S-1396 - 03/11/2014 - BUDGET - Ordinances Supporting Documents ITEM 6.F.e3)
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AGENDA ITEM
Regular Board of Trustees Meeting
of
March 11, 2014
SUBJECT: Transfers Among Budget Line Items
FROM: Sharon Dangles,Finance Director
BUDGET SOURCE/BUDGET IMPACT: Effects Numerous Budget Programs
RECOMMENDED MOTION: I move that the Village Board approve Ordinance 5-1396,
"An Ordinance Authorizing Transfers Among Budget Line Items" for the year ended
December 31,2013.
Background/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 2013 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:
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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 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 General Corporate Fund ended the year with an increase in fund balance of$974,103. The
total revenues were $21.8 million with total expenditures of $20.8 million. The actual total
expenditures are over the budgeted expenditures by $.7 million for the year ending December 31,
2013. Please note that in some cases "over budget" does not mean that money was over spent.
There are numerous situations that occur during the year that may cause a particular line item to
go over the annual budget. The following is a brief explanation of the causes of program
transfers that exceed $10,000:
Program 121-Legal: Account 121-76300 (Outside Legal Services) is over budget in total by
$22,500 due to pending litigation. The Legal contingency budgeted amount of$22,500 was used
to offset these legal expenses.
Program 132-Human Resources: Outside Legal Services is over budget by $20,310 due to
ongoing litigation cases with PSEBA and personnel matters.
Program 134-Risk Management: Account 134-70100 (Risk Management) is over budget by
$54,155 due to higher than expected deductibles.
Program 151-Information Services: Account 151-71100 (Telecom Services) is over budget by
$11,650 due to replacement of wireless modems in the public safety vehicles. The Internet
Services and Maintenance—Computers accounts were used to offset this expense.
Program 293-PSEBA Benefits: Account 293-51520 (PSEBA Benefits) is over budget by
$18,450 due to one additional member receiving this benefit.
Program 621-Police Field Services: Account 621-50100 (Salaries—Part Time) is over budget by
$13,810 and Account 621-50300 (Overtime) is over budget by $74,465 due to patrol level
staffing of five new officers in training, six officers out on injury/surgery or illness for extended
periods of time, overtime associated with deployment of Officer Walsh, Taste of Oak Brook, and
flood event in April. Account 621-51200 (Police Pension) is over budget by $65,515 from
actuarial calculations approved by the Board.
Program 632 —Police Investigations: Account Salaries-Overtime is over budget by $16,500 due
CD Peacock shooting and robbery. Account 632-51200 (Police Pension) is over budget by
$12,710 from actuarial calculations approved by the Board.
Program 700-Fire, Rescue & EMS Operations: Account 700-52100 (Physical exams) is over
budget by $12,185 due to timing of invoice payment. The exams occurred in 2012 and paid in
2013.
Program 711-Fire, Rescue & Service Mgt_: Account 700-50000 (Salaries — Full-time) is over
budget by $25,285 due to a retirement with the final payouts.
Program 360 — Public Works Management: Liability Insurance (Account 360-70100) is over
budget by $15,305 due to more than expected deductible payments.
Program 363 — Snow Removal: Overtime (Account 363-50300) is over budget by $14,105 due
to weather conditions.
Program 366—Safety Pathway Maintenance: Pathway seal coating (Account 366-76450) is over
budget by $42,415. This amount was budgeted for in maintenance supplies and used to offset
this cost.
Program 351-Water Operations: Account 351-50300 (Overtime) is over budget by $14,350 due
to additional manpower needed during the year. Account 351-65000 (General Equipment) is
over budget by $45,365 due to the cost of water meters. Account 351-74300 (DWC Oper. &
Maint. costs) is over budget by $162,200 due to water purchased being higher than expected
from budget.
Program 451-Water System Improvements: General Equipment is over budget by $103,140 due
to the expenses being budgeted in Water Distribution Improvements.
