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Financial Management Policies for the Town of Templeton

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Financial Management Policies for the Town of Templeton Financial Management Policies for the Town of Templeton Table of Contents INTRODUCTION ........................................................................................................................................ 1 A. GENERAL BUDGET POLICIES .......................................................................................................... 2 A-1 Balanced Budget ................................................................................................................................ 2 A-2 Submission of Budget and Budget Message ...................................................................................... 3 A-3 Revenue and Expenditure Forecast .................................................................................................... 4 A-4 Position Control/Vacancies................................................................................................................ 6 B. RESERVE FUNDS/FUND BALANCE POLICIES ............................................................................... 7 B-1 Free Cash ........................................................................................................................................... 7 B-2 Stabilization Funds ............................................................................................................................. 8 B-3 Retained Earnings ............................................................................................................................ 10 B-4 Overlay Estimation & Uses.............................................................................................................. 10 C. CAPITAL IMPROVEMENT PLAN AND POLICIES ........................................................................ 13 C-1 Capital Improvement Plan Budget ................................................................................................... 13 C-2 Capital Improvement Financing....................................................................................................... 14 C-3 Capital Improvement Planning Process ........................................................................................... 14 D-1 Grant Application & Acceptance ..................................................................................................... 16 D-2 Impact on Operating Budget ............................................................................................................ 17 D-3 Impact on Capital Improvement Program and Debt Management .................................................. 17 E. POLICIES REGARDING ESTABLISHMENT OF FEES ................................................................... 17 E-1 Fees and Charges .............................................................................................................................. 17 F. UNFUNDED LIABILITIES POLICIES ................................................................................................ 18 F-1 Pensions/Retirement ......................................................................................................................... 19 F-2 Other Post- Employment Benefits (OPEB) ...................................................................................... 19 G. RISK MANAGEMENT POLICIES ..................................................................................................... 20 G-1 Risk Management Program ............................................................................................................. 20 H. ACCOUNTING/AUDITING/FINANCIAL REPORTING POLICIES ............................................... 21 H-1 Annual Audit ................................................................................................................................... 21 H-2 Comprehensive Annual Financial Report ........................................................................................ 22 H-3 Monthly & Quarterly Reporting ...................................................................................................... 22 H-4 Cash Collections .............................................................................................................................. 22 H-5 Ambulance Service Collection Policy ............................................................................................. 22 H-6 Reconciling Cash and Receivables .................................................................................................. 26 H-7 Cash Flow Forecasting and Budgeting ............................................................................................ 27 I. PROCUREMENT AND PURCHASING POLICIES ............................................................................ 28 I-1 Procurement and Purchasing Policy .................................................................................................. 28 I-2 Disposition of Surplus Items Policy………………………………………………………………… 28 J. INVESTMENT POLICIES .................................................................................................................... 31 J-1 Investment Policy .............................................................................................................................. 31 J-2 Post-Issuance Tax Compliance Procedure for Tax-Exempt Debt Obligations and Other Tax-Benefited Obligations .............................................................................................................................................. 32 SUPREMACY & AUTHORIZATION ...................................................................................................... 33 INTRODUCTION In accordance with its role as the executive body, the Select Board (the “Board”) has the authority to adopt statements of policy to order its affairs and guide the administrative functions of the corporate body politic of the Town of Templeton (the “Town”). These polices are adopted to guide the Town in ensuring the growing and continued financial health of the Town, provide the public with confidence that Town officials seriously respect their responsibility for fiscal stewardship, and to demonstrate to bond rating agencies that the Town has thoughtfully prepared for its future They are intended to be a living tool and shall be reviewed by the Town Administrator and designated staff on an annual basis and updated as necessary. Suggested revisions shall be submitted to the Select Board for consideration and adoption with the annual budget message submitted by the Town Administrator or as needed by changes in statute or regulation. Objectives: The objectives of the Financial Management Policies are as follows: A. To guide the Town in evaluating and implementing decisions that have significant financial impact. B. To set forth planning and operating principles which require that the cost of government be clearly identified, and that financial risk be minimized. C. To employ balanced and fair fee and user revenue policies that provide funding for programs and services being provided - or to be provided - by the Town. D. To regularly evaluate the Town’s financial capacity to meet present and future needs. E. To promote credible and sound financial management by providing accurate and timely information on the Town’s financial condition to the Board and elected officials, staff, the public, and external interests. F. To ensure that current and future capital needs are addressed in a comprehensive and financially-sound manner. G. To promote improvement in the Town’s credit rating and provide financial resources sufficient to meet the Town’s obligations on all municipal debt and other long-term obligations. H. To establish an effective system of internal controls that ensures the legal use of financial resources. I. To promote cooperation and coordination with other governments and the private sector in the financing and delivery of services. 1 A. GENERAL BUDGET POLICIES A-1 Balanced Budget Background: All Massachusetts municipalities are required by state law to prepare balanced annual budgets. The Government Finance Officers Association (GFOA) notes a true structurally balanced budget is one that supports financial sustainability for multiple years into the future. Policy: *The Select Board and the Town Administrator shall present to the Advisory Committee, for their review and recommendation(s) to Town Meeting, a balanced budget in which revenues equal or exceed expenditures. The service offerings contained within this budget shall be proposed with sufficient and appropriate staffing, professional development, material, and equipment and facilities that are well maintained and operating within their useful life spans as is deemed necessary for a quality offering of the service addressing statutory, regulatory, safety and community expectations. Expenditures shall be realistically budgeted and estimated revenues shall be conservatively budgeted to allow for unanticipated events. The balanced budget presented shall include the estimates and assumptions behind the revenue estimates utilized in preparing the proposal. The Town will not use budgetary procedures that balance the budget at the expense of future years, such as postponing or deferring payment of expenses already incurred, accruing future year revenues, or rolling over short-term debt to avoid making principal payments. The Town will not balance the budget by using one-time or other nonrecurring revenues to fund ongoing expenditures, except in the event of an emergency or extraordinary or unforeseen events. If extraordinary
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