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

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

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    1. Financial Management Kansas County Government for the Kansas Association of Local Health Departments By: Mark W. Dick Allen, Gibbs & Houlik, L.C. June 16 & 17, 2009

    2. 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

    3. The Basic Accounting Equation Business: Assets = Liabilities + Equity Government: Current Assets = Current Liabilities + Equity

    4. The County Finance Team Board of County Commissioners: Establishes budgets Approves all expenditures Policy makers

    5. 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

    6. 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

    7. 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

    8. 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

    9. 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

    10. Statute 19-120 Chapter 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.

    11. Statute 19-120 Cont’d. (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.

    12. Statute 19-120 Cont’d (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.

    13. Statute 19-120 Cont’d (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.

    14. 12-16, 111 Chapter 12. – CITIES AND MUNICIPALITIES Article 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.

    15. 12-1663 Chapter 12. – CITIES AND MUNICIPALITIES Article 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.

    16. 79-2934 Chapter 79. – TAXATION Article 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.

    17. Capital Planning

    18. 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.

    19. 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.

    20. 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.

    21. 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.

    22. 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.

    23. Financial Management

    24. 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.

    25. 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.

    26. Examine Your Government’s Revenue Structure Policy - A government’s overall revenue structure should be reviewed periodically to determine its stability, equity, efficiency and capacity to finance future operations.

    27. 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.

    28. 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.

    29. 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.

    30. The End Thank you!

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