Budget in Brief

Section 2

Capital Assets Policies

Capital or fixed assets are physical property owned by the City and used in its operations with a unit cost greater than, or equal to $5,000 and an economic life greater than one year. Capital assets include land and land improvements, easements, buildings and improvements, vehicles, machinery, and equipment, works of art and historical treasures, computer equipment, and infrastructure. Costs of normal maintenance and repairs are not added to the value of capital assets.

  • Capital asset additions – capital assets must be budgeted in capital account categories. When a capital asset is received by the receiving department, the Capital Asset accountant will tag the asset within 30 days of receipt by the receiving Department.
  • Capital asset disposals – a capital asset maintenance form must be completed by the department that is disposing the asset. If the asset is to be auctioned, then the asset is turned over to the Procurement Department.
  • Capital asset physical count – annually, the Finance Department distributes an asset register to the departments for conducting the capital asset physical count. Each department shall be responsible for conducting the physical inventory count and verifying the assets of the City. The Finance Department will audit the department inventory by performing random test counts. Any discrepancy in the physical count must be properly documented.

Interim Financial Reporting

The City Commission and individual departments will be provided with monthly budget reports comparing actual versus budgeted revenue and expense activity. These reports appear on the City Commission agenda for full transparency.

Investment Policies

The City’s Investment Policy is very complex. Highlights appear below:

  • Compliance with all applicable Florida Statutes and regulations guiding investment policies of local governments and the current City of Hallandale Beach Investment Policy.
  • Investment of funds to achieve safety, liquidity, and yield as investments objectives in the specified priority order.
  • Performance of cash flow analyses of all funds on a regular basis. Assure scheduling of disbursements, collections, and deposits to provide cash availability as well as to minimize idle funds.
  • Specification of a list of authorized investments and portfolio composition as authorized by the City Commission approved Investment Policy.
  • Use of performance benchmarks for short-term and long-term portfolios.
  • Reports will be submitted and presented to the City Commission on a quarterly basis detailing investment earnings compared to financial benchmarks, and cash balances.

Renewal and Replacement Reserves

Through the budget adoption process, the City has been maintaining a Renewal and Replacement reserve for the Utility Fund. These funds, with City Manager, and staff and consulting engineering recommendations, and City Commission approval, are used for the repair or replacement of water and sewer facilities. The Commission has authorized the continuation of this reserve methodology to facilitate future funding of capital projects. For the current year, the City did not add additional funding to the Utility R&R.

Equipment Reserves

Since 1996, the City Commission has adopted the establishment of an Equipment Reserve for the replacement of fire service, water, stormwater, sewer, and sanitation equipment. This methodology levels the funding requirement over a multi-year period, thus avoiding the scenario of funding large capital equipment purchases from operating funds in one fiscal year. Each year, the funding of the reserve will be reviewed to determine if it can be funded based of the availability of funds.

Throughout the years, the City has developed reasonable equipment replacement schedules and various replacement accounts have been established providing funding mechanisms and availability of monies budgeted at a generally consistent level each year. The Equipment Reserve is calculated based either on a replacement schedule, on a percentage of revenue generated, or on an as-needed basis.

Cost Allocation Plan

The Cost Allocation Plan is a philosophy in which costs are allocated to the appropriate fund that is benefited by a service or department's activity. The FY proposed 2023-24 budget was predicated on the September 2020 Cost Allocation Plan and some changes from the previous plan were scheduled to be phased in over a three-year period. Instead, dollars were budgeted to update the allocation plan which is currently in process and should be completed by the end of the fiscal year. Staff utilizes three methodologies to allocate cost to various funds. The Direct Cost Method is the most accurate and charges the actual costs to departments based on work orders, purchase orders, projects, or some other documentation. The Percentage Method is the next preferred methodology whereby costs are allocated based on specific workload indicators and the associated percentage for the benefiting fund. The Time Study Method is only utilized when the other methods are impractical. This method requires a monitoring of individuals' time and/or departmental activity for a period of six to eight weeks and the results are then projected for the remainder of the year.