04012008 Regular Meeting - Laserfiche WebLink

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to cover the costs of providing services during the reporting period. The City's award - winning CAFR is distributed to the City Council, executive management, federal and state agencies, bond rating agencies, and financial institutions, as well as others throughout the general public. Budgeting Process The annual budget serves as the foundation for the City's financial planning and control. The City Council formally adopts the budget and legally allocates, or appropriates, available monies for the City's various funds. Therefore, these funds have appropriated budgets, and budget to actual information is presented. The City Manager submits to the City Council a proposed budget for the fiscal year commencing the following September 1st. The budget includes proposed expenditures and the means of financing them. A public hearing is held prior to the budget's final adoption in order to obtain taxpayer comments. The budget is legally enacted through passage of an ordinance. The ordinance sets the limit for expenditures during the fiscal year. The expenditure appropriations in the adopted budget are by department. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Expenditure appropriations may be amended during the year. Upon the recommendation of the City Manager, and with the approval of the City Council: (1) transfers may be made from the appropriations for contingencies to departments; (2) transfers from fund balance accounts to departments or capital improvement program accounts; (3) transfers between departments; and (4) transfers from capital improvement program accounts to departments. Management control of budgets is further maintained through the use of an encumbrance accounting system. Encumbered amounts lapse at year -end. However, encumbrances generally are re- appropriated as part of the following year's budget. As demonstrated by the statements and schedules included in the financial section of this report, the City continues meeting its responsibility for sound financial management. Single Audit As a recipient of federal, state and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the internal audit staff of the City. As a part of the City's single audit, described earlier, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs, as well as to determine that the City has complied with applicable laws and regulations. The results of the City's single audit for the fiscal year ended September 30, 2007, provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws and regulations. Cash Management Cash temporarily idle during the year was invested in U. S. Agency securities, Certificates of Deposit, Local Government Pools, Commercial Paper and Money Market Mutual Funds. At year -end, the carrying amount of the City's deposits was $142 million, and the bank balance was $2,898,546. The U. S. government agency securities had a market value of $71,159,848 as of September 30, 2007, and a book value of $72,681,806. These investments are carried at book value. The City's investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Accordingly, deposits were either insured by federal depository insurance or collateralized. All collateral on deposits was held by the City's agent in the City's name. All investments are in compliance with the Public Funds Investment Act. Risk Management The City of San Marcos maintains a safety and risk management program. Components of the program include the "Safety Coach" Safety Leadership Development Program, an aggressive incident and accident investigation program, awareness and recognition programs and an annual review of assets. Vi