S-1279 - 03/09/2010 - BUDGET - Ordinances Supporting DocumentsITEM 6.G.3)
AGENDAITEM
Regular Board of Trustees Meeting
of
March 9, 2010
SUBJECT: Transfers Among Budget Line Items
FROM: Sharon Dangles, Acting Finance Director
BUDGET SOURCE/BUDGET IMPACT: Effects Numerous Budget Programs
RECOMMENDED MOTION: I move that the Village Board approve Ordinance 5 -1279,
"An Ordinance Authorizing Transfers Among Budget Line Items" for the year ended
December 31, 2009.
Backcround/History:
During the course of a year, there are numerous situations that may arise that cause an account,
program, or even a fund to exceed its budget. When this occurs, State statutes provide that the
corporate authorities may make transfers from "one corporate object or purpose to another
corporate object or purpose ". Additionally, statutes provide that the corporate authorities may
delegate authority to heads of municipal departments to "delete, add to, change, or create sub-
classes within object classes budgeted previously to the department with the approval of the
budget officer or executive officer of the municipality ". The Village has defined a corporate
object or purpose to be an individual program or fund. Sub - classes within object classes have
been defined as accounts and categories within a budget program.
Now that all of the year -end accounting adjustments have been made, several budget accounts,
categories, and programs have been determined to have ended 2009 over budget. The Village
Board's policy on Finance, Taxation, and Budget, prepared based on the previously mentioned
statutes, outlines the following procedures for budget administration and how these variances are
to be addressed:
p V1
1. That the Budget Officer, with the approval of the Village Manager, may authorize
transfers of budgeted funds between accounts or between account categories within a
single budget program.
2. That any transfer of budgeted funds from one budget program to another shall be
subject to approval by the Board of Trustees upon the recommendation of the Village
Manager.
3. That any transfer from contingency shall be subject to approval by the Board of
Trustees upon the recommendation of the Village Manager.
4. That any increase in the total appropriation within any fund shall be subject to
approval by the Board of Trustees upon the recommendation of the Village Manager.
In order to make as few changes to the originally adopted budget as possible, formal budgetary
control has been established at the category level, i.e. personnel, materials and supplies,
operation and contractual, and capital. For example, if staff turnover created a need for
overtime, this may lead to the overtime account going over budget. However, this would likely
be offset by an underbudget salary account. By not doing budget transfers for these types of
situations we preserve the original budget as the basis for evaluating our actual performance
versus expected performance.
Through Budget Year 2002, staff approved an extensive listing of budget transfers
administratively due to budget variances in account categories within a single budget program as
provided for under Procedure #1. In practice, these transfers were only reflected in the Village's
audit report-our accounting records were never adjusted for any budget transfers in order to
maintain proper original budget/actual comparison data. With the new reporting requirements
associated with GASB Statement #34, the Village is now required to publish original budget
amounts in addition to revised budget amounts in its audit report. This new requirement reduces
the value of these administrative transfers required under option #1. After consultation with the
Village's auditors, in Budget Year 2003 and thereafter only program -to- program transfers and
additional fund appropriations are recorded. These transfers are required since this is the level of
legal control where budget compliance is measured.
In addition to the budget transfers required under the Village's Financial Policy ordinance,
during 2004 the Village Board began requiring budget transfers during the year when an
individual line item account exceeded budget by more than 10 %. This policy was revised in
October, 2006 by eliminating the 10% threshold and instead requiring line item transfers when
an account exceeds its budget by $2,500 in a material and supply, operation and contractual or
capital account (6000 to 9000 account series) or $10,000 in a personnel series account (5000
account series). Many of these transfers have already been approved by the Village Board and
have been posted to the accounting system; thus, these transfers are not reflected here.
Please note that all transfers are only for the amounts necessary to offset the individual program
budget variances, and in most cases the transfer is done only to the individual line item that has
the largest variance. In most cases it is several accounts that would cause a program to exceed
its budget. Also, in some cases the variance in a particular line item may be greater than the
amount of the transfer, with offsets found in other line items within the budget program. After
these transfers are made, numerous line -items and categories will remain over budget; however,
each program in total will be within budget.
Program Transfers
The total actual expenditures is under the budgeted expenditures by $1.8 million for the year
ending December 31, 2009. The following is a brief explanation of the causes of program
transfers that exceed $10,000:
Program 111 -Board of Trustees: Expenditures for line item account 111 -76950 Consulting
Services is over budget due to the unbudgeted cost of a fire staffing study, library staffing study
and lobbying service agreement.
Program 121 - Legal: Account 121 -76300 (Outside Legal Services), 121 -76310 (Village
Attorney) and 121 -76320 (Village Prosecutor) is over budget in total by $79,485 due to ongoing
litigation. The Legal Contingency budgeted amount of $100,000 was used to offset these legal
expenses.
Program 132 -Human Resources: Account 132 -76300 (Outside Legal Services) is over budget by
$107,340 due to ongoing litigation and negotiating of two union contracts with the Police and
Fire Departments.
Program 141 - Purchasing: Expenditures for line item account 141 -50000 (Full -Time Salaries) is
over budget due to separation payouts of accrued vacation, severance, etc.. to the US and
Purchasing Director who took the early retirement package offered in 2009.
Program 151- Information Services: Account 151 -50000 (Full -Time Salaries) is over budget by
$10,615 due to an early retirement of the US and Purchasing Director with the payout of final
benefits. Account 151 -54050 (Unemployment Compensation) is over budget by $11,215 due to
the unbudgeted reduction in workforce that occurred in 2009. Account 151 -91600 Computer
Hardware & Software is over budget by $16,930 for security related projects.
