#3 Adopt financial policies and resolution to approve commitment of fund balances (File Res. #2011-828)
CITY MANAGER’S OFFICE MEMORANDUM
August 15, 2011
TO: City Council
FROM: Jacob J Winzenz, Director of Admin. Services/Assistant City Manager
Patty Lynch, Comptroller
SUBJECT: Adoption of Financial Policies on Debt Management and Fund Balance
and Resolution 2011-828 to Approve Commitment of Fund Balances
Summary
The City of Janesville’s financial policies set forth the basic framework for the fiscal
management of the city. Operating concurrently with the changing circumstance and
conditions, these policies assist the decision-making process of the City Council. These
policies provide guidelines for evaluating both current activities and future programs.
The Governmental Accounting Standard Board (GASB) issues standards in
governmental accounting and financial reporting that are intended to result in useful
information to the users of financial reports. This year the City is implementing GASB
Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions.
Implementation of this standard impacts the fund balance policy and is incorporated in
the fund policy and analysis.
Recommendation
The Administrative Services Department recommends City Council adopt Council Policy
Statement No. 75 Debt Management which sets the debt limit at 2.5% of the assessed
equalized value and further limits the General Fund debt to 15% of the General Fund
operating budget. We further recommend adoption of Council Policy No. 88 Fund
Balance which recommends the unrestricted General Fund balance be maintained
between 16.7% and 25% of the budgeted General Fund operating expenditures. Finally
we recommend the City Council adopt resolution No. 2011-828 which approves the
commitment of Fund balances in special revenue funds in compliance with
governmental accounting standards.
Suggested Motions
Move to adopt Council Policy Statement No. 75 Debt Management and Council Policy
88 Fund Balance. Move to adopt Resolution No. 2011-828 to approve the commitment
of fund balances.
City Manager Recommendation
The City Manager concurs with the Administrative Services Department
recommendation.
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Debt Management
Debt issuance is a vital local government financial tool to raise the money necessary to
implement major capital improvements projects. Although vital to local government
finance, debt should be issued prudently to maintain the long-term financial well being
of the government and the community. Sound debt management practices demonstrate
to credit reporting agencies the credit worthiness (credit rating) of the City of Janesville
for borrowing monies at favorable interest rates.
Council Policy Statement No. 75 (Debt Management) - approved on May 13, 1997 -
sets the City’s parameters for debt issuance and management. It is best to periodically
review these policies to make sure they reflect the priorities of the current City Council
and community, as well as best practices of the Government Officers Finance
Association (GFOA). The Government Officers Finance Association (GFOA)
recommends that a debt management policy address five (5) issues:
1. Debt Limits
2. Use of Derivatives
3. Debt Structuring Practices
4. Debt Issuance Practices
5. Debt Management Practices
Debt Limits - The current debt management policy does not establish limits on the
amount of total General Obligation (GO) debt, other than the legal debt limit, or any
financing limits based upon the ability of the community to pay. Section 67.03(1) of the
Wisconsin Statutes provides that the amount of indebtedness of a municipality shall not
exceed five (5) percent of the equalized assessed valuation of the taxable property in
the municipality. This is referred to as the “Legal Debt Limit”. The following table
summarizes total debt subject to the legal limit over the last five (5) years:
5-Year Debt History
20062007200820092010
Equalized Assessed Value$ 3,927,834,200$ 4,160,780,300 $ 4,370,063,000$ 4,251,636,500$ 3,991,153,400
Legal Debt Limit (5%) 196,391,710 208,039,015 218,503,150 212,581,825 199,577,670
City General Obligation Debt 78,630,253 80,214,198 82,529,034 87,480,869 76,914,462
Legal Debt Margin$ 117,761,457$ 127,824,817$ 135,974,116$ 125,100,956 $ 122,663,208
40.04%38.56%37.77%41.15%38.54%
GO Debt as a % of debt limit
GO Debt / Equalized Value2.00%1.93%1.89%2.06%1.93%
Over the last five (5) years, debt in Janesville as a percentage of the legal limit has
been fairly stable fluctuating between 38% and 41%. There does not appear to be a
trend of increasing debt as a percentage of the legal limit, and in fact the current
percentage is lower than in 2006.
