Financial Policies

Financial policies and subsequent procedures and guidelines are the foundation of maintaining sound financial practices. OMB continues to lead the charge through research, documentation, publication, and as-needed refinement of the County's financial policies, procedures and guidelines. The intention of these policies and resulting processes is to adopt a structurally balanced budget in which revenues equal operating expenses without the use of reserves. You will see throughout this document the results of this approach.

The policies outlined below are adopted and enforced by the Board, followed by County employees, and audited by the Clerk and Comptroller.

The policies were developed by considering budget practices developed by the Government Finance Officers Association (GFOA) and National Advisory Council on State and Local Budgeting (NACSLB). It should be noted that the policies listed here reflect those adopted by the BCC. Other financial policies adopted by the Clerk and Comptroller in the capacity as Chief Financial Officer for the BCC, which do not require BCC approval, do not appear here.

The following establish the systems and standards for managing the County's financial resources:

• Florida Statute, Chapter 129 County Annual Budget,
• Florida Statute, Chapter 200 Determination of Millage, and
• Government Accounting Standards Board (GASB).

The County follows the Generally Accepted Accounting Principles (GAAP) for accounting and financial reporting, which requires the use of modified accrual basis of accounting for governmental funds and the accrual basis of accounting for proprietary funds.

The General, Special Revenue, Debt Service, and Capital fund budgets are prepared on a modified accrual basis of accounting, except that encumbrances are treated as the equivalent of expenditures, as opposed to a reservation of fund balance. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. Debt service expenditures as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due, using the current financial resources measurement focus of accounting.

The budgets for the Proprietary Funds and Internal Service Funds are prepared on the full accrual basis of accounting. These funds include Water and Wastewater, Solid Waste, Health, General Insurance, and Equipment Services. Under the full accrual basis, revenues are recorded when earned (for example, water user fees are recognized as revenue when the bills are prepared) and expenses are reported when a liability is incurred, regardless of the timing of related cash flows, using the economic resources measurement focus of accounting.

There are some exceptions to the budgeting of Proprietary Funds using the full accrual basis of accounting. For example, while the accrual method does not recognize loan proceeds as revenue or principal payments on debt obligations as expenditures, loan proceeds are budgeted as revenue and principal payments on debt obligations are budgeted as expenditures. Also, capital expenditures are budgeted as expenses but these must be capitalized under the accrual method of accounting. Finally, depreciation and amortization are not budgeted items.

Policies and Guidelines

The following policy statements guide the annual budget development and monitoring functions of the County. They correspond closely to explicit provisions found in the statutes and complement professional standards established by the GASB.

• F.S., Section 129.01(2)(b): The budget will be balanced by fund, that is, the estimated revenues including balances brought forward will equal the total of the appropriations and reserves.
• F.S., Section 129.01(2)(b): Budgeted reimbursements are considered anticipated receipts and as such will be budgeted at 95% of the estimated fiscal year total.
• F.S., Section 129.01(2)(c)1: Reserves for contingencies may be established for each fund during the annual budget development process, and when established, will be in compliance with Florida Statutes requiring that reserves for contingencies not exceed ten percent of the total budget.
• F.S., Section 129.01(2)(d): A reserve for re-appropriation will be provided in each fund as necessary to provide for the payment of vouchers which have been incurred in the year(s) prior to the fiscal year for which the budget is being prepared.
• F.S., Section 129.06(2)(a): Budget changes may be made through the budget amendment process.
• F.S., Section 129.06(2)(d & e): Fund revenue and expenditure totals may be increased or decreased by formal action of the BCC:
  • Following appropriate public notice and public hearing
  • In the event new revenue is received from an unanticipated source
  • In the County’s enterprise or proprietary fund to increase receipts for a particular purpose
• F.S., Section 129.06(3)(b): Interfund transfers are fixed when the budget is adopted.

