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HomeMy WebLinkAboutResolutions - 1990.05.24 - 16772May 24, 1990 MISCELLANEOUS RESOLUTION #90095 BY: FINANCE COMMI 1 -1.EE, DR. G. WILLIAM CADDELL, CHAIRPERSON IN RE: DEPARTMENT OF MANAGEMENT AND BUDGET - FISCAL POLICIES MANUAL TO THE OAKLAND COUNTY BOARD OF COMMISSIONERS Mr. Chaiiperson, Ladies and Gentlemen: WHEREAS decisions by elected and appointed government officials should be based on useful and valid financial policies;and WHEREAS public confidence in government and voter's approval of its actions requires accountability and timely disclosure of relevant and accurate financial infomration; and WHEREAS capital needs and competition for capital resources have increased the demand by public and private providers for prudent financial management in the context of publicly stated fiscal policies; and WHEREAS the Department of Management and Budget, in cooperation with the County Treasurer, has prepared a FISCAL POLICIES MANUAL covering the following topics: 'General Finacial Goals of the County 'Accounting and Budget Policies 'Purchasing Policies 'Revenue and Investment Policies 'Capital Improvement Policies 'Debt Management Policies 'Reserve Policies 'Communication and Disclosure Policies 'Code of Professional Ethics; and WHEREAS the County Executive has implemented the proposed fiscal policies included therein as a guide for future administrative and legislative decision-making. NOW THERFORE BE IT RESOLVED that the Board of Commissioners adopts the FISCAL POLICY MANUAL recommended by the County Executive and authorizes the Department of Management and Budget and the County Treasurer, respectively, to be responsible for implemen- tation of the policies enumerated therein; Mr. Chairperson, on behalf of the Finance Committee, I move adoption of the foregoing resolution. H F. THE FOREGOING RESOLUTIM, ..., F :I. ' - COMM" II" LEE• 11‘it COUNTY TREASURER C. Hugh Dohany DIRECTOR OF MANAGEMENT and BUDGET Russell D. Martin OAKLAND COUNTY FISCAL POLICIES Implemented By Daniel T. Murphy, County Exective With Concurrence Of The BOARD OF COMMISSIONERS Dennis M Aaron Donald E. Bishop G. William Caddell John P. Calandro Mark W. Chester Larry Crake James D. Ferrens Marilynn E. Gosling Donna R. Huntoon Donald W. Jensen Ruth A. Johnson Richard D. Kuhn, Jr. Susan G. Kuhn Thomas A. Law A. Madeline Luxon Nancy McConnell Michael D. MCCulloch Ruel E. McPherson David L. Moffitt Lillian Jaffe Oaks John E. Olsen John G. Pappageorge Lawrence R. Pemick Hubert Price, Jr. Roy Rewold Richard G. Skarritt Donn L. Wolf TABLE OF CONTENTS Page Number Title Page Table of Contents ii Authorizing Resolution iii Section I: PREFACE 1 Section II: GENERAL FINANCIAL GOALS 2 Section III: ACCOUNTING AND BUDGET POLICIES 2 1) Fund Accounting 3 2) Fixed Assets and Long-Term Liabilities 3 3) Basis of Accounting 3 4) Classification and Terminology 4 5) Financial Reporting 4 6) Budgeting 4 Section IV: PURCHASING POLICIES 6 Section V: REVENUE AND INVESTMENT POLICIES 7 Revenue Policies 8 Gift Donation Acceptance Policies 10 Investment Policies 10 Section VI: CAPITAL IMPROVEMENT POLICIES 12 Section VII: DEBT MANAGEMENT POLICIES 13 Section VIII: RESERVE POLICIES 15 Section IX: COMMUNICATION AND DISCLOSURE POLICIES 16 Section X: CODE OF PROFESSIONAL ETHICS 16 Comment, query, or suggestions are invited regarding aspects of fiscal policy. Please ad- dress to: F. I. PREFACE A. The fiscal policies presented are to further understanding of the basic purposes, goals and objectives of the County. B. "Fiscal Policy" is used here to mean the com- bined policies of Oakland County with respect to resources (including taxes), spending and debt management used in support of County's programs. Its purpose is to provide guidance in the planning and financing of public expenditure. Fiscal policy provides useful guidance for the long-term program- ming of services and facilities, a set of as- sumptions under which budget and tax decisions should be made, and helps set the parameters for governments role. The budget is the result of implementing policies. Fiscal policy applies management principles to so- cial and economic data in developing budgets, business and operations. C. Policy formulation is the responsibility of the Board of Commissioners, who reviews the County Executive's recommendations and es- tablishes policy through the adoption of ap- propriate Ordinances and Resolutions. Policy should be: 1}Definite, positive, and understandable. 2) Translatable into the practices, terms and peculiarities of every department or division of the enterprise 3) Stable or permanent. 4)Predicated on organizational fact and sound judgment. 5) Prescriptive in detail. 6)Consistant with economic principles, be in conformity with State, Federal and other laws, be compatible with the public interest. D. The timely and accurate preparation and adop- tion of Operating and Capital Budgets, a Com- prehensive Annual Financial Report, and a Single Audit Report required for consistent and rational financial management of the County. These Fiscal policies are intended to serve as operating parameters for financial management. The County Executive (as Chief Administrative Officer), the Board of Commissioners, Director of Management and Budget (Fiscal Officer), and the County Treasurer have agreed with these financial policies and guidelines as a way of the County's financial rnanageent. E. The fiscal policy is presented under nine broad policy headings: General Financial Goals, Ac- counting and Budget Policies, Purchasing Policies, Revenue and Investment Policies, Capital Improvement Policies, Debt Manage- ment Policies, Reserves Policies, Com- munication and Disclosure Policies, and Code of Professional Ethics. Department of Management & Budget Oakland County Executive Office Building 1200 North Telegraph Road Pontiac, MI 48053 (313) 858-0490 or 83 a position to respond to changes in the economy or new service challenges. IL GENERAL FINANCIAL GOALS A. Mission and Purpose Statement for the County of Oakland is: —Enhance quality of life of Oakland County citizens by providing needed services while limiting growth in government. —Make County government clearly and directly accountable to its citizens. —Provide leadership through action to en- courage equality of opportunity and im- plementation of rights of all citizens. —Strive to improve conditions for economic growth within the context of preservation and enhancement of human and natural en- vironments. B. Oakland County's general financial goals designed to work towards the above Mission c4r. Purpose are to: I) maintain an adequate financial base to sustain a prescribed level of services (as established by the State and elected County Commissioners.) 