The following tables compare Janesville to our peer cities:
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GO Debt as a Pecent of Legal Limit and GO Debt per Capita - 12/31/2009
EqualizedLegalActual% of%GO Debt/
ValueDebt LimitGO DebtLimitEqual ValCapita
Oshkosh$ 3,801,817,900$ 190,090,895$ 143,157,24975%3.77%$ 2,166
Manitowoc 2,057,147,400 102,857,370 76,641,84075%3.73% 2,272
La Crosse 3,162,233,300 158,111,665 103,925,000 66%3.29% 2,025
Beloit 1,744,186,100 87,209,305 53,788,77962%3.08% 1,456
Racine 4,133,491,100 206,674,555 104,930,000 51%2.54% 1,331
Fond du Lac 2,736,857,700 136,842,885 67,802,47750%2.48% 1,576
Green Bay 6,234,597,300 311,729,865 144,083,225 46%2.31% 1,385
Kenosha 6,799,688,900 339,984,445 152,367,692 45%2.24% 1,536
Eau Claire 4,315,946,500 215,797,325 88,094,68841%2.04% 1,337
Sheboygan 2,865,434,000 143,271,700 56,376,12639%1.97% 1,144
Wausau 2,726,775,100 136,338,755 52,334,07538%1.92% 1,338
Waukesha 5,904,933,100 295,246,655 100,739,201 34%1.71% 1,425
Appleton 4,789,062,900 239,453,145 47,460,34420%0.99% 654
Brookfield 6,566,898,300 328,344,915 52,399,32716%0.80% 1,382
Average$ 4,131,362,114$ 206,568,106$ 88,864,287 43%2.35%$ 1,502
Janesville 4,251,636,500 212,581,825 87,480,86941%2.06% 1,376
Janesville (2010) 3,991,153,400 199,557,670 76,914,46239%1.93% 1,210
The amount of debt subject to the legal debt limit actually issued by each peer
community is contained in the “Actual GO Debt” column. The range of debt as a
percentage of the legal debt limit in our peer communities ranges from 16% to 75%. As
of December 31, 2009, Janesville was tied for the sixth lowest amount of GO debt as a
percentage of the legal debt limit among our peer communities.
Additional statistics show that the 2010 debt burden per capita at $1,210 and 1.93% of
equalized value are low to moderate and compare favorably with our peer cities.
Standard and Poor’s indicates that a GO debt as a percentage of equalized assessed
value below 3% indicates low fiscal stress. Standard and Poor’s benchmark equates to
60% of the legal debt limit for Wisconsin municipalities.
The legal debt limit is only one measure and does not really consider the ability of a
community to make the annual debt service payments. Two measures of this are debt
service as a percentage of General Fund expenditures and debt service per capita. The
following table compares Janesville against our peer communities on these measures:
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General Fund Debt Service vs. Expenditures - 2010
General FundGeneral FundDebt as % ofDebt Service/
Debt ServiceExpendituresExpendituresCapita
Oshkosh17,083,23941,711,00041%259
Green Bay19,451,36078,462,07025%187
Waukesha9,731,81657,542,22017%138
Manitowoc4,974,89229,535,67717%147
Brookfield5,200,00036,383,75314%137
La Crosse9,719,00072,447,55513%189
Beloit4,298,47733,833,72013%116
Sheboygan4,227,01135,096,94112%86
Racine8,755,75981,993,75011%111
Kenosha7,499,56770,987,33311%76
Wausau 4,156,86638,121,67211%106
Fond du Lac3,308,10529,120,39311%77
Eau Claire4,971,60054,340,4009%75
Appleton$3,852,111$66,048,8266%$53
Average$7,659,272$51,830,37915%126
Janesville$5,368,643$41,467,99913%$84
Janesville - 20114,997,52141,583,74412%79
Janesville compares favorably to our peer communities when looking at debt service as
a percentage of General Fund budget expenditures at 12 percent. This is below the
average for our peer communities and tied for the sixth lowest. Standard and Poor’s
indicates that 10 to 15 percent represents a moderate level of spending flexibility.
Furthermore, Janesville’s tax-supported debt service per capita is $79 and the fifth
lowest of our peer communities.
Based upon our debt history and a comparison to our peer communities, our debt
management policy has been revised to establish maximum debt at 2.5 percent of the
equalized assessed value and General Fund debt service at 15 percent of General
Fund expenditure budget. Staff believes these limits will allow flexibility in the
management of our debt and keep debt service affordable for the community. These
limits may be exceeded by a super-majority vote of the City Council.
Use of Derivatives – We have not used nor do we intend to use derivatives as a
financing mechanism.
