Financial policies

4. Administrative policies

4.1 Quarterly and year-end reporting

The Finance and Property Services department will report to the relevant Council Committee following second quarter, third quarter and at year-end, expenditures and revenues by department and fund compared to authorized allocations for the prior fiscal year. This report will identify departments and funds with projected expenditures in excess of authorized appropriations and/or revenues projected to be less than budgeted amounts. Departments may be requested to deliver program updates related to Council budget amendments and address projected year-end actual expenses in excess of authorized appropriations and/or revenues less than budgeted amounts following the quarterly and year-end reports. Council Members may request which departments should present to Council.

For any department where forecasted spending exceeds authorized appropriations or where forecasted revenues are less than budgeted amounts, the department will work with Finance and Property Services to execute a plan that reduces spending to meet authorized appropriations or otherwise addresses the deficit.

4.2 Operating costs for technology

Departments are directed to clearly identify, within existing resources, the funds that would be used to finance the ongoing costs related to the purchase or development of technology prior to the expenditure of funds for the purchase or development of that technology. The sponsoring department shall prepare a Receive and File notice for consideration by the relevant Council Committee when the annual operating and maintenance cost of any technology project exceeds $50,000. This notice shall be submitted as soon after the sponsoring department has identified the ongoing costs and funding sources. Departments shall work with the Information Technology (IT) department and Finance and Property Services to ensure those costs are identified and included in the contract for technology services. Departments shall also work with IT to jointly determine the appropriateness of the purpose for the City’s technology planning. Operating costs of department-specific technology will be allocated to that department. Technology for use across the City or in support of citywide operations shall be allocated citywide.

4.3 Contract funding

Prior to committing to conditions requiring a minimum purchase under any contract, the department/departments involved must clearly identify the specific funding sources dedicated for such purchases.

4.4 Gift acceptance

Any non-travel related gifts with a value of $15,000 or less as long as there are no operating cost implications may be received by individual City departments with written notice to the Finance Officer or their designee. The gift shall be accepted by the City Council through either the Finance Department quarterly report or through a separate Request for Council Action (RCA) from the receiving department.

The Finance Department shall submit a quarterly gift report to the appropriate City Council Committee(s) for approval of gifts that do not involve travel, lodging and/or conference costs.

Gifts covering travel, lodging and/or conference costs shall be approved by City Council prior to the use of the gift. The department receiving the gift of travel, lodging and/or conference costs must submit an RCA for approval by City Council prior to the use of gifted travel, lodging and/or conference costs.

Gifts reimbursing the City after travel, lodging and/or conference costs have been incurred are to be avoided. However, a donor will occasionally offer, after a city department has incurred travel, lodging and/or conference costs, a monetary gift to cover the recipient department’s expenditures. This situation is a restricted monetary gift, and the restriction should be noted on the RCA for acceptance of travel, lodging, and/or conference costs.

For any gifts with a value exceeding $15,000, the recipient department shall submit a request for authorization to accept the gift directly to the City Council’s relevant Committee. Consistent with Minnesota Statutes, section 465.03, the department may not use the gift until it has been approved by a two-thirds vote of the City Council.

Minnesota Administrative Rules, Rule 4512.002, Subp. 2, mandates City Council approval prior to use of gifts by elected officials and employees who must file Statements of Economic Interest. Ethics Code § 15.50 and Civil Service Rule 11.03B.12, both relating to acceptance of gifts by covered individuals, apply to all gifts not otherwise accepted by City Council.

Gifts to the City Policy and additional information can be found at https://www2.minneapolismn.gov/government/charter-ordinances-policies/city-policies/gifts-to-the-city-policy/.

4.5 Grants administration

The following provisions apply to the administrative of grant funds within the City:

4.5.1 Applications for grants

Grant Applications require prior City Council approval if one of the following applies:

1. More than one department is applying for the same funds and prioritization is required;
2. Grant request exceeds $250,000;
3. Grant requires any local cash match;
4. Grant requires new hiring to implement the project;
5. The project, if funded, would require an expectation for the City to continue the funding;
6. The application appears to be inconsistent with the City’s Annual Budget; or
7. The application appears to be inconsistent with the City’s Comprehensive Plan, Consolidated Plan, or other adopted Plans or Policies.

Finance and Property Services Controller’s Office must be informed by departments of grant applications through departments’ submittal of the Grant Review Form at time of application.

