Budget & Financial Management Policies

FY 2024 ANNUAL BUDGET

Financial Policies


The City of Eau Claire's financial policies set forth the basic framework for the overall fiscal management of the City. Operating concurrently with changing circumstances and conditions, these policies assist the decision-making process of the City Council. These policies provide guidelines for evaluating both current activities and proposals for future programs.


Most of the policies represent longstanding principles, traditions and practices and follow generally accepted accounting principles that have guided the City in the past and have helped maintain financial stability over the last two decades.


Operating Budget Policies


The City will prepare an annual budget for all operating funds.


The annual budget must be balanced each year by matching projected expenditures with proposed revenue sources by fund.


The City's basis of budgeting mirrors the annual audited financial statements.


The City will maintain a budgetary control system to ensure adherence to the budget and will prepare regular reports comparing actual revenues and expenditures to budgeted amounts.


A contingency account will be maintained in the annual operating budget to provide for unanticipated expenditures of a non recurring nature or to meet unexpected increases in service delivery costs. Transfers from the contingency account to the operating programs will require approval by the City Council.


Mid year adjustments within budgeted accounts of a department may be made with approval of the Department Directors and the Finance Director. Budget adjustments between departments or between funds must be approved by the City Council.


Budgets are classified as either lapsing (spending authority terminates at year end) or non lapsing (spending authority continues through the life of a project). All lapsing budgets are prepared for fiscal year operations beginning January 1 and ending December 31. Listed below are all budgeted funds categorized by type of appropriation.

Lapsing Appropriations

  • General Fund
  • Economic Development
  • Community Enhancement
  • Downtown Partners
  • Cemetery Maintenance
  • Hazardous Materials Response
  • Public Library
  • City-County Health Department
  • Landfill Remediation
  • Debt Service Funds
  • Water Utility
  • Sewer Utility

  • Storm Water Utility
  • Parking Utility
  • Public Transit
  • Hobbs Municipal Ice Center
  • Fairfax Municipal Pool
  • Risk Management
  • Central Equipment
  • Redevelopment Authority
  • S. Barstow Business District
  • W. Grand Business District
  • Water St. Business District
  • N. Barstow/Medical Business District

Non-Lapsing Appropriations

  • Community Development Block Grant
  • Home Grant
  • Capital Project Funds

(Non-lapsing budgets are reviewed annually)

Operating budgets are established on a fund department program basis. Transfers between departments or between funds must be approved by the City Council. Increases to the approved General Fund operating budget are made only in the following situations:

  • Emergency situations
  • Appropriation for capital projects
  • Appropriation for debt service reserve
  • Transfer from contingency
  • Non-recurring appropriations with offsetting revenues
  • Carry-over of prior year appropriations

Capital Budget Policies


Funding for infrastructure projects should be obtained from:

  • Operating profits
  • Bond market
  • State Trust Fund loans
  • Grants
  • General Fund advances

Loans from the General Fund to the utilities shall be paid back over a period not to exceed 30 years at the municipal interest rate at the time of the loan. This method is used because of the following factors:

  • 5% of customers are outside City
  • Tax-exempt properties pay utility fees

The City shall utilize available funding sources for capital improvements whenever practical and feasible:

  • Grant funds
  • Special assessments
  • Developer contributions

The City will develop a five year capital improvement program, which will be reviewed and updated annually.


The complete five year capital project funding plan must be balanced each year by matching projected expenditures with proposed revenue sources by fund.


Transfers between capital project funds must be approved by the City Council. A transfer within a capital project fund may be approved by the Finance Director.


The City will maintain its physical assets at a level adequate to protect the City's capital investments and to minimize future maintenance and replacement costs. The budget will provide for the adequate maintenance and the orderly replacement of the capital plant and equipment from current revenues, when possible.


The City will try to ensure that industrial acreage is available for development within the City and served with necessary infrastructure.


Revenue Policies


The City will seek to maintain a diversified and stable revenue system to minimize short run fluctuations in any one revenue source.


The City will attempt to maximize benefits from major revenue sources as a way of maintaining a stable tax rate.


