Budget Process
Basis of Accounting
FYs 2021-23 Budget
Summary of Budget Process
The City of Alameda operates on a fiscal year basis that begins on July 1 of each year, and ends the following year on June 30. The City Manager’s Office and Finance Department manage the budget process, with support from each of the departments. The preparation of the budget takes place between December and June, culminating with the adoption of a two-year budget by the City Council, with Council adopting any adjustments prior to the beginning of the second fiscal year as part of a mid-cycle review.
Public hearings and community workshops are conducted on the proposed budgets to review all appropriations and sources of funding. Budgeted expenditures are then adopted through the passage of a resolution. The budget represents the maximum authorized expenditures for the year and cannot legally be exceeded except by subsequent amendments of the budget by the City Council. Any amendments or transfers of appropriations between spending types within the same department and fund must be authorized by the City Manager. Any amendments to the total level of appropriations for a fund or transfers between funds must be approved by the City Council.
Budget Calendar
Winter 2020-21 marked the kickoff of budget preparation with the distribution of a budget calendar and financial data to help departments begin to prepare their budgets. Departments then submitted proposed budgets based upon existing service levels, proposed new service levels, and program goals.
This process is overseen by the City Manager’s Office and Finance. The City Manager’s recommended budget was presented to Council and made available to the public in May 2021. Budget workshops were held on May 11 and May 20, 2021, and the budget was scheduled for adoption on June 15, 2021.
Basis of Accounting
Expenditures are controlled at the fund level for all budgeted departments within the City. This is the level at which expenditures may not legally exceed appropriations. The budgets are adopted on a basis substantially consistent with generally accepted accounting principles (GAAP) in accordance with standards established by the Governmental Accounting Standards Board (GASB), California Society of Municipal Finance Officers (CSMFO), and Government Finance Officers Association (GFOA).
The accounting policies of the City conform to generally accepted accounting principles. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. Fund accounting segregates funds according to their purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions.
All governmental funds (i.e. General, Special Revenue, Capital Projects, and Trust Funds) are accounted for on the modified accrual basis of accounting. Under this method, revenues are recognized in the accounting period in which they become both measurable and available to fund expenditures of the current period. Revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. Expenditures are recorded in the accounting period when the liability is incurred.
Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration. Encumbrances outstanding at year-end do not constitute GAAP basis expenditures or liabilities because the commitments will be honored during the subsequent year.
Proprietary funds (i.e. Enterprise and Internal Service Funds) are accounted for using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned, while expenses are recognized when the liability is incurred.