Debt Structuring Practices – In general, our debt is structured with a 10-year period of
amortization. However, we match the amortization term with the expected life of the
asset. In addition, in the past special assessment debt has been structured with a 6
4
year amortization period because the source used to repay this debt has been
developers and residents using the five (5) year payment plan.
Debt repayment has historically been structured with equal principal payments with
declining interest payments. However, staff would like the flexibility to structure debt
based upon the ability of the community to pay and the goals of the City Council.
Therefore, at times it may be appropriate to consider other repayment terms.
Debt Issuance Practices – Janesville has historically worked with a financial advisor and
used competitive sales. All bids are reviewed and approved by the City Council. In
consultation with our financial consultant we may also recommend refunding of prior
issues to either reduce interest costs or restructure the debt. Such refunding also must
be approved by the City Council.
Debt Management Practices – Due to both the City Council request to review the City’s
Debt Management Practices and the new Governmental Finance Officers Association
(GFOA) best practices regarding debt issuance and management, this is an appropriate
time for the City Council to review and update the current policy to match current
practices.
Street Maintenance (Resurfacing/Reconstruction) Borrowing
Beginning in 2007, the City began funding street resurfacing/reconstruction through
note issues.
The table below breaks down a 5-year funding history for street resurfacing and
reconstruction:
Street Resurfacing/Reconstruction Funding Breakdown - 2006-2011
200620072008200920102011
General Fund $ 1,289,000$ 1,548,000$ 1,556,099$ 1,109,573$ 829,654 $ 362,200
Street Note Issue - 500,000 500,000 650,000 520,000 975,000
LRIP/ARRA Funding - - 150,000 1,439,300 842,000 152,323
Total Funding$ 1,289,000$ 2,048,000$ 2,206,099$ 3,198,873$ 2,191,654$ 1,489,523
Miles of Streets 10.611.612.711.88.05.2
% Reconstruction7.7%7.1%3.7%6.9%9.4%20.8%
% Note Issue Funded0%24%23%20%24%65%
Since 2006, the percent of street resurfacing/reconstruction funded by the General Fund
has decreased and the burden of costs has shifted to street note issues. From 2007 to
2010, note issue funding accounted for approximately 23% of the total funding for street
resurfacing/reconstruction. In 2011, note issue funding increased to 65% percent of the
total costs.
A survey of Janesville’s peer cities indicates that 11 of 13 communities borrow to fund
street resurfacing/reconstruction. Additionally, the average amount borrowed for street
resurfacing/reconstruction is approximately $2.1 million.
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2010
Borrowing for
Street Maint.
Appleton$ -
Beloit 306,500
Eau Claire 6,405,000
Fond du Lac 2,355,500
Green Bay N/A
Kenosha -
La Crosse 1,162,330
Manitowac 4,636,465
Oshkosh 1,293,300
Racine 3,772,250
Sheboygan 1,201,700
Waukesha 1,829,000
Wausau 2,428,250
Average 2,115,858
Janesville (2011) 975,000
In summary, borrowing for street resurfacing/ reconstruction began in 2007 as a way to
manage levy limits and keep the operating tax levy at a minimal increase for city
residents. Street resurfacing has a life of 15 years, so it meets our definition of a capital
outlay. If the City Council determines that it wants to move street resurfacing and
reconstruction projects back to being funded by the general fund operating budget, the
funding will come from other general fund programs due to the constraints on the City’s
revenues.
Fund Balance Policy
The level of fund balance is intended to serve as a measure of the financial resources
available to mitigate risk. It is prudent to maintain unrestricted General Fund balance for
several reasons, including:
To quickly respond to unexpected situations requiring significant financial
resources; such as natural disasters and unanticipated service cost level
increases resulting from inclement winter weather
To respond to financial emergencies, such as revenue shortfalls and cyclical
downturns
To avoid large variations in taxes and fees or variations in the type and quality of
municipal services provided due to financial emergencies
Avoid the need for short-term borrowing to cover delays in revenue receipt
Preserve the credit worthiness (credit rating) of the City of Janesville for
borrowing monies at favorable interest rates
The following table summarizes the general fund balances over the last five (5) years:
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General Fund 5-Year Fund Balance History
20062007200820092010
Revenue$ 37,586,029$ 39,296,706$ 39,922,962$ 40,642,421$ 41,172,344
Expenditures 37,208,723 39,473,648 40,963,454 41,186,393 40,906,075
Net change in fund balance 377,306 (176,942) (1,040,492) (543,972) 266,269
Fund balance - beg of year 8,614,371 8,991,677 8,814,735 7,774,243 7,230,271
Fund balance - end of year$ 8,991,677$ 8,814,735$ 7,774,243$ 7,230,271$ 7,496,540
The proposed Fund Balance policy adopts the new financial statement reporting
requirements issued by the Governmental Accounting Standards Board (GASB)
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.