The City will follow an aggressive policy of collecting revenues.


The City will establish all user charges and fees at a level related to the full cost (operating, direct, and indirect) of providing the service, whenever practical.


The City will review license fees/charges annually to determine if the revenues support the cost of providing the service.


Water, Sewer and Storm Water Utilities will be self-supporting through user fees.

  • The minimum Water and Sewer Utility rates should be set at a rate which will yield net income which is at least 1.25 times the highest principal and interest payment due. This requirement is in conformance with the mortgage revenue bond requirements.

  • Rate adjustments for the Water Utility are submitted to the Public Service Commission and City Council for review and approval.
  • Rate adjustments for the Sewer Utility and the Storm Water Utility will be submitted to the City Council for review and approval.

The City shall levy and collect a room tax pursuant to §66.0615 of the Wisconsin Statutes. This tax is collected monthly from all city hotels and motels and is based on the gross room receipts collected. The proceeds from this tax are used to promote convention, tourism, cultural and recreational activities. As of 2016 the room tax rate is eight percent.


Parks and Recreation administers a variety of adult and youth recreation programs and activities. These fees and charges are reviewed annually by the City Council. The following policy guidelines have been adopted:

  • Instructional programs will be offered on a year-round basis.
  • Adult instructional fees should cover 100 percent of the cost of supplies, administration and personnel.
  • Youth instructional fees should cover 75 percent of the cost of supplies, administration and personnel.
  • Some programs are offered to the community as a service and are not designed to recover their cost. These programs include playgrounds, outdoor rinks and Par-Te-Rec.

The Recreation division shall charge rental fees for rooms, pool, gym, ball fields and special equipment.


Reserve Policies


The City will establish a contingency expenditure appropriation in the annual operating budget to provide for unanticipated expenditures of a non recurring nature, or to meet unexpected small increases in service delivery costs.


As part of the annual budget process, the Finance Director will estimate the surplus or deficit for the current year and prepare a projection of the year end fund balance. Such projection will include an analysis of trends in fund balance levels on a historical and future projection basis.


The total unassigned General Fund balance shall be maintained as of December 31 of each year equal to a minimum of 15 percent of the ensuing year’s budgeted General Fund expenditures, with a target of 20 percent. Included in the unassigned fund balance is a working capital reserve equal to ten percent of the ensuing year’s General Fund expenditures to provide funds for reasonable cash flow needs.


Withdrawal of any amount of the total unassigned General Fund balance in excess of the 20% target amount, for the sole purpose of reducing the ensuing year’s property tax levy, may be made only upon a two-thirds majority vote of the City Council.


Funds in excess of 15 percent of the minimum unassigned fund balance may be considered to supplement “pay as you go” capital outlay expenditures (including reduction of anticipated debt issues) or to prepay existing debt via cash defeasance as allowable. The decision of how to use these funds will be made by the City Council. Unassigned fund balance shall not be used to support recurring operating expenditures.


The City Council, by a two-thirds vote, can declare a fiscal emergency and withdraw any amount of general fund balances for purposes of addressing the fiscal emergency.


Any time the general fund balance is less than the required minimum of 15 percent, staff will present a plan to restore the General Fund balance to the minimum balance to the City Council for its approval.


Reserves will be established as required by bond ordinance and by statute for arbitrage requirements.


A cash reserve for Central Equipment "rolling fleet" replacement will be maintained on a replacement cost basis each year. Amounts in excess of the original cost depreciation will be reserved towards the equipment replacement value.


Investment Policies


Disbursement, collection and deposit of all funds will be managed to maximize investment opportunity for City funds. The City will manage its investment portfolio with the primary objective of preserving capital in the overall portfolio, maintaining sufficient liquidity to meet all operating requirements and attaining a rate of return commensurate with the City’s investment risk constraints. These objectives shall be met in accordance with the City's Investment Policy and prudent investment practices.


Short Term Funds

Funds that are required for daily operating needs and that are available for short periods of time are normally held at a local bank through a contractual agreement or at the State of Wisconsin Local Government Investment Pool. The City will maintain at least ten percent of its total investment portfolio in instruments maturing in 30 days or less.