2) adhere to the highest accounting and management practices as set by the Fair Accounting Standards Board Government Finance Officers' Association standards for financial reporting and budgeting, the Governmental Accounting Standards Board and other professional standards. 3) have the ability to withstand local and regional economic variations, adjust to changes in the service requirements , and respond to changes in State and Federal priorities and funding. 4) maintain maximum degree of financial flexibility by ensuring that the County is in 5) promote fiscal conservation and to obtain the highest credit rating in the financial community, by ensuring the County: a. pays current bills in a timely fashion, b. balances the budget, c. provides for future costs, services and facilities, d. maintains needed and desired services. 6) assure the County is well managed by using prudent financial management prac- tices and maintaining a sound fiscal condi- tion. III. ACCOUNTING AND BUDGET POLICIES A. The goal of the Accounting Division is to provide the best financial data possible on a timely basis so that the administrative and legislative bodies, as well as the general public, can understand the complete financial circumstances surrounding public decisions and consequences of those decisions can be properly assessed. The goal of the Budget Division is to assist the executive and legislative branches in the ra- tional allocation of County resources to pro- vide economical and efficient public services to effectively meet community needs. These goals are fully consistent with the below stated budget and accounting policies. 2 through the general fixed assets account group. b) Long-term liabilities of proprietary funds and trust funds shall be accounted for through those funds. All other unma- tured general long-term liabilities shall be accounted for through the general long-tenn debt account group. c) Fixed assets shall be accounted for at cost or, if the cost is not practicably deter- minable, at estimated cost. Donated fixed assets shall be recorded at their estimated fair value at the time received. d) Depreciation of general fixed assets shall not be recorded in the accounts of governmental funds except in the general fixed assets account group. Depreciation of fixed assets accounted for in a proprietary fund shall be recorded in the accounts of that fund. Depreciation shall also be recognized in those trust funds where expenses, net income, and/or capi- tal maintenance is measured. 3) Basis of Accounting: The accrual basis of accounting shall be used in measuring financial position and operating results. a) Revenues shall be recognized in the accounting period in which they become available and measurable. (Available means then due, or past due and receiv- able within the current period, and col- lected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. Such time thereafter shall not exceed sixty days). Expendi- tures shall be recognized in the account- ing period in which the fund liability is incurred, if measurable. B. Accounting and Reporting Capabilities must make it possible to: (a) present fairly and with full disclosure the financial position and results of financial operations of the funds and account groups of the county in conformity with generally accepted accounting prin- ciples, and (b) determine and demonstrate compliance with finance-related legal and contractual requirements. Accounting Policies include: 1) Fund Accounting: a) The accounting system shall be or- ganized and operated on a fund basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of ac- counts recording cash and other financial resources, together with all related liabilities and residual equities or balan- ces, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain ob- jectives in accordance with special regulations, restrictions or limitations. b) An optimum number of funds consis- tent with legal and operating require- ments shall be established. Unnecessary funds result in inflexibility, undue com- plexity and inefficient financial ad- ministration, too few funds results in combining unlike functions and lack of clarity. 2) Fixed Assets and Long-Term Liabilities: A clear distinction shall be made between: fund fixed assets and general fixed assets and fund long-term liabilities and general long-term debt. a) Fixed assets related to specific proprietary funds or trust funds shall be accounted for through those funds. All other fixed assets shall be accounted for 3 b) Transfers shall be recognized in the accounting period in which the inter- fund receivable and payable arise. 4) Classification and Terminology: a) A common terminology and clas- sification through utilization of a stand- ard chart of accounts shall be used consistently throughout the budget, the accounts, and the financial reports of each fund. b) Governmental fund revenues shall be classified by fund and source. Expendi- tures shall be classified by fund, func- tion, department, division, unit, group, and object of account. c) Proprietary fund revenues and expen- ses shall be classified in essentially the same manner as those of similar business organizations, functions or activities. d)Inter-fund transfers and proceeds of general long-term debt issues shall be classified separately from fund revenues and expenditures or expenses. 5) Financial Reporting: a) A comprehensive annual financial report covering all funds and account groups of Oaldand County including in- troductory section; appropriate com- bined, combining, and individual fund statements; notes to the financial state- ments; required supplementary informa- tion, schedules; narrative explanations, and statistical table — shall be prepared and published. b) Appropriate interim financial state- ments and reports of fmancial position, operating results, and other pertinent in- formation shall be prepared to facilitate oversight, and where necessary or desired, for external reporting purposes. c) To determine if potential component units should be included in the reporting entity, all the pertinent facts shall be evaluated using the following criteria: I.Financial Interdependency, includ- ing: Responsibility for financing deficits; Entitlements to surpluses; Guarantees of or "moral" respon- sibility for debt. 2. Governing Authority 3. Management 4. Ability to Significantly Influence Operations 5. Accountability for Fiscal Matters 6. Scope of Public Service 7. Financing Relationships d) An independent public accounting firm shall perform an annual audit and will publicly issue an opinion concerning the County's finances, as well as issue a management letter regarding internal controls and compliance with Federal and State laws and regulations. C. Budgeting: I) Oakland County shall prepare a com- prehensive biennial budget and multi-year forecast covering all governmental, proprietary, and fiduciary funds. 