• Capital Budget and CIP: Pasco County will develop and implement a comprehensive Capital Budget and a five-year CIP. The first year of the CIP will represent the Capital Budget with the remaining five years representing the CIP. Capital project financing will be derived from various funding sources including, but not limited to, bonds, short-term loans and notes, fuel taxes, Federal and State grants, community investment tax (Local Government Infrastructure Surtax), enterprise revenue, impact fees and the levy of ad valorem taxes and non-ad valorem assessments as determined by the BCC. The CIP will comply with the Laws of Florida, (specifically F.S., 125.85(2); the Florida Administrative Code; GAAP, necessary to assure proper accounting and fiscal management techniques and any County Ordinance, Policy and Procedure, which relates to Capital Improvements and does not prohibit or restrict compliance with F.S., Section 218.33. Changes in the cost of a current year project, advancing projects into the current year or delaying them from the current year to a future year in the adopted CIP shall be handled pursuant to the budget amendment procedure contained in F.S., Section 129.06. Changes in the cost of a current year project that are less than 10% or less than $100,000, whichever is least, of the project’s all year’s budget (including all funding sources), can be adjusted with the approval of the County Administrator under the Administrative Budget Amendment process.
• Budget Submissions: It is the policy of the Board of County Commissioners (BCC) that all government organizations funded in whole, or in part, by the BCC submit budget requests for the upcoming year in accordance with the budget instructions distributed annually by the County Administrator, as designated Budget Officer.
• Recovery of Indirect Costs: It is the policy of the BCC that for the calculation of the value of indirect services provided to a department (exclusive of any grant funded programs); the County uses the most current, "full-cost" cost allocation plan.
  • Enterprise Operations: Each County enterprise operating shall reimburse the General Fund for the Calculated Value of indirect services provided to the enterprise. These costs should be incorporated into service charges levied by the enterprise. The amount actually charged should be based on the amount derived during the budget process.
  • Internal Service Operations: Each County shall reimburse the General Fund for the calculated value of indirect services provided to the internal service department. These costs should be incorporated into service charges levied by the internal service fund.
  • Other Funds: As appropriate, other operating funds, such as the General Purpose MSTU Fund and the Transportation Trust Fund will reimburse the General Fund for the calculated value of indirect services provided to departments funded from those funds. OMB should determine where such charges are appropriate. These costs should be incorporated into the annual budget and should be covered by the revenues available to those funds.
• Fleet Maintenance: The Fleet Maintenance Department shall operate within an internal service fund. The internal service fund shall recover, over time, the full cost of providing fleet maintenance services to customers as well as the projected replacement cost for vehicles owned by Fleet Maintenance and rented to departments and agencies. The Department will develop a fleet replacement schedule and update that schedule annually. Within this internal service fund a fleet replacement reserve will be maintained. The purpose of which is to accumulate the funds necessary to replace County vehicles when they meet County standards for replacement. Fleet replacement standards shall be reviewed annually to ensure rental rates are set to recover sufficient funds to replace vehicles.

The Budget Development and Adoption Process

Several steps have been taken to arrive at the point of adopting a structurally balanced budget in which revenues equal operating expenses without the use of reserves. Preparation, monitoring, and execution of the budget is a year-round process, explained below:

Formulation and Review of Department Requests

In January, the Office of Management and Budget (OMB) projects preliminary revenue estimates and establishes targets for departmental budget submission with direction and guidance from the County's Senior Leaders (the County Administrator and Assistant County Administrators). OMB hosts a Budget Kick-Off meeting to review the upcoming budget cycle expectations and processes. This meeting serves as the official start point of the budget cycle for the County.

In the time from Kick-Off to March, Directors are working with their teams and Budget Analyst to develop and fine tune their budget submissions. Budget submissions include Business Plan Initiatives (requests and business cases for additional resources above the established targets), operating budgets to keep the lights on, capital project and capital plan requests for the next 5 years, and estimating revenue projections. The Assistant County Administrator's review and approve these submissions before being presented to the Budget Director.

In April, Department Directors present their budget submission to the Budget Director for feedback, guidance, and approval.

Administrative Review and Proposal

In May, Department Directors present their budget submission to the County Administrator for feedback, guidance, and approval.

In June, the Board of County Commissioners host a workshop to prioritize which Business Plan Initiatives are needed to implement the Strategic Plan and to review and provide input on the 5-year Capital Improvement Plan.

The County Administrator's proposed budget is then presented in July to the Board of County Commissioners (BCC), and the tentative Millage rates are adopted.

County Commission Review and Adoption

During September, two Public Hearings are held to gather final citizen input and to adopt the budget and millage rates.

The budget schedule and process is governed by Florida Statutes (F.S) 129 and 200.The proposed budget is submitted to the BCC no later than 35 days after certification of assessed values (or August 4, whichever is later) and includes the proposed tax rate based on the net assessed taxable value of all property in the County. The tax millage rate is derived by dividing the tax revenue by the net taxable value of property.

