Financial Management Kansas County Government for the Kansas Association of Local Health Departments

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Financial ManagementKansas County Government for
the Kansas Association of Local Health
Departments

• By Mark W. Dick
• Allen, Gibbs Houlik, L.C.
• June 16 17, 2009

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THE CONTRAST

• Government Business
• Service driven Profit driven
• Taxpayers Customers
• Taxes paid/Services Price/Product
• Cash flow Cost of service
• Legal budget Operating budget
• Restricted resources Common resources
• Elected officials Hired officers

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The Basic Accounting Equation

• Business
• Assets Liabilities Equity
• Government
• Current Assets Current Liabilities Equity

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The County Finance Team

• Board of County Commissioners
• Establishes budgets
• Approves all expenditures
• Policy makers

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The County Finance Team

• County Clerk
• Official recordkeeper
• Maintains County financial books and records
• Pays County bills
• Monitors cash basis/budget law compliance
• Coordinates budget preparation

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The County Finance Team

• County Treasurer
• The bank for the County
• Responsible for compliance with deposit and
  investment laws
• Bills and collects taxes for all taxing entities
  within the County
• Agent for the State for vehicle registration

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The County Finance Team

• Other Elected Officials and Department Heads
• Implement policies approved by BOCC
• Manage specific function, including finances
• Input to the budget process

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Kansas Cash Basis Law (K.S.A. 10-1101 et. seq.)

• Municipalities, including counties, are
  prohibited from creating any financial obligation
  (indebtedness) unless there is money on hand in
  the proper fund with which to pay for it. If
  there is no cash there can be no financial
  obligation. Exceptions
• When there is a favorable vote of electors
• Matters for which bonds will be issued
• When no-fund warrants have been authorized
• Lease-purchase agreements

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Kansas Budget Law (K.S.A. 79-2925 79-2937)

• The annual budget provides legal expenditure
  authority by fund
• The annual budget is used to make annual property
  tax levies
• All money belonging to the county must be
  included in the annual budget
• A separate financial statement for each fund must
  be included
• Forms prescribed by the Director of Accounts and
  Reports
• A balanced budget for the proposed budget year
  must be presented for each tax levy fund the law
  permits, but does not require, a 5
  non-appropriated fund balance in each fund

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Statute 19-120Chapter 19.--COUNTIES AND COUNTY
OFFICERS Article 1.--GENERAL PROVISIONS

• (a) The board of county commissioners of any
  county, which has formally approved a multi-year
  capital improvement plan setting forth the public
  improvement and infrastructure needs of the
  county on a prioritized basis, may establish, by
  adoption of a resolution, a capital improvements
  fund. The resolution establishing such fund, and
  any amendments thereto, may provide for the
  budgeted transfer of moneys from other county
  funds lawfully available for improvement purposes
  to the capital improvements fund, including
  moneys in the county's federal general revenue
  sharing fund and general fund. Any general
  property tax specifically levied for the use of
  such fund shall be authorized by resolution
  adopted under the provisions of K.S.A. 19-101a,
  and amendments thereto.

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Statute 19-120 Contd.

• (b) Moneys in such capital improvements fund may
  be used to finance, in whole or in part, any
  public improvement need set forth in the adopted
  capital improvement plan, including the repair,
  restoration and rehabilitation of existing public
  facilities. The resolution may provide that
  disbursements from such fund may be made for
  engineering and other advance public improvement
  plans and studies and that reimbursements may be
  made to the fund from bond proceeds, special
  assessments or state or federal aid available for
  the completed project.

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Statute 19-120 Contd

• (c)   Except for such reimbursed expenses, no
  moneys shall be credited to such special fund
  except as may be budgeted annually, or
  transferred by the annual budget from other
  funds. Such fund shall not thereafter be subject
  to the provisions of K.S.A. 79-2925 to 79-2937,
  inclusive, and amendments thereto. In making the
  budgets of such counties, the amounts credited
  to, and the amount on hand in, such special fund
  and the amount expended therefrom shall be shown
  thereon for the information of the taxpayers of
  such counties. Moneys in such fund may be
  invested in accordance with the provisions of
  K.S.A. 10-131, and amendments thereto, with
  interest thereon credited to such fund.

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Statute 19-120 Contd

• (d) If the board of county commissioners
  determines that money which has been
  transferred to such special fund or any part
  thereof is not needed for the purposes for which
  so transferred, the board, by adoption of a
  resolution, may transfer such amount not needed
  to the general or other fund from which it was
  derived and such transfer and expenditure thereof
  shall be subject to the budget requirement
  provisions of K.S.A. 79-2925 to 79-2937,
  inclusive, and amendments thereto.

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12-16, 111Chapter 12. CITIES AND
MUNICIPALITIESArticle 16. MISCELLANEOUS
PROVISIONS

• 12-16, 111. Same not subject to budget
  limitations. Any money received by a municipality
  from a state loan or grant may be expended
  without regard to budget limitations and over,
  above or outside the budget, and such
  expenditures shall not be charged against the
  budget. If a municipality temporarily finances
  the service or improvement from budgeted funds
  and later is reimbursed by the state loan or
  grant, such expenditures shall not be charged
  against the budget. If a municipality temporarily
  finances the service or improvement from budgeted
  funds and later is reimbursed by the state loan
  or grant, such expenditure from budgeted funds
  shall be a reimbursed expense, and if received
  after the budget year, shall increase the current
  budget to the same amount unless the budget had
  anticipated and included the reimbursement as
  income.

