HomeMy Public PortalAboutFinancial Plan Process Policy
COUNCIL
POLICY
Effective Date February 24, 2020
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SECTION: Finance
TITLE: Financial Plan Process Policy
PURPOSE:
To define the overall approach and philosophy for budgeting and planning the five-
year financial plan process to ensure clarity and consistency.
To help decision makers make informed choices about the provision of services and
capital assets and to promote stakeholder participation in the process.
SCOPE:
The baseline budget is defined as the steady state operating position of each budget
authority. This reflects the resources required to provide the same level of service in
the current year, before any new priorities or funding requests. New priorities pertain
to any material change in service level from the prior year and must be accompanied
by business plan documentation to substantiate the change.
This policy defines budget process requirements for the Town of Oliver’s Operating
Budgets, Capital Budgets, and Carry-Forward Budgets
POLICY STATEMENT:
Each budget or cost centre is committed to providing services and support to the
operations of the Town . The services will be provided at a level commensurate with
the level of resources that Council is willing to dedicate to that service. In keeping with
the Town’s strategic plan, the adequacy of available Town resources, including
taxation, shall be reviewed with respect to delivery of enhanced levels of core
services.
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POLICY:
Definitions:
Budget Authority - refers to the person responsible for the Budget Centre.
Budget Centre - is a detailed business planning unit under a single person of
responsibility or authority, sometimes bridging multiple cost centres, with a specific
focus. (Example: water distribution, sewer collection)
Cost Centre - is defined by finance as a business unit, including revenues and
expenditures for specific departments such as Water Utility, Sewer Utility
Management and Operations etc. A cost centre can have inputs from more than
one budget center.
Level of Service - shall refer to the level of operating services provided in the
preceding year of the budget year.
Base Budget – refer to expenditures identified as core to the provisions of services
to the Town of Oliver. Salaries & benefits, utilities, fuel, insurance, service contracts
and fleet maintenance are considered as base expenditures.
Non-discretionary items or expenditures - those expenditures that are tied to
operationally essential services, maintenance, asset management, ratified
contracts, repairs etc. that cannot be deferred or reduced.
Standard funding sources - includes "expected" sources of revenue that recur
from year to year without discretion on the part of the Town with respect to the
source's existence. Such sources may include but not be restricted to general
municipal taxes, utility fees and charges, and recurring grant sources from senior
levels of government.
Legislation
The statutory requirements for local governments for the completion of financial
plans (budgets) and the public processes are set out in the Community Charter in
Section 165 and Section 166 respectively.
Principles
Each budget authority's proposed business plan and budget must reflect the
Town’s strategic plan's priorities and be consistent with the priorities of Council and
CAO. The financial plan must incorporate a long - term perspective, establish links
to the Town’s organizational goals and focus decisions on results and outcomes.
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Five year operating plans will incorporate cost and staffing considerations for
desired levels of both discretionary and non-discretionary services, changes in
levels of service, as well as changes in service requirements coupled with capital
projects.
Cycle
The financial plan will be prepared firstly for the utility capital and operating
budgets and must be for five years and all the years should reflect known dynamic
costs and priorities. The time frame of preparation for the utility budgets are
presented in Appendix A.
The financial plan for the general operating and general capital budgets will be
prepared for five years and all the years should reflect known dynamic costs and
priorities. The time frame of preparation for the general operating and capital
budgets are presented in Appendix A.
Expenditures listed below will be considered as base budget items and will not be
reviewed by Council on an annual basis.
1. Wages & benefits – existing staff
2. Insurance – Property, liability, vehicle
3. Utility budgets – power, water, sewer, natural gas
4. Gasoline & diesel – based upon current market prices
5. Fleet Maintenance – gas, labor, repairs
6. Contracts for Services – solid waste, tourism, employment, RDOS mapping
Budgetary items listed as Non Base Budget items will be reviewed and will not
include any adjustments for inflation. New priorities pertain to any material change
in service level from the prior year and must be accompanied by business plan
documentation to substantiate the change.