This statement changes the terminology used for fund balance reporting. It is intended
to clearly defined categories to make the nature and extent of the constraints placed on
a government’s fund balance more transparent. This Statement is effective with the
December 31, 2011 financial statement.
With GASB Statement No.54, the fund balance will be reported in five new categories:
nonspendable, restricted, committed, assigned, or unassigned.
Nonspendable fund balance
- Amounts cannot be spent because they are not
in spendable form such as inventories and prepaid items and long-term inter-fund
advances (TIF cash deficits).
Restricted fund balance
- Include those resources that are externally restricted
by creditors, grantors, and contributors.
Committed fund balance
- Amounts limited by self-imposed formal action
(ordinance or resolution) on how funds will be spent.
Assigned fund balance
- Reflects a government’s intended use or earmarking
of resources (formerly the designated fund balance).
Unassigned fund balance
- Net resources that have not been restricted,
committed, or assigned to specific purposes within the City’s general fund and is
available to be used for any purpose.
Unrestricted fund balance includes committed, assigned and unassigned fund balances.
The unrestricted fund balances are the amounts that the City can control internally.
The following table summarizes the General Fund balance restated with the new fund
balance terminology for the past five years and shows some ratios commonly used to
measure fund balance:
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General Fund 5-Year Fund Balance Analysis
20062007200820092010
Nonspendable Fund Balance$996,342$952,401$906,483$690,567$513,769
Assigned Fund Balance$2,529,837$2,578,820$1,231,000$850,000$890,000
Unassigned Fund Balance 5,465,498 5,283,514 5,678,760 5,689,704 6,092,771
Unrestricted Fund Balance$7,995,335$7,862,334$6,909,760$6,539,704$6,982,771
Total General Fund Balance$8,991,677$8,814,735$7,816,243$7,230,271$7,496,540
Two Months Operating Expenditures$5,468,890$5,816,910$6,040,185$5,982,254$5,923,605
Unrestricted Fund Bal/ Operating Exp.24.4%22.5%19.1%18.2%19.6%
Unassigned Fund Bal/ Total Exp.14.7%13.4%13.9%13.7%14.7%
Unrestricted fund balance is the remaining current assets the City of Janesville has
available to run day to day operations, or has in case of an emergency revenue shortfall
or program expense overrun.
The appropriate fund balance level is dependent upon a variety of factors including
potential fluctuations in revenue sources, anticipated levels of services, trends in debt
service, and the comfort level of management and the City Council.
A key factor to consider in the development of a fund balance policy is the diversification
and stability of revenue sources. The following table summarizes the General Fund
revenue sources for the past five years:
8
General Fund Revenue Sources 5-Year Summary
ActualActualActualActualBudget
20072008200920102011
State Shared Revenues $5,327,617$5,328,355$5,340,661$5,020,877$5,016,320
Expenditure Restraint 821,496 844,382 806,939 733,720 746,680
Shared Revenue Total 6,149,11316% 6,172,73715% 6,147,60015% 5,754,59714% 5,763,00014%
Other State Aid 2,669,3337% 2,718,2857% 2,988,2317% 2,992,2597% 2,990,0007%
Property Taxes22,461,407 56%23,597,800 59%24,438,013 60%24,841,061 60%25,437,644 62%
Other taxes 1,592,5614% 1,682,3754% 1,620,2914% 1,763,7074% 1,757,5004%
Interest Income 1,466,5474% 978,4392% 617,5682% 374,6121% 425,0001%
Fines, Rents, Sale of Prop. 645,2472% 607,9802% 554,6061% 559,1082% 648,0002%
Licenses & Permits 1,514,0444% 1,087,4223% 1,085,0923% 1,260,4903% 1,032,0003%
Dept Charges & Other 2,227,4126% 2,606,9567% 2,484,1636% 2,438,0906% 2,295,1006%
Transfers 571,0421% 470,9681% 706,8572% 1,188,4203% 350,0001%
39,296,706 100%39,922,962 100%40,642,421 100%41,172,344 100%40,698,244 100%
This table shows that property taxes are the City’s largest revenue. The second largest
revenue source is the state shared revenue and other state aids received from the State
of Wisconsin. This percentage had dropped slightly from 2007, but was still at 21% of
the General Fund revenue in 2011. Property taxes typically provide a stable source of
revenue and are not as subject to volatile swings during poor economic times as other
sources of revenue, such as sales tax. Although with the current State budget, there is
limited ability to grow revenues in the future coming from the property tax levy. State
Aids are anticipated to decrease by approximately $1 million in 2012 with the proposed
state budget. Since property taxes and state aid combined amount to 84% of the 2011
budget, the levy limits and proposed state aid reduction will significantly restrict the
City’s ability to finance the services the City provides.
