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City of San Marcos Financial Policy <br />I. Purpose <br />The broad purpose of this policy is to enable the City to achieve and maintain a long -term stable <br />and positive financial condition through the use of sound financial management practices. The <br />watchwords used to epitomize the City's financial management include integrity, prudent <br />stewardship, planning, accountability, full disclosure and communication. <br />The more specific purpose of this policy is to provide guidelines to the Director of Finance in <br />planning and managing the City's daily financial affairs and in developing recommendations to <br />the City Manager and City Council. <br />The City Council will annually review and approve this policy as part of the budget process. <br />The scope of this policy covers the operating budget, revenues, expenditures, capital <br />improvements program, financial planning, accounting, auditing, financial reporting, treasury <br />management, debt management, and financial condition and reserves, in order to: <br />A. Present fairly and with full disclosure the financial position and results of the <br />financial operations of the City in conformity to generally accepted accounting principles <br />(GAAP). <br />B. Determine and demonstrate compliance with finance- related legal and contractual <br />issues in accordance with provisions of the City's Charter, the City's Code of <br />Ordinances, the Texas Local Government Code and other pertinent legal documents and <br />mandates. <br />II. Operating Budget <br />A. Preparation — Budgeting is an essential element of the financial planning, control, <br />and evaluation process of municipal government. The "budget" is the City's annual <br />financial operating plan. The budget includes all of the operating departments of the <br />governmental funds, special revenue funds, enterprise funds, and permanent funds of the <br />City. The budget includes expenditures for personnel, contracted services, materials and <br />supplies, other charges, operating transfers, social services, indirect costs, capital outlay <br />and debt service. The budget is prepared by the City Manager and Director of Finance <br />with the participation of all the City's Department Directors within the provisions of the <br />City Charter, on a basis that is consistent with GAAP. <br />B. Multi -Year Planning — The Director of Finance will prepare a multi -year financial <br />forecast of the General Fund. This forecast is an integral part of developing the adopted <br />budget. <br />