Financial Practices Policy

VILLAGE OF ROSELLE
FINANCIAL PRACTICES
POLICY

The recommended financial policies have been formulated to insure the continued financial health of the Village. The objectives of these practices are to assist the Village Board and Village Management in making budgetary decisions based upon sound financial principals. They are general policies and are not intended to be comprehensive or exhaustive. They are intended to establish a solid foundation for the financial management of the Village. Staff should work within the context of these policies while continuing to explore lawful, creative and insightful financial recommendations to present to the Corporate Authorities of the Village for their consideration and possible implementation. The cornerstone of these policies and future financial recommendations should be maintaining comprehensive and sound fiscal management of all the Villages economic resources. Other than an investment policy, the Village does not have any written financial policies, but does consider the following practice of previous years.

 Budget Practices

The Village Administrator shall submit an annual budget to the Village Board which is within the Village’s ability to pay. The annual budget should provide for the following:

a.       The annual budget should effectively communicate meaningful and understandable information to the Village residents, Village Board, Village Staff, and other readers. To accomplish this goal the Village will prepare its annual budget in conformance with the Government Finance Officers Association’s (GFOA) Distinguished Budget Presentation Award Program.

b.       The annual budget will be monitored on a monthly basis. Revenue and expenditure budget reports will be prepared on a monthly basis. These reports will be made available to Village management staff for departmental review. A monthly budget summary report (Treasurer’s Report) will be presented to the Village Board.

c.       The annual budget should allow for the implementation of as many of the Village Board’s goals and objectives as financially possible.

d.       The annual budget should provide for the adequate funding of all pensions systems (IMRF, Police Pension Fund, and Firefighters Pension Fund). An independent actuary should be used to determine the annual Village contributions to the Police Pension Fund and the Firefighters Pension Fund and determine if these pension funds are adequately funded.

e.       The annual budget should provide funding for the adequate maintenance of municipal equipment, municipal facilities, and infrastructure.

f.         The annual budget should set aside-adequate funding (pay-as-you-go funding) for the replacement of vehicles and major equipment. Annual funding (depreciation funding) for these replacements will eliminate major expenditure jumps in the annual budget when these acquisitions are made.

g.       The annual budget should finance current operating expenditures, excluding major capital expenditures, with current revenues. The use of reserves to finance current operating expenditures should be carefully considered and avoided if possible.

Capital Improvement Practices

The Village will prepare a multiple-year capital improvement program that is incorporated in the annual budget document. The multiyear capital improvement program will be used to identify and prioritize future capital needs and possible funding sources.

a.                       This program will be reviewed during the Village’s annual budget process.

b.                       The operating costs to maintain capital acquisitions and improvements will be included in the annual budget.

c.                       In addition to utility taxes, intergovernmental grant funding, and/or debt financing will be considered to finance capital improvement programs.

Investment Policy

The Village Board approved a separate Investment Policy in 1999 whose goal is to provide guidelines for the prudent investment of the Village’s temporary idle funds. This policy will be reviewed by management on an annual basis and recommended changes, if any, will be submitted to the Village Board for approval.

Capital Assets Practices

As a general rule, the Village capitalizes assets that have a minimum original cost of $20,000 and a useful life of at least one year. The following table has been established and used to determine the depreciation of these capital assets:

Debt Practices

As a non-home rule community, the Village has a legal debt limit of 8.625% of its most recent equalized assessed valuation (EAV). The legal debt limit excludes debt that is repaid using user fees or property taxes. The Village should only incur debt for capital assets and/or capital projects. It has been the Village’s practice not to incur debt for operating expenditures.

a.                   Although pay-as-you-go financing is the preferred method to finance capital projects, the Village will explore all options in financing its capital improvement program, including grants, developer contributions, pay-as-you-go financing, and long-term debt paid by user charges or paid by Village-wide taxes.

b.                   The term of the debt issued for capital improvement projects will not exceed the project’s useful life and generally will not exceed 20 years.

c.                   Whenever possible, the Village will market its debt through the competitive bid process.

d.                   The Village will comply with its Continuing Disclosure Requirements pursuant to the SEC Rule 15c-12(b)(5), including filing a Comprehensive Annual Financial Report (CAFR) with each nationally-recognized municipal information repositories (NRMIR’s) within 210 days following the end of each fiscal year and disclosing certain material events on an occurrence basis.

Accounting, Auditing, and Financial Reporting Practices

a.                   The Village will have an annual audit conducted on its financial records by a qualified, independent public accounting firm. The Village will request proposals from qualified independent accounting firms to conduct the annual audit of its financial statements every three to six years by the use of a request for proposal (RFP) process.

b.                   The annual audit is conducted annually and completed and filed within six months after the end of each fiscal year.

c.                   The Village submits its Comprehensive Annual Financial Report (CAFR) to the Government Finance Officers Association’s (GFOA) Certificate of Achievement for Excellence in Financial Reporting Program.

d.                   The Village’s financial statements are prepared according to generally-accepted accounting principles (GAAP) as promulgated by the Governmental Accounting Standards Board (GASB).

e.                   The Village contracts with an independent actuary to determine the Village’s annual contribution to the Police and Fire Pension Fund. 

Adopted: August 2004

Pam Figolah
Director of Finance
Village of Roselle
PFigolah@roselle.il.us