Program 811 — Sports Core General Operations: Part-time salaries is over budget by $14,510
due to money being budgeted in a different line item. Therefore, a reclassification from the Full-
time salaries line item was offset for this expense.
Program 812 — Swimming Operations: Maintenance - Other Equipment is over budget by
$20,660 due to pool heater repairs. Therefore, a reclassification from the Structural
Improvements line item is needed.
Program 821 —Clubhouse Food & Beverage Operations: Account 821-50200 (Seasonal) is over
budget by $20,085 and overtime by $11,920 due to the staffing needed for the number of events
booked. Maintenance buildings was over budget by $10,325 due to emergency HVAC repairs.
Program 823 — Golf Food & Beverage: Part-time salaries is over budget by $10,855 due to the
employee working off season to assist with food & beverage operations. Beverage/liquor cost
was over budget by $12,190 due to demand.
Program 831-Golf Club General Operations: Account 831-50000 (Salaries — Full-time) is over
budget by $17,840 due to reallocation of director's pay.
Program 342- Equipment Replacement: Account 342-65000 (General Equipment) is over
budget by $10,910. The item was budgeted in account 342-90200 and therefore a
reclassification is needed to offset this expense.
Budget Amendments
During 2013, there were some occurrences that caused the actual expenditures to exceed the
budgeted expenditures. The General Corporate Fund, account 271-80200 is over budget by
$725,325 due to transfers to other funds. A transfer of$515,000 to the Self Insurance Fund was
needed to cover higher than expected insurance claims over the last few years. A transfer of
$96,003 to the Polo account was needed to cover the unbudgeted expenses, a transfer to the
Sports Core Fund for $91,589 was needed to cover end of year operating expenses and $22,732
to pay for golf drainage study approved by the Village Board. A budget amendment of$176,900
is needed in accounts 634-76750 and 711-76750 (Du-Comm) to cover the unbudgeted amount
for Du-Comm fees due to DuComm providing the village with a 2013 budgeted amount that was
less than 12 months. For Fire pension, a budget amendment is needed for $71,140 to cover the
increased amount due to the actuarial results approved by the Board. This was mainly due to a
change in the mortality table and other factors. Account 283-80700 (Debt Principal) in the Tax
Increment Financing Fund is needed due to a higher than expected principal payment on the
note.
Please feel free to contact me if you should have any comments or questions.
ORDINANCE 2014-BU-EX-S-1396
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, 2013 and ending December
31, 2013, 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 General Corporate Fund budget is amended by increasing the amount in account
271-80200, "Transfer Out/In", by $726,000, account 634-76750 "Du-Comm", by $127,555, account 700-
51300 "Fire Pension", by $71,140, and account 711-76750 "Du-Comm", by $49,345, which increases
shall be funded by this Fund's fund balance.
Section 4: The Promenade TIF Fund budget is amended by increasing the amount in account
283-80700, "Debt Principal", by $10,100, which increase shall be funded by this Fund's fund balance.
Section 5: The Sports Core Fund budget is amended by increasing the amount in account 815-62000,
"Flowers", by $2,905, account 815-62450, "Copying & Printing" by $7,350, account 815-63200, "Food
cost" by $33,955, account 815-63250, "Beverage/Liquor cost" by $14,485, account 815-72600, "Rentals"
by $45,845, account 815-73600, "Promotional" by $11,585, account 815-76310, "Village Attorney" by
$8,465, account 815-76700, "Contract Services" by $44,625, and account 815-76900,
"Reception/Entertainment" by $3,190, which increases shall be funded by this Fund's fund balance.
Section 6: This ordinance shall be in full force and effect from and after its passage and approval
as required by law.
Section 7: 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 11th day of March, 2014.
Gopal G. Lalmalani
Village President
PASSED THIS 11th day of March, 2014.
Ayes:
Nays:
Ordinance 2013-BU-EX1-S-1396
Authorizing Transfers Among Budget
Line Items Page 2 of 2
Absent:
ATTEST:
Charlotte K. Pruss
Village Clerk