These actual expenditures will not include expenditures funded by sources not
included in the definition of "standard funding sources" as established by the Chief
Financial Officer from time to time.
This policy is to be reviewed in 2023 and every four years post the municipal
election. Any changes to this policy must be approved by March 31st.
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Overview
The Chief Financial Officer or their designate will prepare the Five Year
Financial Plan, presented by cost center reconciled to the budget centre and
present to Council.
Presentation
The presentation of the annual budget by budget centre will be done by the
CFO and the staff person responsible for a budget centre. Presentations will
reflect how they support the strategic plan. All assumptions used in the budgets
and budget presentations will be identified in the presentations.
The five year financial plan presented by the CFO will be summarized by budget
centre and revenue source and be aggregated to reflect the Town’s taxation
requirement.
Staff will review with the Oliver Rural Fire District the Oliver fire departments
budget in accordance with the fire protection agreement after the Town has
approved the budget.
Staff will solicit input from the Airport Committee for the operating and capital
financial plans for the Airport. The requests of the airport committee will be at the
discretion of Council.
Exceptional Operating Expenses
It is acknowledged that certain operating expenditures fluctuate significantly on a
year to year basis. Each budget authority will provide for such irregular expenditure
patterns by arranging for a special reserve(s) to be created and funded on a year
to year basis as part of their operating budget. The creation of any such reserve will
be at the discretion of the Finance department.
Carry Forwards
Carry forwards may be done for specific operating budget projects and Capital budget
items. All carry forwards at year end must be submitted to Finance in accordance
with the timelines presented in Appendix A. The carry forward list must include the
estimated dollar amount, the year of origin, the carry forward account number, the
month and year of completion and the budget authority. Each carry forward must
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also have a brief explanation of why the project was not completed and a brief
explanation of how the project will be completed by the month and year of
completion provided by the budget authority. All carry forwards submitted without
explanations and month and year of completion will flow back to the capital
surplus. For greater certainty all preliminary carry forward budgets must be
completed in advance of the finalized capital budgets and be included in the
associated 5 year capital plans/budgets. This will ensure that both carry forward
and newly budgeted capital projects in the year will be completed in the year. The
final carry forward budgets shall be calculated by Finance as part of the year-end
process.
Budget Amendments
All budget amendments must be submitted to the CFO on the budget amendment
form signed by the appropriate signing authorities. All budget amendments
submitted to Council for a resolution must identify the funding source or provide
options for Council to choose the funding source. (CC Section 173 (4) (b)). The
five-year financial plan bylaw will be updated if required in September with all
amendments processed to date.
Budget amendments that require a council resolution:
• strategic project budget change
• An additional ask on surplus
• Significant change on the intent of the spend
• Political sensitivity
• Not in compliance with policy or bylaw
• New project from any source
Taxation Impact
The financial plan will present the estimated tax requirement for all five years.
Fees and Charges
Fees and charges form a material part of budgeted revenues. For greater certainty
the annual review of the Fees and Charges Bylaw must be completed by August
31, prior to the commencement of the budget process.
Variance reporting
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Variances to budget shall be reported out quarterly by departments with
explanations included for all positive and negative variances in excess of $10,000
or 20% of budget. If a budgetary is less than $1,000 it is not required to be
reported.
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Appendix A
Budget Timeline
Month Description
Sept/October Management to prepare departmental budgets
November Management to prepare water/sewer budgets
November Council deliberation of water, sewer operating & capital budgets
November 3 readings of water & sewer rate bylaws
December Adopt water & sewer rate bylaws
Dec/January Preparation of general capital & operating budgets
January - 2nd Friday Carry forward capital requests deadline
January - last week Council deliberation of general capital & operating budgets
February 3 readings of 5 year financial plan
February Adopt 5 year financial plan
April 3 readings of tax rate bylaw
April Adopt tax rate bylaw