Comprehensive Financial Report(ACFR).
The City's annual budget is prepared for the fiscal year beginning October Is'and ending September 301 of
the following year. The operating budget represents the financial plan for the City and serves as a policy
document for the distribution of City resources in alignment with the long-term vision, mission, and goals
of the City.
The four uses of a budget document are: Policy Document, Financial Plan, Operations Guide, and
Communications Device. More specifically:
■ As a Policy Document, the budget document must, at minimum, provide a coherent
statement of the organization-wide strategic goals and strategies to address short and long-
term concerns.
■ As a Financial Plan,the budget document must,at minimum,include a summary of major
revenues and expenditures; financing sources and uses; and explain the long-range
financial plans and their impact upon the budget.
• As an Operations Guide,the budget document must,at minimum,include an organization-
wide chart; schedule or table summary of personnel or position counts(prior,current,and
budgeted year); describe activities, services, or functions carried out by organizational
units;and include goals and objectives of the organizational units.
■ As a Communications Device, the budget document must, at minimum, include a
comprehensive table of contents and provide an overview of significant budgetary issues.
Like any plan,the budget must be carefully monitored as the year progresses so that material variances
are identified and corrective action taken. Further, since no plan will prove to be an absolutely accurate
prediction of future events, management must have sufficient flexibility to make adjustments during the
year that do not materially alter the general intent of the City Council when adopting the budget.
This Policy is intended to provide flexibility,to establish adequate controls through budget monitoring and
periodic reporting, and to ensure that the overall distribution of resources achieves the results
contemplated by the City Council.
Roles and Responsibilities
Citizens of Clermont Participate in public budget workshops and formal public hearings
to voice support or concerns regarding budget proposals including
spending on capital projects, operational programs, and revenue
proposals
City Council The City Council establishes policies regarding service levels and
priorities that provide guidance to management in preparing the
recommended budget. Through its legislative authority to approve and
adopt the budget,the City Council ensures that the budget reflects those
policies. It also reviews budget compliance and approves budget
amendments throughout the fiscal year.
Comprehensive Budget Policy 6
City Manager The City Manager is responsible for proposing to the City Council a
balanced budget that is consistent with established service level
priorities and sound business practices,and for establishing a system
for the preparation, execution, and control of the budget that
provides reasonable assurance that the intent of this policy is met.
City Attorney The City Attorney is responsible for preparing the budget resolution
or ordinance in a form consistent with all legal requirements.
City Clerk The City Clerk is responsible for maintaining records of all City
Council proceedings relating to the budget, including all documents
filed as part of those proceedings.
Finance Department Responsible for the development, monitoring, and administration of
the city's annual operating budget and Capital Improvement
Program.
Directors&City Staff Department Directors and staff are responsible for adhering to the
policies and procedures outlined in the Budget Administration
Policy. See "Exhibit A —Department Matrix" for the responsibility
hierarchy of departments and organizational units(divisions).
Preparation&Adoption:
This Policy is intended to require that systematic procedures be used in the development, review,
adoption, monitoring, and revision of the budget, and to set forth the general nature of those procedures.
The City Manager shall establish,maintain and revise such detailed procedures as appropriate.
Budget Calendar
A budget calendar shall be provided to the City Council each year at the beginning of the budget process.
The calendar shall set forth,at a minimum,dates for the following:
• Review,discussion,and adoption of service level priorities by the City Council
• Presentation of the City Manager's proposed budget to the City Council
• Actions of the City Council as required by law
Basis of Budgeting
Budgets are adopted for the general fund,special revenue funds,debt service funds on a basis
consistent with generally accepted accounting principles except is it relates to the use of prior year's fund
balances. This is represented by unappropriated liquid assets remaining in the fund as budgeted revenue in
the succeeding year. The results of operations on a GAAP basis do not recognize the fund balance
allocation as revenue as it represents prior periods' excess of revenues over expenditures.
Form and Content of the City Manger's Recommended Budget
The budget is a communication document intended to describe activities,services,and functions carried out
through departmental goals and objectives and continuation of performance indicators. The document
includes departmental business plans and organizational layouts for the City in support of the policy and
goals established by the City Council.
Comprehensive Budget Policy 7
The City Manager's proposed budget shall be presented in a form which is sufficient to allow the City
Council to review:
• Projected revenues by major category within and across all funds
• Operating expenditures and disbursements by fund,department and program/project
• Staffing levels,with a summary of all personnel changes(new positions,reclassifications,
etc.)with assigned job titles
• Capital improvement expenditures by project
Comparisons of the preceding year's actual experience and current year's projected experience shall be
provided for each category of revenue and expenditure shown in the budget. The Proposed and
Adopted Financial and Operating Plan shall include a description of the service levels to be provided,
a statement of changes to the service levels as compared to the current year,and accompanying
departmental performance measures under the proposed budget.
