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AGENDA ITEM
Regular Board of Trustees Meeting
of
March 13, 2012
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 -1330,
"An Ordinance Authorizing Transfers Among Budget Line Items" for the year ended
December 31, 2011.
Backeround/Historv:
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 2011 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:
ctl �
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 ncy 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 41. 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 total actual expenditures are under the budgeted expenditures by
$2.2 million for the year ending December 31, 2011. Please note that "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 -76320 (Village Prosecutor) is over budget in total by $14,400
due to ongoing litigation. The Legal Contingency budgeted amount of $50,000 was used to
offset these legal expenses.
Program 131 - General Management: Salaries Full Time is over budget by $13,000 due to an
employee bonus of $5,000 and the budgeted allocation of payroll differed to the actual
allocation, as a person's time can be spent in different programs.
Program 134 -Risk Management: Account 134 -70100 (Liability Insurance) is over budget by
$25,000 due to claims being higher than budgeted. Liability Insurance is broken out into
numerous programs, therefore on a whole Liability Insurance exceeded the budget by $33,573.
Program 221 - Accounting & Reporting Account 221 -73150 Ambulance Billing is over budget
by $11,605 due to higher volume this year.
Program 335 - Forestry: Tree Services (account 335- 76800) is over budget by $30,000 due to the
unanticipated storm damage.
Proaxam 611 - Police Services Management: Account 611 -50000 (Salaries — Full Time) is over
budget by $20,200 due to the resignation of the Police Chief with final benefit payouts and staff
early retirement payments.
Program 633 - Communications Center: Account 633 -50000 (Salaries — Full Time) is over budget
by $14,000 due to the early retirement that occurred in 2011 with the payment of final benefits.
Program 461 - Roadway Improvements: Account 461 -76200 (Engineering Services) is over
budget by $15,200 due to professional services performed.
Program 351 -Water Operations: Account 351 -50000 (Salaries — Full Time) is over budget by
$24,000 and Salaries — Overtime by $13,000 due to actual payroll expenses exceeding budget.
The Public Works union contract was signed in April, 2011 and an estimate was used for the
2011 Budget. Account 351-65000 (General Equipment) is over budget by $34,100 due to the
cost of water meters. Account 351 -70100 (Liability Insurance) is over budget by $33,000 due to
deductible payments being higher than budgeted.
Program 451 -Water System Improvements: General Equipment is over budget by $12,500 due
to the expenses being budgeted in a different account.
Program 811 -Sports Core General Operations: Salaries Full -time is over budget by $20,000 due
to an employee who left and received final payout amounts from the value of their accumulated
time on the books.
Program 812 — Swimming Operations: Maintenance services is over budget by $15,000 due to
repairs needed at the Pool for the dive stand and pump room clean up.
Program 813 — Summer Tennis: Account 813 -50200 (Seasonal Salaries) was over budget by
$14,100 due to the need for additional help needed to meet the demands of the tennis program.
Program 816 — Open Field: Taste of Oak Brook expenses were over budget by $10,500,
however the revenues covered these expenses for the event.
Program 821 — Clubhouse Food & Beverage Operations: Account 821 -50200 (Salaries -
Seasonal) is over budget by $20,500 because the original budget for this employee was
accounted for in Sports Core Administration. We are just moving the budgeted dollars from one
program to another. Account 821 -72200 ( Maint. Buildings) is over budget by $11,100 due to
roofing repairs and stair replacement.
Program 823 — Golf Food & Beverage: Part-time salaries is over budget by $54,300 and
overtime by $10,500 due to the employee working off season to assist with the transition from
Calihan's to preferred catering. In addition, the employee also assisted with the Poolside Grill
operations. Other accounts were under budget, therefore this expense was covered. Account
823 -54050 (Unemployment Compensation) is over budget by $14,000 due to the unbudgeted
amount based on former employees gaining employment. Food Cost in this program of $14,000
was not allocated to the Poolside Grill during the year, therefore a budget transfer is needed at
year end. Maint. Other Equipment is over budget by $12,000 due to emergency air conditioning
repairs and compressor replacement. Other accounts were under budget, therefore this expense
was covered.
Program 831 -Golf Club General Operations: Account 831 -50000 (Salaries —Full Time) is over
budget by $12,000 due to the expense being budgeted for in contract services. Originally,
maintenance work was going to be contracted out and it was decided during the year to utilize a
public works employee. We are moving the budgeted dollars in contract services to full -time
salaries to cover the variance. Account 831 -72200 ( Maint. Buildings) was over budget by
$13,800 due to the emergency heating and cooling repairs.
Program 133 - Employee Benefits: Account 133 -70300 (Specific Premiums) is over budget by
$10,200 due to higher claims. Specific Premiums are stop -loss reinsurance for the Village's
insured Health and Dental Plan.
Please feel free to contact me if you should have any comments or questions.
ORDINANCE 2012- BU -EX1 -S -1330
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, 2011 and ending December
31, 2011, 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 Garage Fund budget is amended by increasing the amount budgeted in account
341 - 60300, "Gas & Oil ", by $46,000 and account 341 - 71600, "Maintenance Vehicles ", by $5,000, 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 13'h day of March, 2012.
PASSED THIS 13th day of March, 2012.
Ayes:
Nays:
Absent:
Gopal G. Lalmalani
Village President
ATTEST:
Charlotte K. Pruss
Village Clerk
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