2) The annual General Appropriations Act, when signed into law, establishes revenue, expenditure/expense and obligation authority at the summary control levels of Salaries & Fringes, Overtime, and Operat- 4 ing Appropriations for each Division. The County Executive or the Fiscal Officer shall exercise supervision and control of all budgeted expenditures within these limits, holding expenses below individual line- item appropriations or allowing overruns in individual line-items providing that at no time shall the net expenditures exceed the control levels for each division as authorized by the Board of Commissioners. 3) No appropriations measure shall be sub- mitted to or adopted by the Board of Com- missioners in which estimated total expenditures, including an accrued deficit, exceed estimated total revenues, including an available surplus. 4) No obligation shall be incurred against, and no payment shall be made from, any appropriation account unless there is suffi- cient unencumbered balance in the ap- propriation and sufficient funds are or will be available to meet the obligation. 5) Direct expenditure and/or transfers of any unencumbered balance or any portion thereof in any appropriation reserve for transfer account to any other appropriations or reserve account may not be made without amendment of the general appropriation measure. 6) The Fiscal Officer, after the end of each quarter, shall transmit to the Board of Com- missioners a report depicting the financial condition of budgeted operations, includ- ing, but not limited to: a.A forecast of revenues by major source compared with budgeted revenues ac- companied by an explanation of any sig- nificant variances. b.A forecast of expenditures and en- cumbrances by department compared with authorized appropriations accom- panied by an explanation of any sig- nificant variances, and c. A forecast of expenditures, en- cumbrances and transfers from each of the several non-departmental appropria- tions and reserve accounts compared with authorized appropriations accom- panied by an explanation of any sig- nificant variances. d. Recommend remedial action. 7) All appropriations are annual as authorized by the General Appropriations Act and the unexpended portion shall lapse at year end. Encumbrances and appropria- tions carried forward shall be recorded as a reservation of fund balance. Said en- cumbrances and carried forwards require Board of Commissioners approval to be include in subsequent year's budget, as defined in National Council of Governmen- tal Accounting (NCGA), statement 1. a) The biennial budget shall be prepared consistent with the aforementioned ac- counting policies. b) Budgeting comparisons shall be presented in the general purpose finan- cial statements for governmental funds, proprietary funds, and fiduciary funds. c)All budgetary procedures shall con- form with existing State Law and Public Act 621 of 1978, the Uniform Budgeting and Accounting Act for Local Units of Government. d)The budget shall provide for adequate maintenance of the capital plant and equipment, and for their orderly replace- ment. 5 a) Cash balances should be used only for one time expenditures, such as capital equipment and improvements, or contin- gency accounts. b) Ongoing maintenance costs should be financed through recurring operating revenues, rather than through bonds. IV. PURCHASING POLICIES A. The Purchasing Function is vital to governmen- tal agencies, private business and citizens con- cerned with the prudent expenditure of public funds. B. The procurement function shall be the respon- sibility of the Oakland County Purchasing Division of the Department of Management and Budget (as prescribed in Section 13 of Public Act 139 of 1973, the Unified Form of County Government Act) whose goal is to conduct this function in a fair and consistent manner, with equal opportunity provided to all who desire to participate in the process. e)'The budget shall provide for adequate funding of the County's retirement sys- tem. C. f) The operating budget shall describe the major programmatic goals to be achieved, and the services and programs to be delivered for the level of funding D. provided. 8) Ongoing operating costs should be sup- ported by ongoing, stable revenue sources. This protects the County from fluctuating service levels and avoids crisis when one- time revenues are reduced or removed. Some corollaries to this policy, include: The benefits derived from volume purchases through a centralized procurement process shall be extended via cooperative participation by other governmental jurisdictions throughout the State. Augmenting these policies is a Purchasing Policies and Procedure Manual. Incorporated in that manual are various laws, resolutions and procedures chief of which are: I) Public Act 170 of 1933, "Bidders for Public Contracts, Qualifications Required", an act to regulate the practice of taking bids and awarding contracts. 2) Miscellaneous Resolution No. 5538 of 1970 "Vehicle Purchasing Policy", defining the County policy of limiting vehicle pur- chases. 3) Miscellaneous Resolution No. 6368 of 1973 "Rules Establishing Bidding Proce- dure", to ensure conformity with State and Federal minimum wage guidelines that all county construction work will be performed by skilled craftsmen, and all County con- struction work will be bid in a unifolin manner. 4) Miscellaneous Resolution No. 7133 of 1975 "Uniform Bidding Procedures", out- lining the procedure to be used by all County agencies receiving bids for capital projects. 5) Miscellaneous Resolution No. 7488 of 1976 "Selection of Architects and En- gineers", adopting the procedure outlined in Public Law 92-582 for selecting architects or engineers, also known as the Brooks Bill. 6) Miscellaneous Resolution No. 9294 of 1980 "Revised Uniform Bidding Proce- dures", adding to and changing provisions of Misc. Resolution No. 7133, including: Board of Commissioners conflict of 6 E. As specified in the Oakland County Purchas- ing Procedures section on Code of Ethics, employees and officials shall: 1)Refrain from purchasing goods or ser- vices for County use from County employees, officials or close relatives. 