Adoption of the Budget
The budget shall be prepared on an annual basis and adopted by the City Council at the fund and
department level. The budget will be adopted to meet form and schedule as required by Florida
Statutes. In accordance with Florida Statutes 166.241(2),the City must adopt a balanced budget each
year.
Balanced Budget Definition
The City shall adhere to the Government Finance Officers Association (GFOA) Best Practice
definition of a structurally balanced budget. A true structurally balanced budget is one that supports
financial sustainability for multiple years into the future. GFOA recommends that governments
maintain structural balance where recurring revenues are greater than or equal to recurring
expenditures in the adopted budget.
More specifically:
■ It is appropriate to use excess unassigned fund balance for one-time expenditures. However,
as part of the City's pursuit for a structurally balanced budget,fund balance shall not be used as
a long-term approach to balancing the budget. Any use of fund balance which would result in
a remaining fund balance less than the City's established minimum reserve must comply with
the requirements of the City's Fund Balance Policy.
■ New programs shall not be budgeted or implemented until the full annual cost and the
financial impact can be reasonably projected. New or expanded service appropriations should
be implemented simultaneously with an associated off-setting new revenue source,an existing
revenue source increase and/or other expenditure reduction.
• The tax rate shall be adequate to produce sufficient revenues to cover City services approved
by the City Council.
This definition excludes non-operating funds like capital, debt funds, and in certain circumstances
special revenue funds.
Budgetary Control
Budgetary control is maintained at the fund and department level. The department level of control is the
highest level in which management may reassign resources without City Council approval.Additionally,
expenditures shall not exceed budget appropriations at the department level.Budget accountability rests
primarily with the operating departments of the City,with oversight by the Finance Department.
Comprehensive Budget Policy 8
Account Structure Definition
The following table defines the structure of the city's chart of accounts as it relates to general
financial management,including budget amendments and transfers.
Expenditure Example: 10521-12120-99012
Fund Department or Object Code Project Code
Organizational Unit
10 521 12120 99012
General Fund Police Department Overtime Hurricane Milton
Revenue Example: 10314-31410
Fund Organizational Code Object Code -
10 314 31410 -
General Fund Utility Service Tax Electricity -
Project Code Requirements
Project codes are created by the Finance Department in order to organize budgets,expenses,and revenues
connected to a specific location,operation,construction project,or grant. In addition to helping to organize
the city account structure,project codes also serve to distinctly identify federal grant funds so that they are
not intermingled with regular funds,as required by Federal Uniform Guidance(2 CFR 200). Project codes
are required for all grants and can be created for other purposes as requested by other departments.
Operating Budget Carry-Forward
Operating budgets do not typically carry forward from one fiscal year to the next unless it meets the
following criteria:
■ The expenditure is non-recurring(one-time)and not budgeted in the subsequent fiscal year;
■ A Purchase Order(P.O.)has been created to encumber the funds in the prior fiscal year.
■ Under no circumstances can the operating budget carry forward for more than one-year.
Departments and Offices wishing to carry forward operating budgets(based on the criteria above)must
submit a memo to the Budget Manager explaining the reason for the carry-forward,the account number(s),
and relevant Purchase Order number(s). Departments and Offices may not carry-forward non-discretionary
accounts(such as personnel services accounts, liabilities,internal service fund accounts).
Automatic Adjustments and Reappropriations
All appropriations that have not been expended,encumbered,or appropriated to ongoing capital
improvement projects shall lapse at the end of the fiscal year.
■ The Fiscal Year Budget shall include the re-appropriation and re-authorization of
encumbrances,contracts and capital allocations and other commitments of balances
identified and outstanding,reserved or accrued in the previous fiscal year.The City Manager
is authorized to carry out the re-appropriation of encumbrances contracts,capital allocations
and other commitments of balances identified and outstanding,reserved or accrued as of
September 30 into the subsequent fiscal year.
■ Unfinished multiple year capital projects—the new fiscal year budget will include multiple
year capital project budgets.
■ Re-appropriations will be identified and reported to the City Council during the first quarter
of the subsequent year in the form of a budget amendment.
