By Michael Howell

On Thursday, February 9, the Ravalli County Commissioners adopted new Fiscal Policies. The county already maintains separate Investment and Capitalization policies. Aside from those separate policies the new fiscal policies will supersede all other county documentation referring to financial policies.

“Specifically, job descriptions which indicate budgetary authority are subject to the provisions contained within this policy,” it states at the top of the new policies.

The purpose of the policies is to achieve and maintain a long term stable and positive financial condition and the intent is to use them as the basic framework for overall financial management of the county and to guide the day-to-day and long-range fiscal planning and decision making.

Several goals are enumerated:

1)To provide a financial base that will sustain a sufficient level of services to maintain the general health, safety and welfare of the county;

2)To deliver cost effective and efficient services to citizens;

3)To provide and maintain essential public facilities and capital equipment;

4)To protect and enhance the county’s financial position to assure taxpayers and the financial community that the county is well managed and financially sound;

5)To provide the financial stability needed to weather economic downturns, adjust to changes in the service requirements of the community and respond to other changes as they affect county residents;

6)To adhere to standards of financial management and reporting practices as set by the Governmental Accounting Standards Board and other professional accounting standards;

7)To fully comply with finance related legal mandates, laws and regulations.

To achieve these goals the commissioners are adopting policies covering the areas of revenue and expenditure management, operating and capital budgeting, accounting and financial reporting, debt management, and reserve fund management.

The Revenue Policies adopted would prohibit responding to long term revenue shortfalls with deficit financing and borrowing to support ongoing operations. It also requires all department heads and elected officials to estimate their department/office revenues “realistically, conservatively and prudently.” The county will also endeavor not to use temporary revenues to fund mainstream services or for budget balancing purposes. Fees and charges will be established for services provided that benefit specific individuals or organizations. Grants will be evaluated for matching grant requirements and ongoing resource requirements before acceptance.

Under Operating Budget Policies the commissioners are requiring all department heads and elected officials to submit budget proposals using zero-based budgeting whereby all expenses requested must be detailed and justified and every expense analyzed for its needs and costs. They must also present full-time equivalent for staffing levels for each operating fund or budget and any changes through the year must be authorized by the commissioners. All vacated positions must come before the commissioners for discussion and approval prior to posting the position.

It is also the Commissioners’ intent to adopt the budgets at the department or program level based on individual line items, “to ensure expenditures are controlled in an effective manner.”

The Operating Budget Policies also require that the budget be prepared with the participation of all department heads and elected officials that will be implementing the county’s fiscal policies and states that their “goals and objectives will be identified and incorporated into the budget process.” The Commissioners will also be investigating any budget-to-actual discrepancies that appear in the quarterly reports to be prepared by the Finance Department.

Expenditure Control Policies give the Commissioners the final say in any line item transfers within the departments or any expenditures beyond budget. The Commissioners’ approval is also required for any purchases of capital assets or undertaking any operating or capital arrangements that create fixed costs or ongoing operational expenses.

In the Capital Improvement Policies the Commissioners commit themselves to maintaining capital reserves sufficient for major repairs and replacements for its buildings. They set some criteria for determining the use of debt financing for capital items and require each department and office to prepare a schedule of capital items. The policy states that the budget must provide for adequate maintenance and operation of its assets.

Under Debt Management Policies it states, “No debt shall be incurred for which the County is not reasonably assured that sufficient specifically identified revenue source is available for repayment.” It also prohibits using long term debt to fund current operations, to balance the budget or to fund projects that can be funded form current resources and lays out some rules for ensuring that any long term debt taken on is soundly financed.

The county’s Operating Reserve Policies state that the county shall maintain sufficient operating reserves in each tax-levied and operating fund for the purposes of:

1)Mitigating short term volatility revenues;

2)Mitigating economic downturns;

3)Sustaining County services in the event of an emergency;

4)Meeting operation cash flow requirements before collection of property taxes, grant proceeds, contract awards, and other operating revenues;

5)Mitigating the impact of unexpected claims or litigation settlements

6)Meeting requirements for debt reserves when applicable.

The county’s policy is also to maintain undesignated operating reserves of at least 16% (or 2 months) of the operating budget of tax-levied funds and other operating funds, not to exceed 33% as required by law. In the event that operating reserves are less than the minimum level established by this policy, the County will develop a longterm plan to increase operating reserves to the required level.

The county is currently holding about 7% in reserves.