These revenue constraints reaffirm the need for a fund balance policy so the City can
maintain its strong financial reserves. A sufficient level of fund balance is necessary to
preserve the long-term stability of the City. It will enable the City to respond to
unexpected situations requiring significant financial resources, such as natural
disasters, and allow enough operating cash during the year to pay for operational costs
without reliance on short-term borrowing.
Currently, as stated in the annual budget document, the City of Janesville fund balance
policy is to maintain an undesignated (unassigned) balance of 10% of the adopted
General Fund expenditure budget.
The Government Finance Officers Association (GFOA) recommends that the City
establish a formal policy on the level of unrestricted fund balance that should be
maintained in the General Fund. GFOA recommends, at a minimum, that the General
Fund unrestricted fund balance be no less than two months of General Fund operating
expenditures (16.7%). As shown in the fund balance analysis table above, Janesville
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has meet that criteria for all years listed. The current ratio of 19.6% was considered very
strong as stated in Standard and Poor’s October 2010 rating summary.
The recommendation for the appropriate fund balance level is included in the proposed
City Council Policy Statement - Policy No.88 on Fund Balance. The unrestricted
General Fund balance should be between 16.7 and 25 percent of the budgeted general
fund operating expenditures for the subsequent year.
Flow of funds assumption
Some projects are funded by a variety of resources including both restricted and
unrestricted funds. GASB Statement No.54 requires that Council set a spending
prioritization policy. The fund balance policy recommends that we spend the most
restricted funds first.
Determination of funds reporting status
GASB Statement No.54 has also provides new definitions for governmental fund types.
The governmental fund types and their definitions are listed below:
General Fund
- to account for all financial resources not accounted for in
another fund.
Special Revenue Fund
– to account for specific revenue sources that are
restricted or committed to expenditures for specified purposes other than debt
service or capital projects.
Debt Service Fund
– to account for the accumulation of resources for, and the
payment of, general long-term debt principal and interest.
Capital Projects Fund
- to account for financial resources are restricted,
committed, or assigned to expenditures for capital outlays.
For the most part, the GASB definitions just provided clarification to the current
definition; however the special revenue funds types require additional review. Our
auditors, Baker Tilly Virchow Krause, LLC have requested that we review all funds to
make certain of the fund type determination under the new GASB standard. To meet
the definition of a special revenue fund must have a specific revenue source and
expenditures must be for a specific project.
To be in compliance with GASB Statement No.54 requirements, at year-end 2010 the
uncompleted projects fund and several activities in the “special accounts” fund were
closed. Funds in the amount of $290,454 from these accounts were recorded as
revenue (Transfer In) in the general fund. These transfers were a major contributor to
the fund balance increase reported in 2010.
Another part of this review requires that each special revenue fund have its resources
restricted by external grants, state statues, or committed by enabling legislation of the
City Council (via resolution or ordinance). There has been a review of the City of
Janesville’s 28 special revenue funds and 34 activities within the Special Accounts fund
to make certain the accounts meet the new special revenue definitions. Since many of
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these special revenue funds/activities were set-up years ago, evidence of enabling
legislation is not readily available. To satisfy the requirements of GASB Statement No.
54, a City Council resolution needs to be adopted to formally commit the following
special revenue funds for specific purposes.