Comprehensive Budget Policy 9
Grant Budget Carry-Forward
Grant appropriations, unlike operating budget appropriations, may take multiple fiscal years to spend
down. To avoid negatively affecting the progress of grant activities, the City Manager shall have the
authority (per the annual budget adoption resolution) to administratively rollover up to 100% of the
available balances of grant funds from one fiscal year to the next fiscal year. Exceptions may apply to
grants expected to be completed or closed by the prior fiscal year-end and grants that have no known
pending payments to be made in the prior fiscal year.
At the end of the fiscal year,prior to the execution of the rollover,City Departments/Offices shall review a
list of their respective grants. The departments shall provide the Finance Department with the status of the
grant and amounts requested to rollover (which cannot exceed the available funds of the grant). Re-
appropriations will be identified and reported to the City Council during the first quarter of the subsequent
year in the form of a budget amendment.
Administrative Budget Transfers
Administrative budget transfers include transfers from one line item to another within a department's
operating budget, within a capital project, or changes between divisions (organizations) within a
department. More specifically:
■ Budget transfer requests of$50,000 or less require approval by the department head and
authorization by the Budget Manager;and
• Budget transfers between$50,000 and$100,000 require the previously stated approvers as
well as the Finance Director and City Manager (or designee) approval. The transfers,
must be made within the same organizational unit(department)within a distinct fund.
■ Budget transfers that result from the assignment of a capital project code due to a City-Council
approved capital project/purchase.
■ Where the budget transfer is the result of the creation of accounts and transfer of funds
necessitated by the creation or amendment of a division within a department, or the
creation or amendment of a special office within the Office of the City Manager,the City
Manager (or City Manager's Designee) may approve the budget transfer without City
Council action. All administrative budget transfers shall be documented and tracked in
the City's financial management system.
Budget Amendments by the City Council
The annual budget is the primary short-term financial planning tool for the City. It is used to set forth the
City's estimates of resources available to fund services and to specify the way in which to use those resources.
Like any plan,the budget requires careful monitoring as the year progresses,so that material variances are
identified and action taken to correct them.Further,since no plan will prove to be an absolutely accurate
reflection of future events,management must have sufficient flexibility to make adjustments during the year
which does not materially alter the general intent of the City Council when adopting the budget.
Budget amendments requiring City Council approval are those amendments which result in a change to the
total appropriations of a department or fund and/or exceed the City Manager's approval threshold. The
following amendments require City Council approval
■ The acceptance and appropriation of a grant award;
■ Un-budgeted transfers over$100,000;
■ The appropriation of additional funding if expenditures are projected to exceed budgeted
amounts;
Comprehensive Budget Policy 10
■ Any budget transfers and adjustments within a sixty(60)day period following the close of
the fiscal year,per Florida Statute 166.241;
■ Adjustments to reflect unanticipated revenues or receipts;and
■ Transfers of appropriation from one department or fund to another.
Monitoring& Reporting
The City Manager or designee shall provide a quarterly monitoring report to the City Council.With the
report, the City Manager shall provide recommendations to the City Council regarding any action that
should be taken by the City Council to amend the budget or address issues identified in the monitoring
report.
Comprehensive Budget Policy 11
Capital Improvement Plannin:- (CIP) Policy
The City shall develop a 5-year capital improvement plan during each budget cycle.
Purpose of the CIP
The purpose of the Capital Improvement Planning Policy is to:
■ Facilitate the timely construction,replacement and maintenance of City-owned capital
assets and provide a framework for developing,maintaining and funding the capital needs
of General Government.
■ Inform the public regarding future needs and the timing of City projects.
■ Enhance the City's credit rating by anticipating needs,thus avoiding the adverse fiscal
impact of unforeseen emergencies and maximizing the potential use of intergovernmental
funding.
■ Ensure General Government's future service delivery by developing a pay-as-you-go
funding basis for asset replacement and maintenance;after the initial funding phase of 30
years or less,the funding for all asset replacements and maintenance is on hand and
available as needed.
Each year, as part of the annual budget development process, the City shall adopt a Five-Year Capital
Improvement Plan (CIP). Only the projects and purchases included in the first year of the CIP shall be
appropriated in the budget as adopted by the City Council. Projects and purchases presented in subsequent
years are shown for planning purposes as a statement of intent, and do not have approved appropriations.
The CIP is necessary to provide adequate consideration of the City's short-term and long-term needs and
strategic goals, as well as to evaluate the options and timing availability of funds to address those needs.
The CIP includes major construction, expansion, purchase, or major repair of buildings, utility systems,
City roadways, and other physical structures of equal to or higher than the City's Capitalization Policy.