Program 181 - Community Events: For budget purposes $20,000 was budgeted as a "net' amount
after donations and food vendor payments for the General Fund contribution for Independence
Day. On an accounting basis, we are required to record the revenues and expenses separately.
Thus, the expenditure variance of $24,685 is offset by donation and fee revenue of $24,635 in
the General Fund.
Program 281 - Installment Contract Debt Service: Account 281 -77300 (Bond Issuance Costs) was
offset by the savings in interest expense due to the refunding of the debt service.
Program 621 - Police Field Services: Police Pension contributions of $139,895 are over budget
due to the actual contribution rate of 29.98% being over the rate of 24.00% assumed in the
budget.
Program 631 - Police General Support: Police Pension contributions are over budget due to the
actual contribution rate of 29.98% being over the rate of 24.00% assumed in the budget.
Program 632 - Police Investigations: Salaries Overtime is over budget due to a number of events
that occurred this year which required more coverage. Police Pension contributions are over
budget by $28,160 due to the actual contribution rate of 29.98% being over the rate of 24.00%
assumed in the budget.
Program 700 -Fire, Rescue & EMS Operations: Firefighters' Pension Fund contributions are
over budget by $50,445 due the actual contribution rate of 35.37% being above of the rate of
30.00% assumed in the budget.
Program 711 -Fire Service Management: Firefighters' Pension Fund contributions are over
budget due the actual contribution rate of 35.37% being above of the rate of 30.00% assumed in
the budget.
Program 360 - Public Works Management: Account 360 -80200 (Transfers In/Out) is over budget
due to the General Fund charging the Infrastructure Fund for services incurred by the
administrative staff and legal services. This was a Finance Committee recommendation to
analyze additional costs that could be charged to other funds from the General Fund.
Program 361 - Street General Salaries: Account 361 -50300 (Overtime) is over budget by $12,615
due to some high water occurrences and the Taste of Oak Brook event that occurred in 2009.
Program 362 - Streets & Traffic Maintenance: Account 362 -71300 (Electric) is over budget by
$16,340 due to increased rates compared to last year.
Program 460- Engineering: Full -time salaries are over budget due primarily to separation
payments (accrued vacation, partial sick leave, etc) made to the former Engineering Director.
Program 351 -Water Operations: Account 351 -71700 (Maint. Distribution System) is over
budget by $17,565 due to three water main breaks that occurred in 2009 totaling $25,000 in
repairs. Account 351 -73450 (Hauling Services) is over budget by $11,670 due to additional fees
associated with the removal, transport and disposal of materials.
Program 821 - Clubhouse Food & Beverage Operations: Account 821 -54050 (Unemployment
Compensation) is over budget by $18,775 due to the unbudgeted reduction in workforce that
occurred in the 4`h quarter of 2009.
Program 831 -Golf Club General Operations: Account 831 -54050 (Unemployment
Compensation) is over budget by $11,105 due to the unbudgeted reduction in workforce that
occurred in the 4"' quarter of 2009.
Program 133 - Employee Benefits: Account 133 -70340 (HMO Premiums) is over budget due to
more employees than expected moving from a PPO plan to a HMO Plan.
Program 341 - Garage Operations: Account line item 341 -71600 (Maintenance Vehicles) is over
budget by $18,310 due to the cost of vehicle repairs exceeding budget.
Fund Appropriation Amendments
Promenade Snecial Tax Allocation Fund
The Real Estate Taxes received from DuPage County on the Tax Increment Financing District
exceeded the budget, therefore having more sufficient cash on hand. This allowed the Village to
release a higher interest payment on the note than what was budgeted for. There is only one
budget program in Fund 42- Promenade Special Tax Allocation Fund, no other program is
available to transfer funds from in order to address this budget variance. Thus, in lieu of a
budget transfer, a fund appropriation amendment is required.
Please feel free to contact me if you should have any comments or questions
ORDINANCE 2010- BU -EX1 -S -1279
AN ORDINANCE AUTHORIZING TRANSFERS
AMONG BUDGET LINE ITEMS
WHEREAS, the Village Manager has recommended certain transfers among budget line items in
the Annual Budget Ordinance passed for the fiscal year beginning January 1, 2010 and ending December
31, 2010, and certain transfers of sums of money in said Budget Ordinance from one object or purpose to
another object or purpose; and
WHEREAS, the Village President and Board of Trustees concur with and approve of the Village
Manager's recommendations.
NOW, THEREFORE, BE IT ORDAINED BY THE PRESIDENT AND BOARD OF TRUSTEES OF
THE VILLAGE OF OAK BROOK, DU PAGE AND COOK COUNTIES, ILLINOIS that the following
transfers are hereby authorized:
Section 1: The recitals above are hereby incorporated into and made a part of this ordinance.
Section 2: In the attached schedule, attached as "Exhibit A ", the amounts shown in the column
titled "Transferred From" represent unexpended balances. The total of said amounts are hereby
transferred to the various items specified in the "Transferred To" column immediately opposite the items
specified in the "Transferred From" column.
Section 3: The Promenade Special Tax Allocation Fund budget is amended by increasing the
amount budgeted in account 283 - 80100, "Interest Expense ", by $50,000, which increase shall be funded
by this Fund's fund balance.
Section 4: This ordinance shall be in full force and effect from and after its passage and approval
as required by law.
Section 5: All ordinances or parts thereof in conflict with the provisions of this ordinance be and
the same are hereby repealed to the extent of such conflict.
APPROVED THIS a day of March, 2010.
PASSED THIS 91" day of March, 2010.
Ayes:
Nays:
Absent:
John W. Craig
Village President
ATTEST:
Charlotte K. Pruss
Village Clerk