2)Serve to the best of their ability without regard to sex, age, race, creed, national origin or political belief in making purchas- ing decisions. 3)Not act as an agent for outside interest in any transaction where the County has direct interest. 4)Not use County purchase orders or Coun- ty influence to obtain goods or services for themselves or others at County prices or at a discount which could not otherwise be obtained. 5)Remain free from interest or relationships which could prove harmful in carrying out their responsibility to Oakland County. 6)Conduct themselves in such a manner as to comply with all civil rights legislation so as not to engage in any discriminatory acts. V. REVENUE AND INVESTMENT POLICIES A. Administration of Revenue and Investment Policies, as approved by the Board of Com- missioners, is the responsibility of the County Treasurer, established by the Michigan State Constitution (Article VII, Section 4), and Fis- cal Director of Management & Budget. B. The main responsibilities of the Treasurer are the collector of taxes, the custodian of all interest, Submission of Contractors Worksheets, and other minor clarifications. 7) Miscellaneous Resolution No. 9295 of 1980 "Qualified Bidder's List", requiring maintenance of a list of qualified bidders, solicitation of bidders to add to the list by semi-annual advertising, and maintenance of a list of publications in which to adver- tise, 8) Miscellaneous Resolution No. 85020 of 1985 "Master Vendor Bid File, Develop- ment and Maintenance Within Oakland County for All Divisions' Use", develop- ment and maintenance of a master vendor 9) Public Act 621 of 1978 , "Formulation and Establishment of Uniform Chart of Ac- counts", specifying the legal recourse avail- able for failure to abide by its provisions. 10) Public Act 317 of 1968, a public act that relates to the conduct of County employees with regard to entering into contract with the County or other public entities. Specifi- cally, the Act prohibits employees from contracting with the County unless provid- ing appropriate disclosure and obtaining specific approvals and sanctions. 11) The Uniform Commercial Code, Ar- ticle 2 covers the sale and purchase of goods and services. 12) The Federal Office of Management and Budget (OMB) Circular 102, "Uniform Re- quirements for Assistance to State and Local Governments". Attachment "0"es- tablishes the standards and guidelines for the acquisition of goods, services, equip- ment and construction for Federal Assis- tance Pro grains. County and its agencies' funds, and invest- ment of such funds. Public Act 139 of 1973, the Unified Form of County Government Act, specifies that the Department of Management & Budget shall collect monies owing the County not particularly within the jurisdiction of the Treasurer. C. The goals and objectives of the Treasurer's Office include: 1) The guarantee of safety of County funds by adhering to statutory requirements regarding bonding and investing of funds, reporting by willingly and actively par- ticipating in a system of controls with such units as the Accounting & Budgeting Divisions, Internal Auditing, Board of Commissioners and State Auditors. 2) To maximize earnings on available funds by seeking best available combination of interest rates and tel Jai investments, and by keeping aware of the availability of funds that is best developed through cooperation with all County departments and agencies. 3) To insure complete collection of County property taxes by monitoring and account- ing for tax collections by local units of government and by fairly and thoroughly administering a system of delinquent property tax collection. D. REVENUE POLICIES - When exercising tariff and taxing powers, the County will com- ply with the following principles: 1) Stability — A diversified and stable revenue system shall be maintained to en- sure fiscal health and absorb short run fluc- tuations in any one revenue source, 2) Sufficiency — Fees should cover the full cost of issuance, administration and enfor- cement. 3) Efficiency - A fee should be levied in a way which can be easily and inexpensive- ly administered by the County and com- plied with by the taxpayer. A minimum of the revenue raised through a fee or tax should be consumed in the process of rais- ing it. 4) Simplicity — Fees, Charges and levies should be easily computed and verified, and readily understood by the taxpayer and the official, 5) Equitability — No arbitrary distinctions should be made among taxpayers or classes of taxpayers. However, distinctions will be made when the County believes that such distinctions are appropriate and will not have a disproportionate impact on tax payers or a class of taxpayers. 6) Growth — Fees, charges and levies should not be so high as to either discourage reasonable economic growth or to place the County in a position of comparative disad- vantage vis-d-vis other communities. Revenues from growth or development should be targeted to costs related to development or invested in improvements that will benefit future residents or make future service provision more efficient. There is a commitment to identifying those portions of the County's revenue stream that result from growth. 7) Reliability and Continuity — Fluctuat- ing federal and state grants should not be used to fund ongoing programs. Grant ap- plications to fund new service programs with State or Federal funds shall be reviewed by the County, with significant consideration given to whether locally generated funds will be required to support these programs when original funding is no longer available. A minimum of locally generated revenues will be used to replace funding for activities which are or have traditionally been the responsibilities of the Federal and State governments. 8)Proportionate Funding for Federal, State and Private Grants — Miscellaneous Resolution #89105 establishes the grant ap- plication and acceptance and reimburse- ment agreement procedures. Miscellaneous Resolution #90004 establishes a fiscal policy to maintain proportionate County funding for Federal, State and private grants. If the level of grant funding is reduced by the grantor agency, one of the following actions will be taken: a)A proportionate reduction in local maintenance of effort will be authorized thereby reducing the total budget and service levels of the categorical program, unless b)The County department administra- tively responsible for the categorical pro- gram shall recommend a reprioritization of funds within existing authorized resources to continue the grant program at desired budget and service levels. 