The CIP also includes funding consideration for major fleet and equipment replacement needs.
Capital Plan Development
Annually the Department Directors shall review a list of existing capital projects to re-estimate the costs of
active projects and capital purchases, determine if reallocation or additional funds are necessary, and
identify new projects and capital purchases needed to achieve the City's strategic goals. Directors shall
provide the City Manager recommendations based on the following criteria:
■ The Project/purchase is mandated to meet federal or state laws,consent decree,regulatory
requirements,and/or court ruling;
■ The impact on health,security,and safety of the public and/or employees;
■ The risk of infrastructure failure and/or degradation of service;
■ The extent to which the project aligns with the City's strategic goals;
■ The cost of the project,asset life cycle,ongoing operating costs associated with the project,
and potential revenue impact(such as increases to charges,fees,and taxes);
■ The resources available to fund the project;
■ The sustainability of project including the impact of long-term environmental threats;and
■ The extent to which the project will improve the quality of life for residents.
Once approved by the City Manager,the Five-Year Capital Improvement Plan will be presented to the City
Council for approval and adoption as part of the annual budget adoption process.
Comprehensive Budget Policy 12
Capital Improvement Funding
Funding the Capital Improvement plan shall be accomplished with a wide range of resources. These may
include current revenues, fund balance reserves, and debt financing. Examples of current revenues include
grants or special revenues such as impact fees.As a general rule, funding for capital projects shall be in the
order of most restrictive to least restrictive. For each individual project,the Finance Director shall consider
all available sources and utilize the most-restricted source first.
The City will maintain a"Capital Projects & Expenditures Fund" for governmental capital activities. The
primary funding source shall be an interfund transfer from the General Fund, based upon the results of the
previous fiscal year annual audit. Upon the conclusion of the audit, the Finance Director shall prepare a
status report of all Fund Balances in comparison to the requirements of the Fund Balance Policy. In the
event the Unassigned Fund Balance in the General Fund exceeds the amount required by the policy, the
Budget Manager shall — in accordance with the Fund Balance Reserve Policy - prepare an interfund
transfer via budget amendment to support capital plan funding.
Multi-Year Capital Projects
Capital project appropriations, unlike operating budget appropriations, are typically one-time in nature and
the projects may take multiple fiscal years to complete and use the appropriations. The timing of the carry-
forward (also known as rollovers) is critical as it may impede the departments' ability to complete the
project and/or pay vendors in a timely manner. To avoid negatively affecting the progress of capital projects,
the City Manager shall have the authority (per the annual budget adoption resolution) to administratively
rollover the available balances of City Council approved capital project funds from one fiscal year to the
next fiscal year. Re-appropriations will be identified and reported to the City Council during the first
quarter of the subsequent year in the form of a budget amendment, in accordance with the Budget
Administration Policy.
Capital Improvement Plan Amendments
Budgetary control of capital projects shall be in accordance with the budgetary control section of the
Budget Administration Policy.
Comprehensive Budget Policy 13
User Fee & Charges Policy
Purpose
The purpose of a User Fees and Charges policy is to provide guidance and incorporate best practices in
establishing fees and charges that adequately recover costs incurred for services rendered to individuals
directly benefiting from the services. As a general policy, the City may collect up to 100%of the full cost
of providing the services or subsidize the cost using the City's funds. User fees and charges shall not
exceed the full cost of providing the service. Unless otherwise stated in a City ordinance or resolution,user
fees and charges shall be assessed periodically as part of the budget development process. Revisions to
user fees and charges shall be captured in the City's Comprehensive Schedule of Fees.
Consideration Factors
The following factors shall be taken into consideration when establishing user fees and charges:
■ Does the service benefit the community,individuals,or groups receiving the service?
■ What is the full cost of providing the service? This shall include: direct labor, fringe,
equipment, materials, contractual services, utilities, cost allocation costs, internal service
charges,and other City-wide indirect cost rates.
■ Will the fee or charge pose a hardship on specific users?
• Do any other municipalities in the region charge the same or similar fees or charges?If so,how
do the proposed fees or charges compare in rates?
• Will the establishment of the fee or charge for service create undue demands on City
resources?
■ What was the last increase or decrease to the fee or charge?
■ Is this fee or charge currently charged by another City Department or Office?
■ Are there laws that regulate the proposed fee or charge?
Process of Establishing New Fees and Charges
Departments wishing to create a new fee or charge for service shall assess the feasibility of the fee or charge
based on the Consideration Factors listed above. Creation on a new fee or adjustment to an existing fee
requires the approval of the City Council.