Long Term Funds

Funds that are available for 30 days or longer may be placed in certificates of deposit with local financial institutions, Treasury Bills and other Federal securities in the State maintained Local Government Investment Pool or any other instrument listed in Wisconsin Statute §66.0603(1m). With the exception of US Treasury securities and authorized pools, no more than 50 percent of the City’s total investment portfolio will be invested in a single security type or with a single financial institution.


Bank deposits are secured by Federal Depository Insurance Corporation and by the State Deposit Guarantee Fund up to $650,000. Amounts over $650,000 are guaranteed by an irrevocable standby letter of credit from the Federal Home Loan Bank (FHLB).


All City funds will be pooled for investments except certain restricted funds that require separate accounts. Interest allocations are made to operating and capital project funds based on monthly cash balances.


Debt Policies


Section 67.03(1) of the Wisconsin Statutes provides that the amount of indebtedness of a municipality shall not exceed five percent of the equalized valuation of the taxable property in the municipality. Although State Statutes allow five percent of the equalized valuation, the City has set an internal debt goal, which seeks to remain below 3.5 percent (70 percent of the maximum amount allowed by the State Statutes).


Net Direct Debt should not exceed three times (3X) the operating revenues of the City.


Asset life shall be longer than the debt issued for its purchase. The City shall consider the useful life of the project assets being financed and the long-range financial and credit objectives when determining the final maturity structure of the debt. The City will use short-term debt for bond anticipation purposes only.


Spend down of borrowed proceeds. All debt taken out will be for shovel-ready projects. Draw down of the funds will be in accordance with IRS rules for general obligation debt whereby 10 percent of the proceeds will be spent within 6 months of the borrowing, 50 percent within 12 months of the borrowing, 75 percent within 18 months of the borrowing, and 100 percent within 24 months of the borrowing. Should this schedule not be met, the balance of the amount borrowed and not spent will be applied to debt service levy. Each general obligation debt will be closely monitored so that it adheres to IRS regulations in respect to arbitrage and spend down rules. Should State Trust Fund be utilized for the issuance of debt, all draw requests must be made within 1 year of receiving the approval of the State Trust Fund to borrow the funds.


The City of Eau Claire shall utilize any debt obligations it has at its disposal to take advantage of the lowest cost of the debt or for another benefit for the City.


The City of Eau Claire will follow a policy of full disclosure on every financial report and bond prospectus.


The following objectives will be used to maintain debt service requirements at an affordable level and enhance the credit quality of the City:

  1. The levy for debt service shall be no greater than 25 percent of the total levy, with an effort to maintain the levy at a proportionate, even level for tax rate stabilization.
  2. Debt amortization should be structured so that 65 percent or more of total direct debt principal is retired in 10 years or less.

Each year, as part of the budget process, the City Council should consider the percentage increase in the tax levy for debt service for the year following the issuance of the debt. Flexibility to fund future expenditures necessary to provide essential City services and economic viability are essential considerations.


General obligation debts will be paid through the General Debt Service Fund, the TIF debt service funds, the Storm Water Utility, and other funds for which general obligation debt is issued. Operating budgets will be prepared to meet the annual principal, interest, and service charge costs for each fund. The General Fund is the fund responsible for general obligation debt payments if there are not amounts sufficient for debt payments in the other funds. Special assessments collected from properties benefited by construction funded with bonded debt will be used for debt service payments or to reduce the level of future debt. Revenue for the TIF debt service fund will include taxes generated by incremental property values within the district, special assessments, interest on cash balances, and transfers, if required.


Special Assessment Policies


General Policy

The special assessment policy was adopted by the City Council in 1955. Assessments for the construction and reconstruction of streets and sidewalks as well as the construction of water and sanitary sewer mains and extensions are levied and placed on the tax roll. These assessments are paid in installments over a ten year period. A six percent per year interest rate is charged on the unpaid balance in years two through ten. Effective January 1, 1998, City Council waived the assessment for reconstruction of water and sanitary sewer utilities. Future reconstructions for water and sewer will be paid for by the utilities.


