KENAI PENINSULA BOROUGH

BUDGET POLICY

AUGUST 2006

PURPOSE OF POLICY:

Establishment of uniform policy and procedures in the preparation of the original budget, supplemental budgets and revisions to the budget of the Kenai Peninsula Borough.

LEGAL AUTHORITY:

Kenai Peninsula Borough Code of Ordinances Chapter 2.28 Finance Department, Chapter 5.04 Budget Procedure and Fiscal Year, Chapter 5.08 Financial Procedures and Chapter 5.20 Funds.

PROCEDURES:

NOTIFICATION:

Annually the Director of Finance will notify personnel involved in preparation of the annual budget of the following:

Accounting basis (e.g., accrual basis, modified accrual basis, cash basis) to be used in preparation of each fund’s budget.

The time table for budget preparation and submission to him/her.

Format to be used in budget preparation.

Dollar limitations of amounts to be displayed separately, such as any line item that is $2,000 or less will be included in the “other” line item of revenues or the related major budget classification of expenditures or expenses.

BUDGET FORMAT:

ESTIMATED REVENUES:

Estimated revenues for the General Fund, Special Revenue Funds, Debt Service Funds and Capital Projects Funds will comply with generally accepted accounting principles. Generally they will be classified by fund and source (Local, Intergovernmental). The local revenue source will be segregated by type, such as property taxes, sales taxes, investment earnings, etc. as determined by the Director of Finance. The intergovernmental sources will be segregated between federal and state sources. Federal and state intergovernmental sources will be segregated by type, such as payments in lieu of taxes, disaster relief, reimbursement for school construction, safe communities program, revenue sharing, etc. as determined by the Director of Finance.

Estimated revenues for the Enterprise Funds and Internal Service Funds will comply with generally accepted accounting principles. Generally they will be classified in essentially the same manner as those of similar business organizations, functions or activities. Generally they will be classified by fund, sources (operating or nonoperating) and type, such as for operating – charges for services, premium revenue, patient revenue and nonoperating – property taxes, investment earnings, etc. as determined by the Director of Finance.

APPROPRIATIONS:

Appropriations for the General Fund, Special Revenue Funds, and Debt Service Funds will comply with generally accepted accounting principles. Expenditures will generally be classified by fund, department, budget unit, major budget classification (Personal Services, Supplies and Materials, Services, Debt Service and Capital Outlay, Contingency, and Transfers) and sub-object (Salaries, fringe benefits e.g., FICA, PERS, Insurance, Debt Principal, Debt Interest) as determined by the Director of Finance.

General Fund and Special Revenue Funds appropriations in the major capital outlay sub-objects are restricted to items that qualify (items costing $5,000 or more) as additions to the General Fixed Assets Account Group). Items that do not meet this qualification will be budgeted in the minor capital outlay sub-objects.

Appropriation for Capital Project Funds will comply with generally accepted accounting principles. Generally expenditures will be classified by fund, project, object and sub-object as determined by the Director of Finance.

Capital Project Funds appropriations in the major capital outlay sub-object are restricted to items that qualify as additions to the General Fixed Account Group. Items that do not meet this qualification will be budgeted in the minor capital outlay sub-object.

Appropriations for Enterprise Funds and Internal Service Funds will comply with generally accepted accounting principles.

Expenses will be classified in essentially the same manner as those of similar business organization, functions or activities. Generally expenses will be classified by fund, object (Personal Services, Supplies and Materials, Services, Debt Service, Capital Outlay, Contingency and Transfer) and sub-object (Salaries, FICA, PERS, Debt Principal, Debt Interest, etc.).

Enterprise Funds and Internal Service Funds appropriations in the major capital outlay sub-object are restricted to items that qualify as additions to fixed assets. Items that do not meet this qualification will be budgeted in the minor capital outlay sub-object.

OTHER FINANCING SOURCES:

Other financing sources will comply with generally accepted accounting principles. Other financing sources will be classified by fund and type; such as operating transfers from other funds, proceeds from general long-term debt, etc. Other financing source will be displayed separately from fund revenue.

OTHER FINANCING USES:

Other financing uses will comply with generally accepted accounting principles. Other financing uses will be classified by fund and type; such as operating transfers to other funds, etc. Other financing uses will be displayed separately from fund expenditures or expenses.

RECORDING OF THE BUDGET IN THE ACCOUNTING RECORDS:

The adopted budget will be recorded in the accounting records by the Finance Department.

SUPPLEMENTS TO THE BUDGET:

Supplements to the budget increase or decrease the total budget of a fund. Supplements to the budget will be prepared in the same format as described previously in this policy.

Authority to make supplemental budgets is defined in the Borough Code of Ordinances Chapter 5.04.

Adopted supplements to the budget will be recorded in the accounting records by the Finance Department.

REVISIONS TO THE BUDGET:

Revisions to the budget change the allocation of amounts included in adopted budgets but do not increase or decrease the total budget of a fund.

Revisions to the budget will be prepared in the same format as described previously in this policy.

Revisions to the budget will only be made when actual expenditures or expenses exceed appropriations at the major budget classification levels (Personal Services, Supplies and Materials, Services and other, Debt Service, Capital Outlay, Contingency and Transfers).

Authority to make budget revisions is defined in the Borough Code of Ordinances Chapter 5.04.

Approved budget revisions will be recorded in the accounting records by the Finance Department.

ADMINISTRATIVE BUDGET CONTROL LEVEL:

The administrative budget control level is the major budget classification level (Personal Services, Supplies and Materials, Services, Debt Service, Capital Outlay, Interdepartmental, and Transfers). Budget revisions need not be prepared unless actual expenditures or expenses exceed the total appropriations at this level.