All fees shall be reviewed during the annual budget process,and recommended changes shall be included in
the proposed budget. If approved by the City Manager,the Finance Department shall work in coordination
with City Departments to update the Comprehensive Schedule of Fees resolution to include the new fees
and/or charges. The Finance Department shall create new accounts for the approved fees and/or charges in
consideration of the Uniformed Accounting System Manual as published by the Florida Department of
Financial Services.
There may be occasions when the Finance Department may decide not to include a budgeted revenue
estimate for the new fees and charges until a full year of revenue has been collected. A full year of revenue
collections will provide staff with a baseline of actuals that may be used to determine the subsequent fiscal
year's budget.
Comprehensive Budget Policy 14
Debt Management Policy
Overview
This debt management policy is adopted to assist the government in meeting its goals and objectives by
contributing to the ongoing financial health and stability of the City of Clermont.It facilitates access to the
debt markets to meet both scheduled and unscheduled needs,assists the organization in controlling the types
and levels of outstanding obligations,and provides a framework within which each potential issuance can be
evaluated.
The Debt Management Policy establishes parameters for issuing debt and managing a debt portfolio
that encompass existing legal, economic, financial and capital market conditions, the City's capital
improvement needs,and its ability to repay financial obligations as they become due.
The policy:
• Guides the City in policy and debt issuance decisions.
• Assists the City in maintenance,acquisition and replacement of appropriate capital assets
for present and future needs.
• Promotes sound financial management.
• Enhances the City's credit rating.
Purposes for Debt Issuance
The City may issue debt for the purposes of-
Constructing or acquiring capital improvements
• Making major renovations to existing capital improvements as defined in the City's Capital
Improvement Plan
• Acquiring Land
• Refunding outstanding debt when feasible and desirable
• Generating a net economic benefit for the City.
Projects included in the Capital Improvements Plan during the annual budget process incorporate the
priorities and needs identified in the City's Comprehensive Plan. To the extent practicable,debt will not be
authorized by the City Council for the purpose of funding capital projects unless those projects are included
in the Capital Improvement Plan.
Debt Service Structure
Debt will be structured to achieve the lowest possible net cost to the City given market conditions and the
urgency of the capital project.Generally,debt repayments shall be structured to achieve relatively level debt
service.To the extent possible,the repayment schedule should permit rapid recapture of the City's credit
capacity for future use.Absent a compelling economic or policy reason to the contrary,the City will
structure its payment streams to repay 50 percent of its outstanding principal within 10 years.
Debt Limitations
Absent a compelling economic or policy reason to the contrary,the City's total outstanding debt service
(principal and interest)will not exceed the lesser of the following:
• 10%of the City's taxable property value,or
• $3,000 in per capita total outstanding debt service,or
• Per capita debt(principal only)will not exceed 6%of per capital income.
These restrictions will be tested prior to any new debt issuance and will be based on the most recent annual
audit.Any deviation from the criteria for compelling reasons will be fully documented.
Comprehensive Budget Policy 15
Professional Services
The City shall retain external professional services as necessary for debt issuances,including but not limited
to the following areas:
Financial Advisor
The City shall retain an external financial advisor to assist in the process of debt issuance,administration
and analysis.The advisor will be selected through a competitive process and serves under a multi-year
contractual agreement.Evaluation factors for selection of the financial advisor include knowledge and
experience in structuring and analyzing complex debt issues,experience in providing services to municipal
issuers,and experience and qualifications of assigned personnel.
Services provided to the City by the financial advisor shall include but are not limited to the following:
• Evaluation of proposals submitted to the City by investment banking firms
• Monitoring of marketing opportunities
• Structuring,pricing,and timing of issues
• Preparation of requests for proposals for other financial services(e.g., paying agent and registrar,
printing,credit facilities)
• Advice,assistance and preparation for presentations with rating agencies
Bond Counsel
The City shall retain external bond counsel through a multi-year contractual agreement for all City-
issued debt. Bond counsel provides necessary legal services to the City in negotiation and preparation
of required documents connected with the issuance of debt. All debt issued by the City includes a
written opinion by the City's bond counsel concerning the validity and binding nature of the
agreements as well as the determination of the debt's federal income tax status. Selection criteria will
include extensive experience in public finance issues.
Investment of Debt Proceeds
Debt proceeds are invested in permitted investments, as defined in financing agreements, escrow
agreements,resolutions, and the City's written investment policy. The City will not invest any proceeds
in a manner that would cause the City's bonds to be deemed private activity bonds or arbitrage bonds.