If a property with outstanding special assessments is sold, the assessments become due and payable in full at the time of sale and may not be assumed by the purchaser. All improvements are guaranteed for a set number of years. In the event an improvement does not last the entire estimated period, a pro rata credit adjustment will be made for the remaining life of the improvement.


In 1990, the City Council amended the policy to allow a 20-year payback at a six percent interest for hardship situations. In some situations, where the payment of the special assessments would result in extreme financial hardship, Council may authorize deferment of the assessments. In this situation, the City places a lien on the property for the amount of deferred assessments. This lien accumulates interest at six percent per year. If the financial condition of the property owner changes to enable them to make payment, the assessment plus accumulated interest can be placed on the tax roll and paid over a ten or 20-year period. If the property is sold, the lien plus accumulated interest becomes due and payable in full at the time of sale.


Special Assessments Levied Over Ten Years

Street improvement construction includes construction of bituminous and concrete pavement, concrete curb and gutter, and sidewalk and boulevard restoration. The assessment rate for the street improvement category is based on the prior year average cost to construct a typical street, including engineering and inspection costs.


Estimated life of street construction components is 30 years for bituminous pavement, 40 years for concrete paving, 30 years for concrete curb and gutter and ten years for sidewalks.



Assessment rates for new water and sewer mains are based on the prior year cost to construct an eight inch main, including engineering and inspection costs.


The assessment for white way lighting construction is based on construction cost. Non residential properties pay two-thirds of cost and the City pays the remaining one-third.


Special Assessments Levied Over Five Years

  • Diseased tree removal.

Special Assessments Due in Year Assessed

  • Assessments less than $100.
  • Assessments for current services such as snow removal, weed cutting, etc.
  • Whiteway lighting operation and maintenance assessments are based on the total cost of operating and maintaining the system and are assessed in full to non residential properties.

Improvements Not Assessed

  • Reconstruction of water and sewer utilities, with the exception of service level upgrades, such as replacing a 4" lateral with a 6" lateral.
  • Storm sewer the total cost is paid by the Storm Water Utility, except for work that is performed under development agreements.
  • Seal coating the total cost is paid by City.

Major Development Policies


Special assessments are paid by developers on projects that are within the scope and terms stated in the special assessment policy. In 1989, the City Council approved legislation that requires developers of subdivisions platted after 1989 to bear the full cost of streets, storm sewers, and City utilities within the development area. Funds are either escrowed with the City or financing guaranteed with a letter of credit as required by the development agreement approved by the City Council.


Purchasing Policies


Purchases for all City departments for the City of Eau Claire shall be in accordance with the City Procurement Policy (Chapter 2.92 of City Code of Ordinances). For contracts involving building or construction work, financed in whole or in part with City financial assistance, contractors shall compensate employees at the prevailing wage rate in accordance with §66.0903, Wisconsin Statutes, Chapter DWD 290, WI Adm. Code, and Chapter 2.92.215 of the City of Eau Claire Code.


The methods of source selection are as follows:


Competitive Seal Bids/Proposals

Competitive sealed bidding must be used for Public Works projects exceeding $25,000 and other purchases of $30,000 or greater. This process shall consist of:

  • Invitation for bids
  • Public notice
  • Bid opening
  • Bid acceptance and bid evaluation
  • Bid award City Council authorization

Small Purchase

Other than Public Works projects, procurements less than $30,000 must follow Purchasing guidelines and City Code of Ordinances. Procurement methods used for less than $30,000 include written quotes, informal written notices, telephone quotations and published price lists, cooperative contract and procurement cards.


Sole Source Procurement

When it has been determined in writing by the Purchasing Manager that there is only one source for a required procurement, the purchase may be negotiated and the other methods of selection disregarded. A written determination must be submitted to the City Manager.


Cooperative Purchasing

May use cooperative contracts as permitted by the City Procurement Code for Cooperative Purchasing (Chapter 2.92. of the City Code of Ordinances.)


Emergency Procurement

In the event of an emergency, supplies, services, or construction may be purchased without regard to normal purchase selection procedures to protect the health and welfare of the public. A written determination of the basis for the emergency and for the selection of the particular contractor must be sent to the City Manager and included in the contract file.


