City of Melissa
Summary of Financial Planning Policies

Financial Planning Policies

1. Balanced Budget – Each year the budget for each fund shall be balanced. Total resources available, including fund balances plus projected revenue, shall be equal to or greater than the projected expenditures for the coming year. In the event a budget deviates from being presented as balanced, full disclosure and City Council approval will be required including the factors affecting the budget such as economic factors or emergency capital expenditures.

2. Long-Range Planning – The City will annually prepare a Five-Year Forecast for each fund. The forecast will include estimated operating costs and revenues of future capital improvements included in the capital budget.

3. Asset Inventory – Fixed assets include equipment, computers, furniture and vehicles. Once purchased, all capital items are maintained in the physical inventory until disposed. All vehicles are maintained for maximum life and use through each department’s fleet management and maintenance programs.

Revenue Policies

1. Revenue Diversification - The City will strive to identify new revenue streams for the organization.  Those fees will be reviewed by the City Council in conjunction with the budget process.

2. Fees and Charges - In conjunction with the annual budget process, departments will review the cost of providing services against the fee charged. For those services which the costs exceed the fees collected, the City Council will be represented analysis for each proposed fee increase. The City Council will be the determinate of if the fees are amended, but the responsibility for the identification of these fees will be the organization.

3. Use of One-time Revenues – Use of one-time revenues will be reserved for the highest priorities of the current budget to include any revenue shortfalls impacting current budget, reducing and managing debt, use in considering one-time capital purchases and fund balance reserves. One-time revenues will not be used to maintain or establish ongoing expenditures.

4. Revenue Collections – The City will maintain an aggressive policy of collecting all moneys due to the City.

Expenditure Policies

1. Debt Capacity, Issuance, and Management - The City of Melissa strives to manage debt issuance by reviewing the Maintenance and Operations allocation against the Interest and Sinking allocation. The City will strive to maintain a 65/35% ratio. This ratio is a guide only and may be amended as our growing communities needs dictate; however, this policy will be used as a measuring device before any debt is issued.

2. Reserve or Stabilization Accounts – Unreserved, undesignated fund balance equal to three months annually budgeted expenditures of General Fund and Enterprise Fund maintained for the purpose of providing for emergency and other unplanned expenditures and revenue shortfalls.

3. Operating/Capital Expenditure Accountability - The City of Melissa will review expenditures monthly and align City’s adopted Fiscal Management Plan that outlines appropriate budget strategies in light of the economic conditions. In addition, the City Council will be presented quarterly reports and an annual alignment action item.

Financial Reporting

1. GFOA Distinguished Budget Award - The City of Melissa will annually submit the Operating Budget to the Government Finance Officers Association of America's (GFOA) Distinguished Budget Award Program.  The budget document will address comments and suggestions by the GFOA review to continuously improve the quality and usefulness of the budget document.