All dates are shown on the Budget Cycle Calendar, but here is a high-level overview:

• June 1 - Submission of budget request to the BCC by the Sheriff, Supervisor of Elections, and Clerk and Comptroller.
• June 1 - Submission of budget request to the Florida Department of Revenue by the Property Appraiser.
• By July 1 - Certification of the County’s net taxable value of property by the Property Appraiser.
• August 1 - Submission of budget request to the Florida Department of Revenue by the Tax Collector and a copy to the BCC.
• By August 4 (or 35 days after certification, whichever is later) - Submission of proposed budget by the County Administrator to the BCC.
• August 4 to September 20 - The BCC may hold work sessions on various sections of the County budget.
• By August 4 (or 35 days after certification, whichever is later) - The BCC must notify the Property Appraiser of the proposed millage rate; rolled-back rate; and the date, time, and place of the first public hearing.
• By August 24 - Property Appraiser mails TRIM (Truth In Millage) Notices, which are notices of proposed property taxes.
• Approximately September 3 to 18 - The BCC holds the first of two public hearings to adopt the proposed budget.
• Approximately September 18 to 21 - The BCC holds the final public hearing and adopts the budget (must be held within 15 days of the first proposed public hearing).
• October 1 - Effective date of the Pasco County budget.

Guidelines for amending the budget after adoption are outlined below in the Budget Amendment Policy section.

Pasco County's budget amendment policy and the Florida state statutes which govern it are listed below.

Florida State Statute

Section 129.06 defines how a budget may be amended, as follows:

“The Board at any time within a fiscal year may amend a budget for that year, and may within the first 60 days of a fiscal year amend the budget for the prior fiscal year, as follows:

(a) Appropriations for expenditures within any fund may be decreased or increased by motion recorded in the Minutes if the total appropriations of the fund does not change. The Board of County Commissioners may establish procedures by which the designated Budget Officer may authorize budget amendments if the total appropriations of the fund does not change.

(b) Appropriations from the reserve for contingencies may be made to increase the appropriation for any particular expense in the same fund, or to create an appropriation in the fund for any lawful purpose, but expenditures may not be charged directly to the reserve for contingencies.

(c) The reserve for future construction and improvements may be appropriated by Resolution of the Board for the purposes for which the reserve was made.

(d) A receipt of a nature from a source not anticipated in the budget and received for a particular purpose, including but not limited to grants, donations, gifts, or reimbursement for damages, may, by Resolution of the Board spread on its Minutes, be appropriated and expended for that purpose, in addition to the appropriations and expenditures provided for in the budget. Such receipts and appropriations must be added to the budget of the proper fund. The Resolution may amend the budget to transfer revenue between funds to properly account for unanticipated revenue.

(e) Increased receipts for enterprise or proprietary funds received for a particular purpose may, by Resolution of the Board spread on its Minutes, be appropriated and expended for that purpose, in addition to the appropriations and expenditures provided for in the budget. The Resolution may amend the budget to transfer revenue between funds to properly account for increased receipts.

(f) Unless otherwise prohibited by law, if an amendment to a budget is required for a purpose not specifically authorized in paragraphs (a)-(e), the amendment may be authorized by Resolution or Ordinance of the Board of County Commissioners adopted following a public hearing.

1. The public hearing must be advertised at least 2 days, but not more than 5 days, before the date of the hearing. The advertisement must appear in a newspaper of paid general circulation and must identify the name of the taxing authority, the date, place, and time of the hearing, and the purpose of the hearing. The advertisement must also identify each budgetary fund to be amended, the source of the funds, the use of the funds, and the total amount of each fund’s appropriations.

2. If the Board amends the budget pursuant to this paragraph, the adopted amendment must be posted on the County’s official website within 5 days after adoption and must remain on the website for at least 2 years.

(3) Only the following transfers may be made between funds:

(a) Transfer to correct errors in handling receipts and disbursements

(b) Budgeted transfers.

(c) Transfers to properly account for unanticipated revenue or increased receipts.

(4) All unexpended balances of appropriations at the end of the fiscal year shall revert to the fund from which the appropriation was made, but reserves for sinking funds and for future construction and improvements may not be diverted to other purposes.

