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Local Budgeting Manual, 150-504-420 - Oregon State Library - State ...

Local Budgeting Manual, 150-504-420 - Oregon State Library - State ...

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esource if they are known or anticipated during the regular budget process. If an unanticipated general purpose grant is received during the fiscal year, a supplemental budget must be prepared in order to increase appropriations to spend the grant money. Specific purpose grants may be treated in a different manner. If an unanticipated specific purpose grant is received and will be spent during the fiscal year, no supplemental budget is required. The governing body may spend the grant money after enacting an ordinance or resolution authorizing the expenditure [ORS 294.326(3)]. Budget Transfers The budget may include the transfer of revenue between funds. Money received in a fund through a transfer from another fund must be budgeted as a resource to the receiving fund. The originating fund budgets the transfer as a requirement. This way the total budget stays in balance (ORS 294.361). Bond Proceeds When voter approval to issue bonds is received during the fiscal year and the bond proceeds will be expended during that same fiscal year, the proceeds do not have to be budgeted. It is recommended that a fund for the bond proceeds be established and a resolution appropriating the proceeds be prepared. If the bonds are approved in one fiscal year and the proceeds are to be spent in the upcoming fiscal year, the proceeds must be budgeted in the regular budget. Any proceeds that are to be carried forward from one fiscal year to the next must also be included in the regular budget [ORS 294.326(5)]. Insurance Proceeds Funds received to repair or replace property, such as insurance proceeds, do not have to be budgeted. To spend the money, the governing body may either enact an ordinance or resolution (ORS 294.455) or enact a supplemental budget [ORS 294.480(1)(e)]. Interfund Loans During the fiscal year the governing body may loan money from one fund to another to cover a revenue shortfall. The loan must be authorized through an ordinance or resolution. A supplemental budget is not required. A loan cannot be made from a debt service fund except for loans from a debt service reserve fund created to provide additional covenanted security for outstanding bonds or other borrowing obligations if 20 the amount in the fund exceeds the amount covenanted and the aggregate outstanding amount of such loans does not exceed the excess amount in the fund (ORS 294.460). If the loan is an operating loan and it is not repaid in the fiscal year in which it was made, the repayment must be budgeted in the upcoming fiscal year. Operating loans must be repaid no later than the fiscal year following the year in which they were made. If the loan is a capital loan, it must be repaid in full over a term not to exceed five years. The repayment must be budgeted according to a schedule and at a rate of interest set forth at the time the loan is made (ORS 294.460). The fund that received the loan budgets the repayment as a requirement. The fund that gave the loan budgets the repayment as a resource. A capital loan is any interfund loan, or portion thereof, made for the purpose of financing the design, acquisition, construction, installation, or improvement of real or personal property and not for the purpose of paying operating expenses. An operating loan is any interfund loan, or portion thereof, that is not a capital loan, and that is made for the purpose of paying operating expenses. Tax Anticipation Notes Local governments are authorized to contract indebtedness by issuing short-term promissory notes for the purposes of meeting current expenses, retiring outstanding bonds, or paying the interest on the bonds (ORS 287.442, ORS 328.565, and ORS 341.715). Tax anticipation notes are a form of short-term borrowing. They are issued in anticipation of the collection of property taxes. The anticipated loan proceeds and the related principal repayments within a fiscal year are not budgeted as resources or expenditures. However, they must be reported in narrative form or by footnoted schedules to the adopted budget (ORS 294.443). The interest due on the principal must be budgeted as an anticipated expenditure. Also, any interest anticipated to be earned from the principal must be budgeted as a resource. Refunded Money When a district returns merchandise that has been paid for, the money refunded for the merchandise does not have to be budgeted. The governing body can spend this refunded money after holding a public hearing and adopting a resolution or ordinance to appropriate the money [ORS 294.326(10)]. Emergency Funds—Schools or Community Colleges If the governing body of any school district or community college district declares that an emergency exists, re-

quiring a greater expenditure of public money, the law allows for spending over the amount appropriated in the budget. These districts are allowed to make such specific expenditures of federal and state funds (ORS 294.440). Budgeting a Deficit Resource Do not budget a negative resource [OAR 150-294.361(1)- (B)]. A deficit line item entry distorts the actual total of revenues. Budget only the amount of revenue estimated to actually be received by the fund. If there is an anticipated deficit in a fund, it is treated as a requirement of that fund. If actual resources fall short of the amount estimated, expenditures cannot be made in excess of the available revenues. Deficit fund balances are a violation of Local Budget Law. Classifying and Estimating Expenditures Each local government must prepare estimates of expenditures and budget requirements for the upcoming fiscal year. Governments that have the authority to impose ad valorem property taxes must use a fiscal year that runs from July 1 to June 30 [ORS 294.311(13)]. Local Budget Law requires that expenditures be shown in the budget in certain ways. The budget is broken down into funds which are discussed in Chapter 5. The expenditures for each fund must be identified in one of two ways—organizational unit or program—depending on how the district is structured. Subdividing a fund into organizational units or programs makes the budget more understandable. Organizational Unit Some local governments are structured in organizational units. An organizational unit is an administrative subdivision of the local government which is responsible for specific services, functions or activities. These are usually identified as departments, divisions, offices, etc. [ORS 294.311(28)]. For example, a city may be structured into organizational units such as: Police Department, Public Works Department, Office of the City Recorder, etc. School districts, ESDs, and community colleges do not use organizational units when preparing expenditure estimates. They must prepare expenditure estimates according to the classification of accounts prescribed by rules of the State Board of Education. Program Budgeting and Accounting Manual for School Districts, published by the Department of Education details all the requirements of the board’s rules for school districts [ORS 294.356(1)]. Hospitals may not use organizational units when preparing expenditure estimates, making appropriations or publishing the budget summary [ORS 294.356(2)]. 21 Program Many districts are structured by program. A program is a group of related activities aimed at accomplishing a major service or function [ORS 294.311(30)]. Programs could include services and functions such as: fire control, sewage disposal, instruction, road maintenance, etc. Most special districts are formed to provide one or two major services. These districts have a program structure. Whether a local government is structured by organizational units or programs, the budget must contain the following: 1. The estimated expenditures of the General Fund and all special revenue funds arranged by organizational unit or program and activity. They must be categorized by personal services, materials and services, capital outlay, etc. Spending estimates must be detailed under separate object classifications (ORS 294.352). School districts and community colleges are required to further detail expenditure estimates by object within object classification [ORS 294.352(4)]. Information on this breakdown can be found in the Program Budgeting and Accounting Manual for School Districts. 2. Estimated expenditures for special payments, operating expenses and general capital outlay which cannot be allocated by organizational unit or program. 3. Estimated expenditures for personal services. Personal services includes salaries, fringe benefits, and miscellaneous costs associated with salary expenditures, such as overtime. Federal program employees and part-time employees are included when figuring personal services. In addition, detail must be provided on the salary for each officer and employee, except hourly wage and part-time employees. Employees of like classification and salary range may be listed by the number of those employees, the limits of each salary range and the amount of their combined salaries [ORS 294.352(5)]. 4. A separate schedule detailing the salaries of persons who perform services for two or more organizational units, programs, or activities (Form LB-40). For instance, one of the county clerical staff may provide services to the administration office and the police department. 5. Estimated expenditures for materials and services. These may include a separate estimate for: (a) contractual services, (b) materials (such as office supplies), and (c) other charges (such as education or travel). Estimates should be detailed and itemized to disclose all proposed expenditures.

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