9) Cost Recovery — Where Oakland Coun- ty provides services on behalf of other governmental jurisdictions, the County shall establish and maintain agreements and contracts with those jurisdictions — includ- ing the Federal government, the State of Michigan, other counties, and incorporated cities, townships and villages in Oakland County — to ensure Oakland County is reimbursed for the full cost of those ser- vices. 10) Maximization — In order to maximize revenues, the County shall, to the fullest extent possible: a) Aggressively collect revenues. b) Establish all fees and user charges at levels related to recovery of full costs incurred in providing the services, unless otherwise provided by law or at the sole discretion of the Board of Commis- sioners. c) Review fees and user charges annually and provide in its revenue systems for automatic changes in rates to keep pace with changes in the costs of providing services. d) Charge fees for all services that benefit limited interests within the community, except for human needs services to per- sons with limited ability to pay. e)Make revenue projections for five years and revise them annually. f)Miscellaneous Resolution #89276 es- tablishes a policy that no County funds be loaned or advanced to any local unit of government or any local unit's agen- cy, commission, authority or board, without prior approval of the Oakland County Board of Commissioners and that: 1.Such loans or advances as may be approved by the Board of Commis- sioners be at an interest rate no less than the prevailing six-month Treasury Bill rate. 2.The interest rates should be com- puted and compounded quarterly. 3.Any loan agreement clearly estab- lish the repayment terms before it is submitted to the Board for approval. 4.Any such loan comply with all legal mandates including those of the Municipal Finance Commissison. 9 GIFT DONATION ACCEPTANCE POLICIES - Miscellaneous Resolution #83204 establishes written County proce- dures defining terms of acceptance and ac- counting of a gift donation. I )Gifts donated to a County department or division are classified into one of the fol- lowing categories: a)Gifts with a value of $9,999 or less, with no match requirement or other financial implication to the County. b)Gifts with a value of $10,000 or greater, with no match requirement or other fmanci al implication to the County. c)Gifts with a value of any amount, with financial implications to the County. 2)Financial implication is defined as any one-time, continuing, maintenance, and/or future cost incurred by the County as a result of acceptance of a proposed gift donation amount and/or gift item. Applica- tion of this definition is the responsibility of the Department of Management & Budget. 3)Gifts in the first category require no Com- mittee or Board action, and, upon written notification by the recipient Department Head or Division Manager, will be receipted in the Accounting Division and recorded in the appropriate Depart- ment/Division donation fund (201) ac- count. 4)Gifts in the second category are to be reviewed by the recipient Depart- ment/Division Liaison Committee, for recognition purposes as well as program review. The recipient Department Head or Division Manager is responsible for providing written notificaiton to the Chair- man of the Department/Division Liaison Committee, advising the Committee of the prospective gift donation. Once an accep- tance decision is made the gift donation will be accounted for in the same manner described above. 5)All gifts with financial implications to the County must receive official acknow- ledgement and acceptance by the Board of Commissioners through signed resolution before acceptance by a County Department or Division. Finance Committee review is required prior to consideration by the full Board. Any gifts accepted in this category will be accounted for in the same manner described above. 6)The Accounting Division will maintain a record of donation amounts by Department and Division in the trial balance/expendi- ture fund report (201 account) and will record all property items as General Fixed County Assets. A list of all gift donations received during the previous quarter will be included as an addendum to the quarterly forecast report made by the Department of Management & Budget to the Finance Committee of the Board of Commissioners. F. INVESTMENT POLICIES - Consistent with the Treasurers' Office stated goals and objec- tives, the County operates under the following general investment policies: 1) The County Treasurer analyzes the cash flow of all funds on a regular basis to ensure cash availability. 2) In order to obtain the best possible return on all cash investments, the County Treasurer pools cash from several different funds for investment purposes. 3) Market conditions and investment securities are analyzed on a daily basis to 10 determine the maximum yield to be ob- tained. 4) The County Treasurer invests at least 99 percent of idle cash on a continuous basis. 5) The County Treasurer invests in quality issues and complies with Board Resolu- tions and State Statutes regarding invest- ment requirements. G. In addition, the County Treasurer adheres to the following topical policies: 1) Portfolio Perspective — Individual in- vestment decisions are made to further the County's financial objectives on a common investment portfolio as a whole, and with respect to monies invested on an individual fund basis, to further the investment objec- tives of that particular fund. 2) Maturity — The maturity date of invest- ments is no further away than the time that the County anticipates that it will need the funds. Estimates of when the County shall need cash shall be prudent. The goal is to maximize income while preserving prin- cipal and maintaining liquidity. 