4.5.2 Acceptance of grants

All grant awards must be submitted by departments via Request for Council Action (RCA), formally accepted by City Council and appropriated to a City grant fund. Final, signed grant agreements should be sent to the Procurement Office to be recorded in the financial software for storage.

4.5.3 Changes to grants after acceptance

Any department which has received a grant shall notify the Finance and Property Services department of changes in the grant award or terms of the grant that occur after the grant is initially awarded.

4.6 Approval of payments and procurements

All payments for or procurement of goods and services from external sources, regardless of dollar amount, must be approved. Additionally, where applicable, the system-generated purchase order number will be communicated to the vendor prior to the order being placed. Purchases under the formal bid threshold, with minor exceptions, shall meet the Target Market Program requirements, which can be found at the below link:

Target Market Program requirements

Additional procurement policies and procedures

4.7 Accounts receivable collections policy

Services provided in advance of payment are recorded as accounts receivable. Invoices must be created and recorded as receivables as soon as possible after a billing cycle ends or service is provided. Collections of receivables are managed according to type and age. Collection methods may include the use of collection agencies, cancellation of service and assessment of unpaid amounts to real estate property taxes. Installment arrangements may be utilized to facilitate collections. Receivables that are in dispute or are determined to be uncollectible will be processed in accordance with Minneapolis City Ordinance 509.920 or the Write-off section under the Accounts Receivable Policy depending on the receivable type. All efforts to collect or resolve an outstanding receivable must be done in accordance with Federal Regulations, State Statute and Minneapolis City Ordinance or Charter. Write-offs for delinquent billings shall be managed using the allowance for doubtful accounts methodology rather than the direct write-off method.

4.8 PCI information security policy

The City will comply with the Payment Card Industry Data Security Standard (“PCI DSS”). The data that resides at and is transmitted from the City of Minneapolis merchant locations includes cardholder data as defined by the Payment Card Industry Security Standards Council. Due to the value of cardholder data and contractual requirements of processing credit cards, it is a high priority for the City of Minneapolis to protect such data and maintain compliance with the Payment Card Industry Data Security Standard.

City contractors who accept payments for conducting City business are required to comply with PCI DSS and supply the City with annual certification to such compliance. City contractors experiencing a breach of City data are required to immediately inform the City of all such breaches.

4.9 Medical self-insurance

The City began implementing medical self-insurance on January 1, 2018. The City’s medical self- insurance plan shall maintain adequate reserve balances as outlined in the reserve policies section . Funding of reserves shall be included in the premium rates paid by the City and employees. Medical self-insurance reserves shall be used only for medical self-insurance purposes and not be allocated for any other purpose.

If the medical self-insurance fund is dissolved for any reason, the reserve shall be transferred to the City’s remaining self-insurance reserves in the Self-Insurance Fund.

4.10 City time reporting

Every employee of City departments must follow the City’s Time and Labor guidelines for time reporting and approval of compensation, reporting both working and non-working compensable hours. With limited exception as approved by the Chief Financial Officer, every employee’s timesheet must be approved by a supervisor, regardless of FLSA exemption status.

4.11 Employee pay: overpayment and underpayment

City policy is to pay employees all wages earned. In the event it is discovered an employee has been overpaid or underpaid, the City shall inform the employee of the error and the error shall be corrected, either by collection of overpayment or making additional payment to correct underpayment. In most cases, the City will only collect overpayments made in the previous 36 months, although the City reserves the right to seek repayment for any period in which overpayment has been discovered. The City will work with the employee to prepare a repayment plan, and all repayment agreements between the employee and the City shall be approved by the Payroll Director. Payments to correct erroneous underpayments to employees will be made retroactively not to exceed 36 months, unless required otherwise by law. The full amount shall be paid in one payment to the employee promptly after discovering the underpayment. Overpayment and underpayments shall comply with all legal and statutory provisions.

4.12 Surplus property donation

All donations of surplus property must be in accordance with Minnesota Statute 471.3459, Minneapolis Ordinance 18.160, Minneapolis Surplus Property Disposal Policy, and Minneapolis Surplus Property Disposal Procedures.

4.13 Authority of the Finance Officer

The Finance Officer or designee has the following authorities:

4.13.1 Related to loans

• To make temporary loans between funds to cover any cash deficits at the end of each fiscal year.