The City will comply with all federal tax arbitrage regulations and remit any required payments on a
timely basis.
Disclosure Requirements
The City complies with all requirements of related federal and state securities laws,rules and regulations,
including Securities and Exchange Commission Rule 15c 2-12. To this end,the City will provide full and
fair disclosure in connection with the initial sale and distribution of its publicly marketed debt instruments
as well as ongoing secondary market information.
Policy Implementation and Amendments
This debt management policy has been adopted by the Clermont City Council. Any amendments to this
policy must be similarly approved by the City Council. The Finance Director,as designated by the City
Manager, is responsible for implementing the policies set forth in this document and for maintaining
proper oversight to ensure compliance with this debt management policy.
Comprehensive Budget Policy 16
Fund Balance Reserve Policy
Background
Governmental Accounting Standards Board(GASB)Statement#54(Fund Balance Reporting and
Governmental Fund type Definitions)governs how funds are presented and classified within financial
statements. The Government Finance Officers Association(GFOA)recommends that governments establish
a formal policy on the level of unrestricted fund balance in the General Fund that should be maintained.
Purpose
This policy provides for a stable financial environment that allows the City to provide quality services in a
fiscally responsible manner.This policy is adopted to ensure the City maintains adequate fund balance and
reserves to provide the capacity to:
1. The purpose of the Reserves Policy is to provide sufficient cash flow for daily financial needs
2. Secure and maintain investment grade bond ratings.
3. Offset significant economic downturns and revenue shortfalls.
4. Provide funds for unforeseen expenditures related to emergencies.
Furthermore,the policy articulates a framework and process for how the city shall increase or decrease the
level of unrestricted fund balance over a specific time period,as well as provide guidance in the policy for
how resources will be directed to replenish fund balance should the balance fall below the level determined.
Fund Balance Definitions
In general,fund balance is the difference between revenues and expenditures.The difference between assets
and liabilities can also be considered in the reported governmental funds.GASB#54 establishes fund
balance classifications that comprise a hierarchy based primarily on the extent to which a government is
bound to observe constraints imposed upon the use of resources reported in governmental funds.
The City shall maintain reservations of Fund Balance specified as the following classifications:
Non-Spendable Fund Balance—amounts that cannot be spent because they are either(a)not in
spendable form (inventory or long-term receivables)or(b)amounts legally or contractually
required to be maintained intact.
Restricted Fund Balance—amounts restricted when constraints are placed on the use of reserves
due to: (a)amounts that can be spent only for specific purposes as stipulated by external resource
providers such as creditors, granters, contributors, or(b)by law through constitutional provisions or
enabling legislature.
Committed Fund Balance—amounts that can only be used for specific purposes pursuant to
constraints imposed by formal action(resolution or ordinance)of the City Council,the City's
highest level of decision-making authority. Committed amounts cannot be used for any other
purpose unless the City Council removes or changes the specified use by taking the same type of
formal action(resolution or ordinance)it employed to commit those amounts.
Assigned Fund Balance—amounts in the assigned fund balance classification are intended to be
used by the City for specific purposes but do not meet the criteria to be classified as committed.
The Council is the only body that may assign fund balance. The Council may also assign fund
balance as it does when appropriating fund balance to cover a gap between estimated revenue and
appropriations in the subsequent year's budget. Unlike commitments,assignments generally only
Comprehensive Budget Policy 17
exist temporarily. In other words,additional action does not normally have to be taken for the
removal of an assignment.
Unassigned Fund Balance—the residual classification for the General Fund, available for any legal
purpose.
Reserve Requirements
General Fund
The City shall maintain an Unrestricted Fund Balance of 25%of the General Fund's annual total
expenditures(less capital outlay).The most recently completed annual audit(Statement of Revenues,
Expenditures,and Changes in Fund Balances)shall be the source of calculation for the next budget cycle.
Unassigned Fund Balance that exceeds the 25%requirement may be transferred to the Capital Projects&
Expenditures Fund as recommended by the City Manager and approved by the City Council during the
annual budget process.
Enterprise Funds
The City shall maintain unrestricted net assets equal to 90 days of actual operating expenses of the prior
fiscal year.This reserve is needed to cover short-term cash flow variations,economic downturns,and
emergencies.
The City shall establish committed or assigned reserve amounts identified as Capital Replacement Reserves
in order to set aside funds for future major capital projects. The amounts shall be set by the City Council
through the annual budget adoption process.