3) Liquidity, Trading, Preferences — In accordance with the following Board Resolutions and State laws (particularly Act 20 of 1943, as amended by the follow- ing public acts which provides for invest- ment of surplus funds in bonds and other direct obligations of the United States of America or in certificates of deposit or depository receipts of any bank which is a member of the Federal Deposit Insurance Corporation), the County Treasurer is directed to deposit and invest all monies, including tax monies coming into his hands as Treasurer, in: a) As per Public Act 66 of 1977 and Miscellaneous Resolution No. 8146, bonds and other direct obligations of the United States or an agency or instrumen- tality of the United States; certificates of deposit, savings accounts, or depository receipts of a bank which is a member of the Federal Deposit Insurance Corpora- tion; commercial paper rated prime one (1) A-1 or its equivalent by a nationally recognized rating service at the time of purchase and maturing not more than 270 days after the date of purchase. Not more than 50% of any fund to be invested in commercial paper at any time. b) As per Public Act 500 of 1978 and Miscellaneous Resolution No. 8814, cer- tificates of deposits, savings accounts or depository receipts of a savings and loan association which is a member of the Federal Savings and Loan Insurance Corporation. c) As per Public Act 217 of 1982 and Miscellaneous Resolution No. 82273, United States government or federal agency obligation repurchase agree- ments and bankers' acceptances of United States banks. d) As per Public Act 500 of 1978 and Miscellaneous Resolution No. 83001, certificates of deposits, savings accounts or depository receipts of a credit union which is insured by the National Credit Union Administration. e)As per Public Act 367 of 1982, invest- ment pools by financial institutions but with specific restrictions on the use of those funds. H. The County Treasurer, at his discretion, may determine which funds shall be invested on an individual fund basis, and which funds shall 11 participate within one or more common invest- ment portfolio(s) and apportion earnings and losses to those funds participating in a com- mon investment portfolio within the parameter established by Miscellaneous Resolution #87246, Policy for the Designa- tion of Interest Income, which states that in- terest earnings in all funds not required by law or funded by separate tax levy be credited to the General Fund, except the Airport Fund, which is allowed to continue interest ac- cumulation until such time as the Board deter- mines otherwise. Deviation from the policy for the designation of interest income can only be allowed by Board Resolution. I. The authorized types of investments of surplus funds is delegated to the County Treasurer by the Board of Commissioners. Surplus funds shall be invested in a safe and prudent manner calculated to maximize the return on invest- ments. VI. CAPITAL IMPROVEMENT POLICIES A. General I) To maintain the County's physical assets, a Fixed Asset Inventory of the County's physical assets and their conditions shall be developed and maintained. An amortization schedule shall be established for physical assets to reflect the reasonable life of the asset. 2) The Department of Public Works' Facilities Engineering Division, in conjunc- tion with the Department of Management and Budget, shall develop a multi-year plan for capital improvements and update it an- nually. The Capital Improvement Program shall estimated costs and funding sources for each capital project, as well as the County Executive's relative priority, before it is sub- mitted to the Board of Commissioners for review, modification and approval. 3) The County shall make all capital im- provements in accordance with the adopted Capital Improvement Program and the Capi- tal Project Management Control System. 4) County Operating budgets, through the Building Space Cost Allocation Program in which operating agencies are allocated a rent charge for occupied space, shall provide for adequate facility maintenance and opera- tions. Operating funds to maintain capital improvements shall be estimated and iden- tified prior to making the decision to under- take capital improvements. 5) The County shall use intergovernmental assistance to finance only those capital im- provements that are consistent with the Capi- tal Improvement Program priorities established by the Board of Commissioners and whose operating and maintenance costs have been included in the operating budget forecasts. 6) The County shall make improvements to existing facilities and adopt non-capital strategies to increase capacity prior to making recommendations for new facilities. For example, the use of new technologies, i.e., Optical Disc Storage and Retrieval, which increase productivity and reduce costs and space requirements is encouraged. 7) The County shall rehabilitate or replace structures which have service problems with safety or have a remaining life of less than five years or are inefficient to operate. 8) The operating and capital budgets shall be determined concurrently and a proper balance maintained between current-year and long-term requirements. 12 Essential — Priority 2 Necessary — Priority 5 Desirable — Priority 8 Essential — Priority 3 Necessary— Priority 5 Desirable Priority 9 B. Capital Financing: Capital Projects are categorized as follows, with financing as noted for each category: 3) The following matrix resulting order of priority to available funds: Basic Maintenance Services of Effort demonstrates the in terms of access Quality of Life I) REPLACEMENT — Capital expendi- tures relating to normal replacement of worn or obsolete capital plant should be financed on a pay-as-you-go basis, with debt financing considered where ap- propriate. 2) EXPANSION — Capital expenditures relating to the construction of new or ex- panded facilities necessitated by growth should be financed primarily on a pay-as- you-go basis, but when the new improve- ments can be determined to benefit the overall population in the future, debt financing may be appropriate. 3) UNUSUAL — Some capital expendi- tures for improvements enhance the quality of life in Oakland County and are consistent with the County's goals but cannot be categorized as essential for the provision of basic services or maintenance of the useful life of existing facilities. Source of funding shall be determined by looking to the ul- timate beneficiary of each capital improve- ment. C. Prioritization of Capital Projects I) Capital improvement needs are first identified as relating to one of the following categories of service: Basic Services Maintenance of Effort Quality of Life 2) Within each category, projects are then ranked as: Essential Necessary Desirable Essential — Priority 1 Necessary —Priority 4 Desirable— Priority7 4) Basic service essential projects are con- sidered top priority and Quality of Life desirable projects are last priority. VII. DEBT MANAGEMENT POLICIES A. The following debt management policies shall be used to provide the general framework for planning and reviewing debt proposals. The County recognizes that there are no absolute rules or easy formulas that can substitute for a thorough review of all information affecting the County debt position. Debt decisions should be the result of deliberative considera- tion of all factors involved. B. Use of debt financing is appropriate: 1) For non-continuous capital improve- ments. 