• To create or adjust appropriations in any fund to prepay bonds and facilitate transfers for debt service and to make all appropriate transfers and payments relating to debt service and the administration thereof.
• To call (prepay) bonds in advance of maturity for the following types of bonds: net debt, special assessment, enterprise and tax increment provided sufficient excess cash resources are available.
• To approve the closure of non-bond funded capital projects.
• To authorize the Deputy Finance Officer and/or Controller to sign real estate and bond documents in the absence of the Finance Officer.

4.13.3 Related to appropriations and transfers

• To amend appropriations related to technical accounting treatment changes.
• To assign fund balance in accordance with GASB 54 based on analysis provided by the City Controller.
• To adjust the appropriations of the special revenue funds for payments to various pension organizations as may be required.
• To establish or adjust appropriations, transfer balances, or make payments to carry out the intent of any action or resolution Passed and Approved, or any legal agreement Passed, Approved and Executed, with respect to any inter-fund loans, advances, residual equity transfers, or operating transfers, or the repayment thereof.
• To make any necessary appropriation adjustments to allow departments to receive and spend funds consistent with Council-approved actions.
• To review and approve any and all transfers of eligible revenues into and out of the Development Account, based on an eligibility assessment and analysis conducted by Finance and Property Services department staff.
• To approve any and all transfers of eligible revenues into the Property Disposition Fund based on approval by the Facilities, Space and Asset Management Committee and eligibility assessment conducted by Finance and Property Services department staff.
• To make appropriation adjustments to correct any errors, omissions or misstatements to accurately reflect the intent of the City Council in adopting the Operating or Capital Budget and/or any subsequent City Council action.
• To administratively increase or decrease capital project appropriations to reflect necessary reductions whenever a revenue source is determined to be uncollectible or to increase appropriations upon receipt of funds and/or a reasonable expectation of receipt of funds based on adopted Council actions.
• To appropriate and transfer revenue within the Tax Increment and other special revenue funds consistent with the management of the City's tax increment districts and development program.
• To establish or amend appropriations related to technical accounting treatment changes and to establish and adjust accounts and appropriations, make payments and transfers, process transactions as necessary for the purpose of cash management of revenues, and facilitate any technical corrections, adjustments and completions authorized for the following project/s: Target Center Finance Plan internal allocation models and the appropriations attached to them.

4.13.4 Related to expenditures and public purpose

• To develop, implement, and administer food and gift card policies and procedures in accordance with the Public Purpose doctrine and other legal and accounting guidelines.

• To make minor changes to insurance requirements, coverage and limits, defense and indemnification, and similar provisions in contracts, after consultation with the City Attorney or their designee. Before exercising this authority, the Finance Officer must first develop, implement, and administer a procedure, in accordance with legal and risk management guidelines, describing the circumstance under which changes may be acceptable and the reasonable limits to the changes which may be made under this authority.

4.13.6 Related to grants and CDBG

• To make the necessary project and line item budget adjustments to periodically balance budgets and expenses between objectives within given programs and within normal CDBG program constraints.
• To adjust re-appropriations for grant funds within cost centers as appropriate.
• To appropriate available grant balances.

4.13.7 Related to claims administration

• To make the necessary adjustments in Subrogation 3rd party claims, to take the necessary action to increase 3rd party payments and decrease write-offs to the City.
• To provide oversight of related-party or sub-recipient transactions using City or pass-through funds to ensure compliance with applicable rules and regulations.

4.13.8 Related to interest earnings

• To administratively allocate interest earnings from any City fund as long as such allocations are consistent with State law and federal regulations.

4.13.9 Related to state aids

• To allocate the State Insurance Aid payments received from the state for pension costs.
• To reduce LGA payments to the Independent Boards if payment of the management support charge, or any other charges required by City Ordinance, are not received prior to the distribution of the December LGA payment. This reduction shall only occur after an affirmative vote of the Council to implement this authority.

4.13.10 Related to rollover

To re-appropriate funds and certify that an encumbrance is eligible for re-appropriation at the end of the fiscal year. Additionally, the Finance Officer may reject re-appropriation requests based on the financial health of the fund or extenuating circumstances. To be eligible for re-appropriation, requests must meet all of the following criteria:

1. Be a valid encumbrance;
2. Be a one-time expenditure and not a recurring budget item;
3. Have a purpose consistent with the department’s business plan and included as part of the department’s planned expenditures for the year;
4. Have the budget year appropriation balance available for the encumbered item; and
5. Have a positive fund financial position.