Other Funds
All other funds,including Special Revenue Funds and Capital Project Funds,do not have a fund balance
requirement.Fund balances in these funds are dictated by revenue sources and a schedule of capital projects.
The amount of any reservation of Fund Balance shall be governed by the legal authority underlying the
creation of the individual funds.
Spending Order of Fund Balances
The City uses restricted amounts to be spent first when both restricted(Non-Spendable Fund Balance and
Restricted Fund Balance)and unrestricted fund balances(Committed Fund Balance,Assigned Fund Balance
and Unassigned Fund Balance)are available unless there are legal documents/contracts that prohibit doing
this, such as grant agreements requiring dollar for dollar spending.
Replenishment of Reserve Deficits
If, at the end of any fiscal year,the actual amount of Unassigned Fund Balance falls below the
targeted levels set forth herein, a plan shall be established to achieve the target by adding
designated amounts to the budget to cover the deficiency over a period not to exceed three (3)fiscal
years.
Annual Review
Compliance with the provisions of this Policy shall be reviewed as part of the annual budget adoption
g
Process.Minimum reserve targets may also be reviewed during th e budget process.In any Year,the City
Council may deviate from the targeted amounts established herein based on unusual or unforeseen
circumstances.
Comprehensive Budget Policy 18
Glossary of Key Terms
Accrual: An accrual is an accounting entry recognizing revenues or expenses that have been incurred but
not yet received or spent. Please see Modified Accrual Basis of Accounting.
Annual Budget: A budget applicable to a single fiscal year.
Appropriation: A legal authorization granted by a legislative body (e.g., the City Council) to incur
obligations and make expenditures for specific purposes.
Balanced Budget: A balanced budget(particularly that of a government)is a budget with revenues equal
to expenditures,and neither a budget deficit nor a budget surplus.
Bond Issue: A borrowing based upon certificates of debt containing a promise to pay a specified sum of
money (face value or principal) at a specified date or dates in the future (maturity date) together with
periodic interest at a specific rate.
Budget: A fiscal plan of operation. The budget is comprised of proposed expenditures and proposed
revenues together with specific authorizations and restrictions as appropriate. It also includes the current
and prior fiscal period history. The budget quantifies executive and legislative objectives and provides a
means to measure performance. As a guide for operations, the budget changes over time in response to
changes in conditions.The budget embodies public policy and provides insight into how that policy will be
implemented. It serves as a policy document,a financial plan, an operations guide, and a communications
device to the City's various stakeholders.
Budget Amendment: Changes to the Adopted Budget.
Capital Budget: The first year of the capital improvement plan which includes capital project
appropriations and the revenues required to support the projects.
Capital Improvement Plan: All capital expenditures are planned for the next five years. The program
specifies both proposed projects and the resources estimated to be available to fund projected expenditures.
Charges: These refer to a revenue source for a program that is attributable to a particular service provided.
An example would be revenue for the water and sewer fund based upon the usage of water by a customer.
Cost Allocation: A study and analysis designed to recover indirect costs from activities for the
administration of specific services provided to those activities.
Cost Recovery: Recouping a portion of or all costs associated with a particular service provided by a
government agency to the public. The user fees determine the percentage of a service that is recovered.
Debt: An obligation resulting from the borrowing of money or the purchase of goods and services. Debt
instruments used by the City of Clermont may include general obligation bonds(G.O.), special obligation
bonds, bond anticipation notes, tax anticipation notes and bank loans. All debt instruments must be
approved by the City Council. All G. O.bonds must be approved by the voters.
Debt Service: Payment of principal and interest related to long-term borrowing.
Comprehensive Budget Policy 19
Department: An organizational unit responsible for carrying out a major governmental function, such as
Police or Finance.
Direct Costs: The costs incurred directly by providing a specified service.These costs are associated with
staff time spent performing service-related duties and include employee salary and benefits. In general,
direct costs are any costs that can be traced directly to the production of a given service or product.
Enterprise Fund: A fund used to account for continuing operations which provide services to the public
that are similar to private business enterprises in nature,and where the intent is that the costs recovered will
primarily be used to account for activities where the periodic determination of revenues and expenses is
appropriate for capital maintenance,management control,or other public policy. An example would be the
Water Fund.
Expenditure/Expense: A decrease in net total assets. Expenses encompass all costs associated with the
delivery of goods and rendering of services, including costs related to borrowing, renting, leasing, or
purchasing assets(such as vehicles or machinery)and costs representing the use or time-related declining
value (depreciation) of assets. Categories of expenses included in the operating budget are personnel
services,operating expenditures,and capital outlay.