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12-1663Chapter 12. CITIES AND
MUNICIPALITIESArticle 16. MISCELLANEOUS
PROVISIONS

• 12-1663. Expenditures of federal aid by public
  agencies expenditures of grants, gifts and other
  income by school districts budget requirements,
  exceptions.
• (a), Where any public agency receives federal aid
  through any federal agency for any purpose to be
  used alone or with funds of the public agency,
  such federal aid may be expended without regard
  to budget limitations and over, above or outside
  the budget, and such expenditures shall not be
  charged against the budget of the current or any
  other budget year of the public agency. Where a
  public agency spends from budgeted funds and
  later is reimbursed by federal aid, such
  expenditure from budgeted funds shall be a
  reimbursed expense and if received after the
  budget year, shall increase the current budget to
  the same amount unless the budget had anticipated
  and included the reimbursement as income.
• (b), In addition to the requirements of
  subsection (a), a school district shall include
  all revenues and expenditures, including, but not
  limited to, federal aid and other grants, gifts
  and miscellaneous income, in all budget documents
  prepared by the school district, including
  documents submitted to the department of
  education. In order to account for such revenues
  and expenditures separately, each school district
  shall budget for federal aid and other grants and
  gifts, other than scholarships, received, which
  funds shall not be subject to limitations on the
  expenditure of moneys in such funds.

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79-2934Chapter 79. TAXATIONArticle 29.
MISCELLANEOUS PROVISIONS

• 79-2934. Funds appropriated by budget balances
  duties of clerks and officers distribution of
  tax proceeds. The budget as approved and filed
  with the county clerk for each year shall
  constitute and shall hereafter be declared to be
  an appropriation for each fund, and the
  appropriation thus made shall not be used for any
  other purpose. No money in any fund shall be used
  to pay for any indebtedness created in excess of
  the total amount of the adopted budget of
  expenditures for such fund. Any balance remaining
  in such fund at the end of the current budget
  year shall be carried forward to the credit of
  the fund for the ensuing budget year. The clerk
  or secretary of each taxing subdivision or
  municipality shall open and keep an account of
  each fund, showing the total amount appropriated
  for each fund, and shall charge such
  appropriation with the amount of any indebtedness
  created at the time such indebtedness is
  incurred. If any indebtedness is reimbursed
  during the current budget year and the
  reimbursement is in excess of the amount which
  was shown as reimbursed expense in the budget of
  revenues for the current budget year, the charge
  made shall be reduced by the amount of the
  reimbursement.
• No part of any fund shall be diverted to any
  other fund, whether before or after the
  distribution of taxes by the county treasurer,
  except as provided by law. The county treasurer
  shall distribute the proceeds of the taxes levied
  by each taxing subdivision in the manner provided
  by K.S.A. 12-1678a, and amendments thereto.

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Capital Planning
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A Capital Budget is Vital

• Policy - Governments should develop capital
  budgets and capital programs that facilitate
  advance planning for capital facilities. A
  formal capital planning process should encourage
  broad participation by all interested
  constituencies and departments.

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Make Plans Now to Replace Equipment and Facilities

• Policy - Replacement schedules should anticipate
  the inevitable aging and obsolescence of
  facilities and equipment. Depreciable assets
  should be financed through internal funds
  whenever feasible.
• KSA 19-120 Allows counties to accumulate funds
  for future capital needs.

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Do Not Overcommit Scarce Resources

• Policy - Capital programs should realistically
  assess likely future revenues and avoid
  commitments for projects that lack economic
  feasibility. If revenues are not forthcoming,
  operations may require adjustment to conform with
  capital expenditure needs.

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Disciplined Borrowing Has its Place

• Policy - The capital program must recognize
  borrowing limitations. Debt financing is
  appropriate, however, only as a means of matching
  facilities costs with the benefits enjoyed by
  future residents.
• Statues limit use of bond financing.

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Capital Expenses Usually Add Operating Costs

• Policy - Capital plans should include projected
  changes in operating and maintenance costs,
  workforce requirements, productivity and risk
  management considerations.

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Financial Management
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Promote Competent, Professional Financial
Management

• Policy - Governments should seek to retain
  trained, experienced professional financial
  managers. To ensure that vital financial
  policies are implemented, a continuing investment
  should be made in proper organization, staffing,
  training, compensation and support facilities for
  financial professionals.

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Organization is Important

• Policy - Whenever possible, the legislative body
  and the chief executive should promote
  coordinated organizational structures for all
  financial operations. Accountability and
  professionalism seldom are achieved through
  fragmented financial offices.

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Examine Your Governments Revenue Structure

• Policy - A governments overall revenue structure
  should be reviewed periodically to determine its
  stability, equity, efficiency and capacity to
  finance future operations.

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Efficient Procurement Saves Taxpayer Dollars

• Policy - Procurement policies and practices
  should promote maximum value and economy through
  a competitive process. Vendors and service
  providers should be selected using processes that
  minimize opportunities for favoritism.
• KSA 19-214 Requires contracts over 10,000 for
  buildings or bridges to be awarded to the best
  and lowest bid.

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Think About Long-Term Financial Planning

• Policy - Governments should develop long-term
  financial plans that include revenue and
  expenditure trend studies, capital and debt
  management plans, an employee compensation
  outlook, an economic development program and a
  general financial management plan. Independent
  of the budgeting process, annual or semiannual
  planning sessions should be held to bring
  together appropriate staff members, consultants
  and decision makers.

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Schedule Financial Study Sessions

• Policy - Single-purpose study sessions addressing
  selected financial issues or reports can help
  promote better understanding of complex technical
  concepts and financial strategies.

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The End

• Thank you!