2) When future citizen's will receive a benefit from the improvement. C. The County shall not use short-term borrowing (Notes) to finance operating needs except in • the case of financial emergency which is beyond our control or reasonable ability to forecast. Interim financing in anticipation of a definite fixed source of revenue such as property taxes, an authorized but unsold bond issue, or a grant is acceptable. Such tax, bond or grant anticipation notes and warrants shall not: I) Have maturities greater than 2 1/2 years; 13 1) Total general obligation debt shall not exceed ten percent of assessed valuation in accordance with State law. 2) Where possible, the County shall use special assessment, revenue, or other self- supporting bonds instead of general obliga- tion bonds. 3) Annual budget shall include debt service payments and reserve requirements for all debt currently outstanding for all proposed debt issues. 4) The County shall seek to maintain the highest possible bond rating so borrowing costs are minimized and access to credit is preserved. 5) The Director of Management and Budget, as Fiscal Officer, shall review and comment on each bond issue proposal, especially in regard to compliance with ex- isting debt and financial management policies, and shall review and comment on the specific aspects of the proposed financ- ing package and their impacts on the County's creditworthiness. 6) In general, the County analyzes its debt position through a series of ratios which include: a) Bonded debt as a percentage of asses- sable tax base. b) Debt service as a percentage of operat- ing budgets. c) Per capita debt as a percentage of per capita income. 2) Be rolled over for a period greater than one year; or D. Uses of Debt Financing: I) Bond proceeds shall be limited to financ- ing the costs of planning, design, land ac- quisition, buildings, permanent structures, attached fixtures and equipment, movable pieces of equipment, and bonding and as- sociated legal costs. 2) Acceptable uses of bond proceeds are for: a) items which can be capitalized and depreciated. (Non-capital furnishings and supplies shall not be financed from bond proceeds.) b) Refunding bond issues designed to restructure currently outstanding debt. E. Taxpayer Equity — A significant proportion of the Cou.nty 's property tax payers and citizens should benefit from projects financed by limited general obligation bonds. This prin- ciple of taxpayer equity shall be a requisite consideration in determining the type of projects selected for financing. F. When the County utilizes long-teim debt financing it shall ensure that the debt is sound- ly financed by: 1) Conservatively projecting the revenue sources that will be utilized to pay the debt. 2) Financing the improvement over a period not greater than the useful life of the im- provement. 3) Determining that the cost benefits of the improvement, including interest cost, is positive. G. Additionally, the County has the following policies in relation to debt financing: 14 VIII. RESERVES POLICIES A. Reserve policies are an important factor in maintaining Oakland County government in good fiscal health. Application of reserve policy may vary with the fund(s) and/or opera- tions involved as well as be affected by Federal, State or local law and regulation. There are three primary types of reserves: 1) Operating Reserves There three types of operating reserves: a) Designated General Fund for known contingencies, i.e., pending litigation, potential bad debts, etc. b) An appropriated contingency which provides for unexpected or unanticipated expenditures during the year. It is typi- cally budgeted at an amount equal to one percent of the annual operating expendi- ture, c) The County should maintain a fund balance for the General Fund for emer- gency operating needs. This reserve is not appropriated as part of the biennial budget, but the Board of Commissioners is authorized to appropriate emergency funds to meet necessary expenditures. The balance for the General Fund and operating funds shall be maintained at a sufficient level to: 1. Offset significant downturns in- revenues in any general purpose fund. 2. Provide emergency working capi- tal. 3. Provide cash flow for daily financial needs. 4. Provide reasonable coverage for contingent liabilities not covered by the County's insurance program. 5. Provide reasonable coverage for an- nual long-term Limited General Obligation debt service. d) Fund balance of the General Fund not reserved for emergency operating needs, annual long-term Limited General Obligation debt service, or as specifical- ly reserved by resolution may be ap- propriated to support one-time capital or one-time non-operating expenditures. e) Fund balances remaining after all reserves and fund allocations are made may be appropriated to support the operation of existing County services if there is an adequate level of short and long-term resources. 2) Capital Reserves - established in order to provide for replacement of existing capi- tal plant and additional capital improve- ments financed on a pay-as-you-go basis. The amount of the reserve is determined by averaging the dollar value of capital needs. 3)Debt Reserves — established to protect bondholders from payment defaults. Ade- quate debt reserves are essential in main- taining good bond ratings and the marketability of bonds. The amounts of debt reserves are established by bond resolution in association with each bond issuance. 15 7) Disclose the financial position and con- dition of the County. DC COMMUNICATION AND DISCLOSURE POLICIES A. The County's primary financial reporting goals are open communication and full disclosure. Reaching these goals requires reporting which: 1)Can be used to Hold the County publicly accountable and enable users to assess that accountability. 2)Assist users in evaluating the operating results of the County. 