Resolution 2011-828 commits the special revenue items as listed below:
20% of the Cable TV franchise fees shall be committed for the cost related
to operation of JATV-12
Resources of the Golf Courses Special Revenue Fund shall be committed
for the costs associated with the Golf Courses
37.5% of the Room Tax collected shall be committed for the support of the
Janesville Visitor and Convention Bureau
Resources collected in the Parkland Acquisition Special Account fund
shall be committed to the cost associated with acquiring and improving
parkland
Resources collected in the Crime Prevention Special Account Fund shall
be committed to the for cost associated with crime prevention activities
Resources collected in the Federal Forfeiture Sharing Special Account
Fund shall be committed to the cost associated with for drug enforcement
activities and / or police equipment
Resources collected for Police Department Drug Unit shall be committed
to the cost associated with for drug enforcement activities
Resources collected from the Janesville School District for Police Liaison
Service in the Special Account Fund shall be committed to the costs
associated with school resource officers
Resources collected from the Townships surrounding Janesville in the
Rural Fire Protection Special Account Fund shall be committed to the
costs associated with Fire Protection Services
Resources collected in the Landfill Long-term Care of Site 3023 Special
Account shall be committed to the cost associated with long-term care of
landfill site 3023
cc: Eric Levitt, City Manager
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CITY OF JANESVILLE Policy No. 75
Page 1 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date 5/13/97
Special Subject: Debt Management Cancellation Date
DRAFT
Supersedes #75 of 5-13-
97
PURPOSE
To record and clarify the City Council's policy regarding the
management and issuance of debt.
STATEMENT OF POLICY
In accordance with State Statutes, Chapter 67, the City is
granted the authority to issue debt. The following practices and
procedures shall be followed by the City:
1. Conditions for Debt Issuance
The City shall limit the issuance of debt to capital
outlays (and costs associated with the capital outlay),
including the acquisition or construction of capital
facilities, infrastructure, and other capital assets.
2. Capital Improvement Program
The Administration prepares an updated Capital Improvement
Program on a bi-annual basis. The Capital Improvement
Program will indicate the source of funding for all
proposed capital projects and/or assets.
The first year of the Capital Improvement Program will be
included in the Annual City Budget. Those projects and/or
assets which require financing through the issuance of debt
will be reconsidered when the City Council undertakes the
Debt Issuance process.
3. General Obligation Debt
The City will issue General Obligation Debt for those
capital improvement projects benefiting the City as a whole.
Such debt would be secured by the full faith, credit, and
taxing powers of the City.
Every capital improvement project proposed for financing
through general obligation debt should be accompanied by a
full analysis of the future operating and maintenance costs
associated with the project, including the impact of the
CITY OF JANESVILLE Policy No. 75
Page 2 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date 5/13/97
Special Subject: Debt Management Cancellation Date
DRAFT
Supersedes #75 of 5-13-
97
proposed project on the annual operating budget.
Whenever possible, the City will finance capital
improvement projects by using self-supporting Revenue or
Special Assessment Bonds. Such Bonds assure the greatest
degree of equity because those who benefit from a project
closely match those who pay for a project.
3.1 Debt Limit
Section 67.03(1) of the Wisconsin Statutes provides that
the amount of indebtedness of a municipality shall not
exceed five (5) percent of the equalized assessed valuation
of the taxable property in the municipality.
The City shall limit outstanding General Obligation Debt to
less than 2.5% percent of the equalized assessed value. The
City Council, by super majority vote, may increase the
stated debt limit.
The City recognizes the importance of issuing debt
prudently and should first determine its long-term
financial capability to repay.
4. Revenue Debt
To promote taxpayer equity, the City will consider the
issuance of Revenue Debt for capital improvement projects
providing benefits to specific users. Such debt would be
secured by revenues of the financed project.
However, if the projected revenues will not be sufficient
to meet the corresponding annual debt service payments or the
credit rating of the proposed Revenue Debt instrument would
result in an adverse interest rate, the City would consider
issuing General Obligation Debt for such projects.
5. Debt Service Limitations
Annual General Fund Debt Service payments for General
CITY OF JANESVILLE Policy No. 75
Page 3 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date 5/13/97
Special Subject: Debt Management Cancellation Date
DRAFT
Supersedes #75 of 5-13-
97
Obligation Debt, exclusive of that funded by enterprise
operations or debt approved exceeding the debt limit
described above, shall not exceed 15 percent of annual
General Fund expenditures.
6. Review of Financing Alternatives
The City will seek all possible Federal and State
reimbursements for mandated projects and/or programs.
The City will encourage pay-as-you-go financing of capital
improvement projects where feasible. However, it will
strive to maintain a balanced relationship between issuing
debt and pay-as-you-go financing to ensure property tax
stabilization.
The City will seek to maintain a sufficient General Fund
cash balance in order to prevent the need for external cash
flow borrowing.
7. Timing of Debt Issuance
Debt should be issued when projects are or will be for bid
or construction start within 6 months. Projects funded with
borrowed funds should be completed within 24 months from of
the issuance of debt. If funds are not expended within 18
months, consideration should be given to reprogramming the
funds for another approved project.not
8. Characteristics of Debt Issuance
The issuance of debt for funding annual general operating
expenditures will be prohibited.
