financial management policies

The City of Winchester has an important responsibility to its citizens to plan for the future and manage public funds with accuracy and integrity. Planning has been an important focus of the City of Winchester, as we constantly adapt and change to meet the needs of our community. City Council along with City Staff have created and implemented many financial policies to demonstrate our commitment to sound financial management.

The City of Winchester has implemented a 20-year financial planning model which aids us in evaluating our policies and making sure we meet our targets. Our model incorporates all of our CIP, revenues and expenditures. Using past performance and changing factors in our community, we use percent increases/decreases to project into the future. We are constantly preparing and changing to meet the needs of our community in the following areas:

• Continue to monitor debt levels to prepare for future capital needs.

• Recognize the City’s potential markets with the redevelopment of historical properties for a different and more prosperous use.

• Continue to keep tax rates at low levels

Our policies include many issues such as cash and investment management, expenditure control, asset management, debt management and planning concepts, in order to:

• Demonstrate to the citizens of the City of Winchester, the investment community and the bond rating agencies that we are committed to being a fiscally strong organization.

• Make goals and policies clear so new Council members or staff will be able to continue with our current policies and change them as the needs of the community change.

• Continue to conform to Generally Accepted Accounting Principles (GAAP) as well as Governmental Accounting Standards Board (GASB) regulations.

• Insulate from financial crisis.

• Plan for projects to spread the costs of larger projects over a longer period of time.

• Maintain the City’s bond rating.

1. The primary goal of the investment policy is to maximize the return on investment while minimizing the risk to the investment.

2. The Treasurer will diversify use of investment instruments to avoid incurring unreasonable risks inherent in over investing in specific instruments, individual financial institutions, or maturities.

3. The Treasurer, in cooperation with the City’s Finance Department reports at the end of each month the amount of money on deposit with each depository to City Council.

4. All investments are recorded and reviewed with internal and independent auditors and meets the requirements of the Governmental Accounting Standards Board (GASB).

1. The City provides medical insurance to eligible retirees until the age of 65 for employees that were hired before June 30, 2017. Council voted to end this other post-employment benefit for employees hired after July 1, 2017, although costs for retirees and future eligible active employees will continue for some time. Retirees are eligible to receive the same medical coverage they had as active employees.

2. The funding objective is to reach and maintain 70 percent funding for the OPEB liabilities. Maintaining this target funding level will support the payment of 100 percent of the cost of benefits for post-retirement, pre-Medicare eligible retirees and active employees hired prior to July 1, 2017 that will in the future be eligible for benefits.

3. The City will contribute 100 percent of the Actuarially Determined Contribution (ADC) calculated by the plan actuary based on this policy of maintaining a 70 percent funding level. The ADC will be contributed from the City’s operating budget each year. The City will contribute the amount required to maintain the 70 percent funding level. If, due to positive experience or other factors, the actuary determines the funded ratio has exceeded 75 percent funding as of a valuation date, the surplus will be amortized over 10 years as an offset against the ADC.

1. The City develops a five-year Capital Improvement Program which is updated every year.

2. The City will make all capital improvements in accordance with an adopted capital improvement program, excluding emergency situations.

3. The City will identify future costs of the anticipated projects and budget accordingly to reduce budget overages before approval and will finance Capital projects in the most cost-effective way possible.

The purpose of this debt policy adopted by City Council in 2003 is to ensure the issuance and repayment of all debt obligations are properly planned, approved and executed to ensure the efficient and effective financial operations of the City. Some highlights from this policy follow, the entire policy is presented in the Debt Policy section of this document.

1. The City may issue debt obligations for the purpose of acquiring, improving, renovating, or constructing Capital Projects including buildings, machinery, equipment, furniture, and fixtures or other similar longer life assets (i.e., water or sewer capacity, etc.).

2. The City will not use short-term borrowing to finance operating needs, except in instances as described under Revenue Anticipation Notes.

3. Net Debt as a percentage of Assessed Value shall be targeted at less than 3.5%, with a maximum level of 4.0%. (Net Debt is General Obligation debt and Capital Lease Obligation exclusive of debt or leases payable from the Enterprise Fund.)

4. General Obligation Debt Service and Capital Lease payments as a percentage of Total Governmental Fund Expenditures shall be targeted at less than 12.5%, with a maximum level of 15%. For purposes of this requirement, General Governmental Expenditures shall be that amount reported in the most recent Comprehensive Annual Financial Report.

5. The Constitution of Virginia, Article VII Section 10(a), and the Public Finance Act contains a 10% of assessed value of real estate limitation on outstanding indebtedness which a City may incur. The table below shows the City’s audited legal debt margin calculation for FY2021, which indicates the City’s applicable debt ($91,165,000) is well below the 10% limit ($330,940,692).