Fee: Typically,a flat rate charged for the use of certain municipal services.
Financial Sustainability:Ability to maintain financial capabilities over time.
Fiscal Year: The annual period applicable to the annual operating budget. The City's standard fiscal year
runs from October 1 through September 30. Certain activities of the City,primarily state and federal grant
programs which are separate from the annual budget, are required to be accounted for in different fiscal
years.
Fund: A fiscal and accounting entity that is comprised of a self-balancing set of accounts which reflect all
assets, liabilities, equity, revenue, and expenses necessary to disclose financial position and the results of
operations. Generally, the number of individual funds should be kept at the lowest number that allows
effective and efficient management, with activities that are similar in nature and purpose accounted for in
the same fund.
General Fund: The fund used to account for both general government activities and those activities not
required to be accounted for in another fund.
General Obligation Bond: A method of financing used by municipalities for capital improvement
projects that are specifically authorized and repaid using the City's taxing power. Voters must approve the
projects and purchases in a general obligation bond and by voting for it, also agree to tax to pay for the
projects and purchases.
Goal: The result or achievement toward which effort is directed.
Governmental Fund: Those individual funds through which most governmental functions are typically
financed. This category includes the General Fund, Special Revenue Funds, Capital Projects Funds, and
Debt Service Funds.
Comprehensive Budget Policy 20
Indirect Costs: The costs not directly accountable or associated with the production of a service,such as a
fixed cost. Indirect costs include departmental overhead (operating expenses and internal administrative
costs),as well as citywide overhead,including all those costs that support City programs and services.
Long-Range Financial Planning: The process of aligning financial capacity with long-term strategic
objectives.
Modified Accrual Basis of Accounting: Revenues are recognized when they are both measurable and
available. Revenues are considered measurable if the amount of the transaction can be reasonably
determined. Expenditures are normally recognized when the related liability is incurred. All governmental
funds and expendable trust funds are accounted for using the modified accrual basis of accounting.
Performance Measures: Specific quantitative and qualitative measures of work performed.
Program: A set of activities, operations, or organizational units designed and directed to accomplish
specific service outcomes or objectives for a defined customer.
Proprietary Fund: A proprietary fund is a fund in which certain transactions by the government and many
nonprofit organizations are handled. These funds call for the services rendered under these accounts to be
paid for by the patrons who use them. There are two main types of proprietary funds: an enterprise fund,
which sells goods or services to the public(like the City's Water Fund or Sanitation Fund),and an internal
service fund, which provides services to other parts of the government (the City has an Internal Service
Fund which tracks the accounting activity of the City's Group Health Insurance plan).
Revenue: Funds that the government receives as income. This includes tax payments, service or user
fees,receipts from other governments,fines,forfeitures,grants,shared revenues,and interest income.
Service: A system supplying a public need such as public safety,parks and programs,or utilities.
Objective: A clear statement of what a program is intended to achieve in the short-term,given set resources
Structurally Sound Budget: A budget that not only achieves and maintains structural balance where
recurring revenues are equal to recurring expenditures in the adopted budget but also supports financial
stability for multiple years into the future.
Comprehensive Budget Policy 21
Exhibit A — Department Matrix
Department Management Organizational Organizational Unit Name
Responsibility Unit#/
Division
City Council City Manager 510 City Council
City Clerk City Clerk 511 City Clerk Office
City Manager City Manager 512 City Manager Office
517 Other General Government
Finance Finance Director 513 Finance Department
533-30000 Water - Utility Billing &
Collections
581 Interfund Transfers
Legal City Manager 514 Legal
Planning& Planning 515 Planning&Development
Development Director
522 Community Redevelopment
Information I.T. Director 516 Information Technology(I.T.)
Technology _
Police Department Chief of Police _ 521 _ Police
Fire Department Fire Chief 522 Fire Suppression
525 EMS Transport _
529 _ - Fire Inspections
Public Works PW Director 533 - Water
534 Sanitation
-- ---- 535 - -Sewer- -- ---
-- ---- -
_ 538 Stormwater
541 Street Maintenance
542 Grounds Maintenance
544 Fleet Maintenance
549 Facilities Maintenance
Economic Economic 559 Economic Development
Development Development
Director
Human Resources HR Director 560 Human Resources
Procurement Procurement 565 Procurement
Director
Parks& Recreation Parks Director 572 Parks&Recreation
573 Historic Village
_ 574 Special Events
575 Arts& Recreation
579 Performing Arts Center
Comprehensive Budget Policy 22