The average maturities of long-term obligations shall
notonly exceed 10 years if the expected useful life of the
capital project or asset financed justifies it.
The scheduled maturities of long-term obligations should
not exceed the expected useful life of the capital project
or asset(s) financed.
CITY OF JANESVILLE Policy No. 75
Page 4 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date 5/13/97
Special Subject: Debt Management Cancellation Date
DRAFT
Supersedes #75 of 5-13-
97
9. Debt Issuance Process
The City will use competitive sales as the primary means of
selling long-term bonds and notes. Negotiated sales will
be permitted only if there is evidence of volatile market
conditions, complex security features, or other unique
factors.
Bonds
- The issuance of bonds requires the City Council to
follow various procedures identified in State Statutes
67.05. These include separate Council actions to authorize
and establish the bond details and are comprised of, but
not limited to, setting the final amount of bonds to be
issued.
Promissory Notes
- Although State Statutes 67.12 permits
the City Council to combine the authorization and details
of a note issue into one Council action, the Council will
adopt the aforementioned issuance procedure required for
bonds.
10. Professional Services
The City shall retain an independent financial advisor for
debt structuring, the rating review process, marketing debt
issuances, sale and post-sale services, and to assist in
issuing the City's official statement.
The City shall retain bond counsel for legal and procedural
advice on all debt issuances, which include determining the
legal authority to issue the proposed debt and that it
qualifies for tax exempt status.
11. Rating Agency Relations
The City will maintain effective communications with
financial and debt rating agencies concerning the City's
financial condition. The City's Comprehensive Annual
Financial Report shall be distributed to the rating
CITY OF JANESVILLE Policy No. 75
Page 5 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date 5/13/97
Special Subject: Debt Management Cancellation Date
DRAFT
Supersedes #75 of 5-13-
97
agencies.
Additionally, the City recognizes there are several key
debt ratios used by investors and financial rating analysts
when reviewing the City's credit worthiness. Therefore, the
City will address the following ratios:
Debt Per Capita.
Debt as a Percentage of Equalized Property Value.
Annual Debt Service as a percentage of annual
General Fund operating expenditure
appropriations.
The City will comply with the Security and Exchange
Commission’s reporting requirements concerning "Continuing
Disclosure Undertakings".
12. Bond Rating Goals
The City will seek to maintain and improve its bond rating
to minimize borrowing costs and to ensure access to credit
markets.
CITY OF JANESVILLE Policy No. 88_
Page 1 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date ______
Special Subject: Fund Balance Cancellation Date
DRAFT
Supersedes No.
PURPOSE
The objectives of this fund balance policy are as follows:
Preserve the credit worthiness (credit rating) of the City
for borrowing monies at favorable interest rates.
Provide working capital for the City to meet cash flow
needs during the year.
Provide a comfortable margin of safety to address
unanticipated expenditures / emergencies and unexpected
declines in revenue due to economic downturns, natural
disasters, etc.
Provide a resource to stabilize fluctuations from year to
year in the property taxes paid by the City taxpayers.
STATEMENT OF POLICY
This statement identifies the amount the City of Janesville will
strive to maintain in its unrestricted General Fund balance, how
the fund balance will be funded, and the conditions under which
fund balance may be spent.
1. Fund Balance Reporting Categories
This policy follows the Fund Balance reporting categories
stated in Government Accounting Standards Board (GASB)
Fund Balance Reporting and Governmental
Statement No. 54,
Fund Type Definitions
. This statement impacts governmental
fund types. The fund balance will be reported in these five
categories: Nonspendable Fund Balance, Restricted Fund
Balance, Committed Fund Balance, Assigned Fund Balance and
Unassigned Fund Balance.
2. Flow of Funds
It is the policy of the City of Janesville that in cases
where multiple types of funds are available to pay for
expenditures in the various funds, restricted resources
will be used first, followed by committed, assigned, and
finally unassigned. Unrestricted fund balance includes
committed, assigned and unassigned fund balances.
CITY OF JANESVILLE Policy No. 88_
Page 2 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date ______
Special Subject: Fund Balance Cancellation Date
DRAFT
Supersedes No.
3. Procedures
In order to achieve the objectives of this policy, the
following guidelines shall be adhered to by the Common
Council:
3.1 The unrestricted General Fund balance should be
between 15 and 25 percent of the budgeted general fund
operating expenditures for the subsequent year. The
target goal is that the unrestricted fund balance be
two months of the general fund operating expenditures.