3)Assist users in assessing the level of ser- vices that the County provides and its ability to meet its obligations as they be- come due. B. These objectives are divided further into nine sub objectives: 1)Provide information to determine whether current-year revenues were suffi- cient to pay for current-year services. 2)Demonstrate whether resources were ob- tained and used in accordance with the budget; and compliance with finance-re- lated legal or contractual requirements. 3)Provide infoiniation to assist users in as- sessing the service efforts, costs and ac- complishments of the County. 4)Identify sources and uses of financial resources. 5)Disclose the County financed its ac- tivities and met its cash requirements. 6)Provide comparative information to determine whether the County's financial position improved or deteriorated as a result of the years' operations. 8)Disclose information about the County's physical and other non-financial resources having useful lives that extend beyond the current year, including information that can be used to assess the service potential of those resources. 9) Disclose legal or contractual restrictions on resources and risks of potential loss of resources. 10)1nfonn bond rating agencies about the County's financial condition. Financial reports commenting on the County shall be forwarded to the rating agencies. Each bond prospectus shall follow the Governmental Finance Officers Association disclosure guidelines. C. The County shall publish on an annual basis an Overlapping Debt Statement develop coor- dinated communication processes with other jurisdictions with which is shared a common property tax base concerning collective plans for future debt issues. Reciprocally shared information on debt plans, including amounts, purposes, timing, and types of debt aids each jurisdiction in its debt planning decisions. X. CODE OF PROFESSIONAL ETHICS (Modeled after the Government Finance Officer Association Code of Ethics) A. County finance officers are enjoined to adhere to legal, moral and professional standards of conduct in the fulfillment of their professional responsibilities. 16 1) Personal Standards - County finance officers shall demonstrate and be dedicated to the highest ideals of honor and integrity in all public and personal relationships to merit the respect, trust and confidence of governing officials, other public officials, employees, and of the public. 'They shall devote their time, skills and energies to their office both independently and in cooperation with other professionals. They shall abide by approved professional practices and recommended standards. 2) Responsibility as Public Officials - County finance officers shall recognize and be ac- countable for their responsibilities as officials in the public sector. *They shall be sensitive and responsive to the rights of the public and its changing needs. *They shall strive to provide the highest quality of performance and counsel. *They shall exercise prudence and integrity in the management of funds in their custody and in all financial transactions. 'They shall uphold both the letter and the spirit of the constitution, legislation and regulations governing their actions and report violations of the law to the ap- propriate authorities. 3) Professional Development - County fmance officers shall be responsible for maintaining their own competence, for enhancing the com- petence of their colleagues, and for providing encouragement to those seeking to enter the field of government finance. Finance officer shall promote excellence in the public service. 4) Professional Integrity-Information - County finance officers shall demonstrate profes- sional integrity in the issuance and manage- ment of information. -They shall not knowingly sign, subscribe to, or permit the issuance of any statement or report which contains any misstatement or which omits any material fact. 'They shall prepare and present statements and financial information pursuant to ap- plicable law and generally accepted prac- tices and guidelines. -They shall respect and protect privileged information to which they have access by virtue of their office. -They shall be sensitive and responsive to inquiries from the public and the media, within the framework of state or local government policy. 5) Professional Integrity-Relationships - County finance officers shall act with honor,integrity and virtue in all professional relationships. *They shall exhibit loyalty and trust in the affairs and interests of the government they serve, within the confines of this Code of Ethics. 'They shall not knowingly be a party to or condone any illegal or improper activity. *They shall respect the rights, respon- sibilities and integrity of their colleagues and other public officials with whom they work and associate. *They shall manage all matters of personnel within the scope of their authority so that fairness and impartiality govern their decisions. 'They shall promote equal employment op- portunities, and in doing so, oppose any discrimination, harassment or other unfair practices. 17 6) Conflict of Interest - County finance officers shall actively avoid the appearance of or fact of conflicting interests. -They shall discharge their duties without favor and shall refrain from engaging in any outside matters of financial or personal in- terest incompatible with the impartial and objective performance of their duties. They shall not, directly or indirectly, seek or accept personal gain which would in- fluence, or appear to influence, the conduct of their official duties. They shall not use public property or resources for personal or political gain. 18 Resolution # 9009 May 24, 1990 Moved by Caddell supported by Jensen the resolution be adopted. AYES: Caddell, Calandro, Chester, Crake, Ferrens, Gosling, Huntoon, Jensen, Johnson, R. Kuhn, S. Kuhn, Law, Luxon, McConnell, McPherson, Moffitt, Olsen, Pappageorge, Pernick, Price, Rewold, Skarritt, Wolf, Aaron, Bishop. (25) NAYS: None. (0) A sufficient majority having voted therefor, the resolution was adopted. STATE OF MICHIGAN) COUNTY OF OAKLAND I, Lynn D. Allen, Clerk of the County of Oakland, do 'hereby certify that the foregoing resolution is a true and accurate copy of a resolution adopted by the Oakland County Board of Commissioners on May 24, 1990 with the original record thereof now remaining in my office. In Testimony Whereof, I have hereunto set my hand and affixed the seal of the County of Oakland at Pontiac, Michigan this 24th day may 19 90 6M4 Lynn/O, Allen, County Clerk