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FINANCE COMMITTEE

Meeting Date:	11/15/2016
Subject: Update of County Budget Policy (Resolution No. 2006/677)
Submitted For:	FINANCE COMMITTEE
Department:	County Administrator
Referral No.:	N/A
Referral Name:	County Budget Policy
Presenter:	Lisa Driscoll, County Finance Director	Contact:	Lisa Driscoll, County Finance Director (925) 335-1023

Information

Referral History:

On April 19, 2005, the Board of Supervisors adopted a policy related to the practice of allocating general fund revenue to specific communities or programs (attached).

On November 2, 2006, a formal Budget Policy was presented to the Finance Committee and approved for submission to the full Board of Supervisors.

On November 14, 2006, the Board of Supervisors adopted the attached County Budget Policy - Resolution No. 2006/677 (attached). This policy was developed after Standard & Poor’s announced Financial Management Assessment Criteria would be used for future ratings. This announcement was important. In the past, it was difficult to judge how an agency would be rated, this was the beginning of the development of specific assessments of issuer’s policies.

On December 15, 2009, the Board of Supervisors affirmed the policy on special revenue mitigation funds (attached).

On December 3, 2013, the Board of Supervisors adopted a new policy on governing special revenues administered by the Board of Supervisors and directed staff to incorporate these policies into the County's formal Budget Policy.

On March 3, 2015, the Finance Committee began review of the policy.

Referral Update:

Since adoption by the Board of the original Budget Policy, S&P has rated the County's fiscal policies as "Strong" and has increased the County's credit rating to AAA. A rating of Strong "indicates that practices are strong, well-embedded and likely sustainable; County maintains best practices that support credit quality and are used in daily operations; policies may be formal".

In 2006 when the original policy was adopted, the County was loosely following a list of 12 habits of highly successful finance officers. We worked with our financial advisor to rank the 12 habits in order of importance and addressed them. The practices/policies are:

Fund balance reserve policy/working capital reserves;
Debt affordability reviews and polices;
Superior debt disclosure practices;
Multiyear financial forecasting;
Monthly or quarterly financial reporting and monitoring;
Pay-as-you-go capital funding polices;
Rapid debt retirement polices (greater than 65% in 10 years);
Contingencies planning polices;
Policies regarding nonrecurring revenue;
5-year capital improvement plan that integrates operating cost of new facilities;
Financial reporting awards; and
Budgeting awards.

Over the last ten years the County has followed/met each of these "habits" except the 5-year capital improvement plan that integrates operating cost of new facilities. It is recommended that the County's Budget Policy be updated to include a capital improvement plan that integrates capital life-cycle costs as well as all operating costs.

A thorough review and update of the County's Budget Policy is warranted. A draft of a new policy is attached for discussion purposes/direction.

Recommendation(s)/Next Step(s):

Continue review of the County's 2006 County Budget Policy to consider future recommendations for changes/updates.

Fiscal Impact (if any):

No specific fiscal impact.

Attachments
Recommended Updates to the County Budget Policy
April 19, 2005 Document
November 14, 2006 Document
December 15, 2009 Document
December 3, 2013 Document
GFOA- Recommended Budget Practices from the National Advisory Council on State and Local Budgeting