3.2 The City will maintain appropriate commitments or
assignments of General Fund, special revenue funds,
debt service funds and capital projects funds for
specified purposes, including but not limited to
contingencies, compensated absences or similar items.
Commitments and/or assignments of fund balance shall
be made pursuant to appropriate legislation adopted by
the City Council.
3.3 As part of the annual budget process, the Comptroller
will estimate the surplus or deficit for the current
year and prepare a projection of the year-end
unrestricted General Fund balance. Such projection
will include an analysis of trends in fund balance
levels on an historical and future projection basis.
Any anticipated balance in excess of the minimum
unrestricted General Fund balance may be assigned to
other purposes, or budgeted to reduce the ensuing
year’s property tax levy.
3.4 Funds in excess of the targeted unrestrictedtargeted
unrestricted General Fund balance may be considered to
supplement “pay as you go” capital outlay expenditures
(including reduction of anticipated debt issues).
Unrestricted fund balance above the targeted
unrestricted General Fund balance may be used to
support recurring operating expenditures in times of
CITY OF JANESVILLE Policy No. 88_
Page 3 of 4
CITY COUNCIL POLICY STATEMENT
Date Issued
General Subject: Administration Effective Date ______
Special Subject: Fund Balance Cancellation Date
DRAFT
Supersedes No.
fiscal stress, but this practice is discouraged.
3.5 Withdrawal of any amount of unrestricted General Fund
balance in excess of the targeted minimum of the
amount budgeted under (3.1) above, for the sole
purpose of reducing the ensuing year’s property tax
levy, may be made only upon a supermajority vote of
the City Council.
3.6 The Common Council, by vote, can declare a fiscal
emergency and withdraw any amount of General Fund
balance for purposes of addressing the fiscal
emergency. Any such action must also provide for
necessary appropriations to restore the unrestricted
General Fund balance to the minimum balance within a
three-year period.
3.7 This policy will be reviewed by the City Manager’s
Office every three years following adoption or sooner
at the direction of the Common Council.
3.8 It is the policy of this government that assignments
of fund balances and resources within a fund may be
determined by the Comptroller.
RESOLUTION NO. 2011-828
A Resolution to Approve Commitment of Fund Balances.
WHEREAS, the Governmental Accounting Standards Board (GASB) has issued Statement No.
54, which changes the terminology used for fund balance reporting on balance sheets of
Governmental Funds; and
WHEREAS, to meet the new GASB Statement No. 54 definition of a special revenue fund, the
specific revenue source must be committed to expenditures for specified purposes; and
WHEREAS, Administrative Services has reviewed the new terminology; and
WHEREAS, 20% of the Cable TV franchise fees shall be committed for the cost related to
operation of JATV-12; and
WHEREAS, resources of the Golf Courses Special Revenue Fund shall be committed for the
costs associated with the Golf Courses; and
WHEREAS, 37.5% of the Room Tax collected shall be committed for the support of the
Janesville Visitor and Convention Bureau; and
WHEREAS, resources collected in the Parkland Acquisition Special Account fund shall be
committed to the cost associated with acquiring and improving parkland; and
WHEREAS, resources collected in the Crime Prevention Special Account Fund shall be
committed to the for cost associated with crime prevention activities; and
WHEREAS, resources collected in the Federal Forfeiture Sharing Special Account Fund shall be
committed to the cost associated with for drug enforcement activities and/or police equipment;
and
WHEREAS, resources collected for Police Department Drug Unit shall be committed to the
costs associated with for drug enforcement activities; and
WHEREAS, resources collected from the Janesville School District for Police Liaison Service in
the Special Account Fund shall be committed to the costs associated with school resource
officers; and
WHEREAS, resources collected from the Townships surrounding Janesville in the Rural Fire
Protection Special Account Fund shall be committed to the costs associated with Fire Protection
Services; and
WHEREAS, resources collected in the Landfill Long-term Care of Site 3023 Special Account
shall be committed to the costs associated with the long-term care of landfill site 3023.
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Janesville that
the above enumerated commitments of the special revenue funds for specific purposes are hereby
approved and adopted.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Brunner
Dongarra-Adams
Eric J. Levitt, City Manager
Liebert
McDonald
ATTEST:
Rashkin
Steeber
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
Wald Klimczyk, City Attorney
Proposed by: Administrative Services
Prepared by: Administrative Services