MONROE - The City of Monroe Finance and Taxation Committee learned Tuesday that all "expenditures" are not the same as out-of-pocket expenses.
A city financial policy, adopted about two years ago, requires an amount equal to 25 percent of the city's annual government activities expenditures be set aside in a Committed Working Capital fund. These funds are protected from the normal budget spending, but are to be available in the event of a large emergency or city-wide, catastrophic event.
Finance Department Comptroller Bridget Schuchart recommended a couple changes to the policy on Tuesday, which the committee approved unanimously.
Under the new policy changes, the city will see about $141,000 going back into its unassigned funds for 2014.
An accounting situation arose for Schuchart recently, which was inconsistent with the intention of the policy, prompting her recommendations.
When recording the refinancing of debt, the amount comes into the account books appearing as expenditure, but it's really not an added expense. It's taken off one side of the accounting books, as paid off, and added to the other side as a debt that needs to be paid. Only the annual debt payment is the real expense for each year.
Adding the total debt amount, after refinancing, to the expenditure total gives an over-inflated total, Schuchart pointed out. If it were a real expense, the city would have to sock away another $824,000 to its Committed Working Capital fund, tying it up for a year.
Next year, recalculation would once again drop the amount of expenditure, and that excess money would come back out, probably to be placed in the general fund. Instead Schuchart recommended excluding "refinancing of debt" from the annual government activities expenditure amount.
Schuchart also recommended shifting the time period, from which the expenditure amount is taken, to the most recent prior year. The original policy wording for the time period was causing the calculation to run 18 months behind the current budget.
- Tere Dunlap
A city financial policy, adopted about two years ago, requires an amount equal to 25 percent of the city's annual government activities expenditures be set aside in a Committed Working Capital fund. These funds are protected from the normal budget spending, but are to be available in the event of a large emergency or city-wide, catastrophic event.
Finance Department Comptroller Bridget Schuchart recommended a couple changes to the policy on Tuesday, which the committee approved unanimously.
Under the new policy changes, the city will see about $141,000 going back into its unassigned funds for 2014.
An accounting situation arose for Schuchart recently, which was inconsistent with the intention of the policy, prompting her recommendations.
When recording the refinancing of debt, the amount comes into the account books appearing as expenditure, but it's really not an added expense. It's taken off one side of the accounting books, as paid off, and added to the other side as a debt that needs to be paid. Only the annual debt payment is the real expense for each year.
Adding the total debt amount, after refinancing, to the expenditure total gives an over-inflated total, Schuchart pointed out. If it were a real expense, the city would have to sock away another $824,000 to its Committed Working Capital fund, tying it up for a year.
Next year, recalculation would once again drop the amount of expenditure, and that excess money would come back out, probably to be placed in the general fund. Instead Schuchart recommended excluding "refinancing of debt" from the annual government activities expenditure amount.
Schuchart also recommended shifting the time period, from which the expenditure amount is taken, to the most recent prior year. The original policy wording for the time period was causing the calculation to run 18 months behind the current budget.
- Tere Dunlap