(5) Any County constitutional officer whose budget is approved by the Board of County Commissioners, who has not been reelected to office or is not seeking reelection, shall be prohibited from making any budget amendments, transferring funds between itemized appropriations, or expending in a single month more than one-twelfth of any itemized approved appropriation, following the date he or she is eliminated as a candidate or October 1, whichever comes later, without approval of the Board of County Commissioners.”

County Policy

A. To increase efficiency and transparency, all amendments to the budget listed in Section 129.06(2), paragraphs (a)-(e), will be approved as documented in Procedures Section IV below; posted in the financial system by the Clerk & Comptroller; retroactively brought to the Board of County Commissioners (BCC) for approval; and recorded in the Minutes. This retroactive approval of all amendments to the budget will occur on a quarterly basis. The last quarter retroactive approval will occur within the first 60 days of the new fiscal year for the prior fiscal year to avoid conflict with Section 129.06(2).

1. If, for some reason, the BCC does not approve an amendment previously posted, then another amendment will be completed to reverse that particular transaction.
2. The Office of Management and Budget (OMB) and any individual listed in the Final Approval Level table below reserves the right to move any of these type of amendments to the next available BCC meeting if the amendment rises to a level of BCC significance. Approval of these type of budget amendments will not be retroactive. Examples of items of significance include, but are not limited to, implementing new programs and initiatives, mid-year position adds, responding to unfunded mandates, or changes in legislation.

B. In accordance with Section 129.06(2)(a), the BCC establishes the following procedures by which the designated Budget Officer may authorize budget amendments if the total appropriation of a fund does not change. The approvers and associated approval thresholds are listed below for these types of amendments:

• Budget Director or Assistant Budget Director less than or equal to $1,000,000.00
• Assistant County Administrator for Internal Services greater than $1,000,000.00 but less than $2,000,000.00
• County Administrator greater than $2,000,000.00

C. Budget amendments, in accordance with Section 129.06(2)(f), regardless of dollar amount, will follow the exact procedures as outlined within the Statute.

County Procedure

A. All budget amendments will be processed through the financial system and routed through the appropriate workflows. This workflow includes approvals from the Department Head or Fiscal Services representative (1 level), OMB (3 levels), and Finance (2 levels).

1. OMB approvals for budget amendments utilizing operating accounts are a Budget Analyst, a Budget Manager or Assistant Budget Director, and the Budget Director.
2. OMB approvals for budget amendments utilizing grants or capital projects are a Budget Analyst, a Budget Manager, and the Assistant Budget Director.
3. Finance approvals for all budget amendments are Finance Clerks and Operations Supervisor or Manager.

B. Budget amendments, in accordance with Section 129.06(2)(a), will also include the Final Approval Levels as listed in Policy Section III.B. These approvals will be completed either directly through workflow within the financial system, or, if the approver is not in the workflow, documented as an attachment (such as an approval via email) to the budget amendment within the financial system.

C. Budget amendments, in accordance with Section 129.06(2), paragraphs (d)-(e), regardless of dollar amount, will not be approved through workflow within the financial system until proof of a receipt in nature from a source not anticipated is properly documented by a formal notification of amount. A common example of this occurrence is grants, whereby OMB will not approve a budget amendment for additional grant funds until the grant agreement has been approved by either the granting agency or the BCC.

D. Budget amendments, in accordance with Section 129.06(2)(f), regardless of dollar amount, will be authorized by Resolution or Ordinance of the BCC adopted following a public hearing and will follow the exact procedures as outlined within the Statute above.

E. All budget amendments will be posted in the financial system after all workflow approvals have been completed.

F. OMB will obtain retroactive approval from the BCC on a quarterly basis for all budget amendments posted within the financial system for the prior quarter, via an agenda item. The last quarter retroactive approval for the prior fiscal year will occur within the first 60 days of the new fiscal year to avoid conflict with Section 129.06(2). OMB will follow the steps below to fulfill the requirements within Section 129.06 for the budget amendments to be recorded in the Minutes.

1. An agenda memo will be written seeking blanket approval from the BCC for all the budget amendments that were posted in the financial system for the prior quarter.
2. A report will be run out of the financial system of all posted budget amendments for the prior quarter and attached to the agenda memo via the agenda software for BCC approval.
3. If the BCC rejects one or more of the budget amendments on this list, the remaining budget amendments will be considered approved. The rejected budget amendments will be reversed via a separate budget amendment transaction routed through the workflow, as listed in Section IV. A-C.