Pension Funding and Reporting Policies


All current pension liabilities shall be funded on an annual basis.


Existing Plan Funding

All permanent employees of the City are participants in the Wisconsin Retirement System (WRS), a statewide, defined benefit pension plan to which employer and employees both contribute.


All employees are mandated to pay the employee required portion. The rates of the employer and employee contribution are set annually by WRS based on actuarial evaluations. The 2022 rates are as follows:

Prior Years' Unfunded Pensions

The State of Wisconsin administers a plan for retired employees of the Eau Claire Police and Fire Departments. These individuals had been covered by a private pension plan prior to the City joining the WRS. No new employees are added to the plan. The City's policy is to fund retirement contributions to meet current benefit payments to retired employees. The total estimated present value of future cost to the City as of December 31, 2020, was approximately $2,168,308, all of which relates to prior service. The estimated remaining period of amortization is 10 years and will be paid through annual operating appropriations.


Post Retirement Benefits

In addition to providing pension benefits, the City provides certain health care benefits for retired employees. A substantial number of the City's permanent employees may become eligible to receive employer paid health care from retirement until Medicare entitlement if they reach normal retirement age while working for the City. The City is required by GASB Statement 75 to complete an actuarial study every two years to determine its actuarial liability for future health care benefits. The last study was completed as of January 1, 2018. As of January 2014, new employees who are not Public Safety or Transit employees will not be eligible for a post-retirement health care benefit.


Compensated Absences


Employees accumulate vacation, sick leave, and other benefits at various rates depending on bargaining group and length of service. Employees are paid for their total unused vacation and compensatory time upon termination or retirement. However, sick leave can only be used during employment.


The cost of compensated absences is recognized when payments are made to employees. The estimated current portion of these costs has been included in the 2024 Adopted Budget.


Accounting, Auditing, and Financial Reporting Policies


Public trust and confidence in local government and government leaders is essential. Provided on the City’s Website, under the Financial Transparency page are various monthly and annual financial reports to help better understand how public funds are being spent.


An annual budget for all operating funds will be prepared.


A five year Capital Improvement Plan budget will be presented annually.


An independent audit will be performed annually for all City funds.


The City will produce an Annual Comprehensive Financial Report (ACFR) in accordance with generally accepted accounting principles as outlined by the Governmental Accounting Standards Board.


Special Events Policies - Insurance Requirement


Organizations that use City parks and/or City facilities for special events such as foot races, parades, festivals, etc. are required to obtain liability insurance and provide a certificate evidencing limits of not less than $1,000,000 per occurrence and agree to endorse the City as an additional insured under the policy. Organizations must also sign a hold harmless agreement. (Ordinance 9.59.110)


All special events are reviewed and approved by City Council or the Director of Community Services. Special Events are reviewed to ensure the health and safety of the participants in the event.


Risk Management Policy


The City of Eau Clare is one of 18 municipalities and counties and 2 special use districts that are members of Wisconsin Municipal Mutual Insurance Company (WMMIC), a municipal insurance program that provides liability insurance. As part of this program, the City pays the first $200,000 of any claim. WMMIC will pay any covered costs over $200,000 per occurrence or $400,000 aggregate with an annual cap of $12 million.


The objective of this program is to safeguard the financial security of the City, by protecting its human, financial and property assets from the adverse impact of loss. The program is set up to protect the financial assets of the City and provide stable funding for losses. The City will self-insure all losses that occur with predictable frequency and those that will not have a significant impact on the City’s financial position.


The Risk Manager will review all claims and award recommendations prior to payment by the insurance company. Judgment or award recommendations in excess of $250,000 will be reviewed with the City Council prior to payment.


In 1992, the City became self-insured for workers' compensation. Claims are handled by WMMIC TPA Services. Excess insurance is purchased through Safety National Insurance, which protects the City for losses greater than $550,000 per claim.


In 2016, the City purchased property insurance with Municipal Property Insurance Company (MPIC). MPIC provides policy coverage that is specifically tailored to government entities. There is a $25,000 deductible.