AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: SIAMLU COX
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
DAVID CASTRO
MANAGEMENT ANALYST
SUBJECT: ADOPT A RESOLUTION AMENDING THE EXISTING ADMINISTRATIVE BUDGET GUIDELINES AND ESTBALISHING A NEW BUDGET MANAGEMENT POLICY
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Summary:
Staff recommends that the City Council adopt a Resolution establishing a formal Budget Management Policy (“Policy”). The updated Policy modernizes the existing administrative budget guidelines. The proposed Policy establishes a clear, City Council approved framework that distinguishes between administrative budget transfers and policy-level amendments that affect overall fund appropriations. This ensures the City Council retains authority over material budget decisions, while allowing staff to manage routine operational adjustments efficiently and transparently. The new framework clarifies approval authorities, ensures consistent financial reporting across all City departments, and enhances overall fiscal transparency.
Strategic Plan Goal(s):
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 5 High-Functioning Government: Strengthen internal communication, recruitment, retention, systems, and processes to increase the effectiveness and efficiency of City services.
recommendation
Recommendation:
Adopt a Resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, ADOPTING THE BUDGET MANAGEMENT POLICY AND AMENDING ALL PRIOR BUDGET AMENDMENT POLICIES AND GUIDELINES.
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Fiscal Impact:
There is no direct fiscal impact associated with the recommended action of this report. The proposed Budget Management Policy formalizes and standardizes existing practices while establishing clearer approval thresholds, allowing for better fiscal oversight and management.
Background:
The City currently manages budget adjustments and administrative practices under the existing administrative budget guidelines. While these practices have provided a baseline for fiscal control, the administrative approval thresholds no longer capture the potential adjustments needed for today’s cost environment for goods, services, and personnel.
As a result, routine operational budget reallocations and minor technical adjustments often require a level of administrative processing and City Council action that may not be proportional to their fiscal impact. This can limit the City’s ability to respond efficiently to day-to-day operational needs, while also placing technical items before the City Council that do not materially change overall fund appropriations.
The proposed Policy draws on best practices from other municipalities to modernize the framework for budget adjustments and transfers by updating approval thresholds to better align with current financial realities, while maintaining appropriate oversight and internal controls.
As the City's operations grow in scope and complexity, the proposed policy ensures that all departments follow identical procedures for moving funds or requesting supplemental appropriations. The proposed Policy defines budget changes, such as transfers versus amendments, and establishes a tiered approval process based on the amount and nature of each change. By clearly defining roles, thresholds, and reporting requirements, the City strengthens internal controls while preserving operational efficiency.
Analysis:
The proposed Policy formalizes and transforms the existing administrative budget guidelines into a comprehensive City Council approved framework for financial governance. By increasing approval thresholds to more appropriate levels, the proposed Policy allows the City Council to focus on high-level fiscal strategy while staff manages routine operational adjustments. This framework maintains the core principle that budgetary control remains at the fund level. Establishing defined approval thresholds aligns with recognized municipal finance best practices, including those promoted by the Government Finance Officers Association (GFOA), which recommend formal policies that clearly delineate budget authority, amendment processes, and reporting standards.
The key components of the proposed Policy include:
• Policy & Definitions: The Policy begins with a clear purpose statement and definitions for key terms including "Budget Transfer" and "Budget Amendment/Adjustment," which establishes that budgetary control will be established at the fund level.
• Tiered Approval System: The Policy establishes an updated three-level approval process for Budget Transfers that does not alter the overall fund appropriation.
Level I - Department Head and Finance Director:
§ Budget transfers between $0 and $20,000 that net to $0.
§ Transfers must occur within the same department.
§ Applicable to the Maintenance and Operation expenditure category.
§ The Finance Director maintains final discretion.
Level II - Department Head, Finance Director, and City Manager:
§ Budget transfers greater than $20,000 and equal to or less than $100,000 that net to $0.
§ Transfers can occur between departments but must be within the same fund.
§ Applicable to the Personnel expenditure category.
§ Applicable to the Capital Outlay expenditure category.
§ Applicable to the Maintenance and Operation expenditure category for amounts over $20,000.
§ The City Manager maintains final discretion.
Level III - City Council Approval (Budget Resolution):
§ Any budget adjustment that results in an overall increase or decrease to the adopted budget.
§ This includes transfers exceeding $100,000, and the use of reserve funds or designated funding sources.
• Budget Amendments & Appropriations: The Policy clarifies that any budget change that increases or decreases the total appropriation of a fund is considered a Budget Amendment and requires City Council approval.
• Reporting: The Director of Finance shall report the adjustments twice a year, at mid-year and at budget adoption. This report will provide valuable insight into budget performance and a listing of all budget transfers made within departments, increasing transparency and accountability.
Conclusion:
Staff recommends the City Council adopt a Resolution to establish the proposed Budget Management Policy and authorize the City Manager to implement the administrative procedures therein. Under the existing guidelines, routine operational transfers and minor technical adjustments often require a level of administrative processing and City Council action that is disproportionate to their fiscal impact. By adopting the proposed Policy, the City Council would establish a clear, City Council approved framework that distinguishes between administrative budget transfers and policy-level amendments that affect overall fund appropriations. The Policy ensures that the City Council retains authority over material budget decisions, while allowing staff to manage routine operational adjustments efficiently and transparently. Upon approval of the attached Resolution, staff would implement the updated Policy for the remainder of the current fiscal year.
Reviewed for Fiscal Impact:
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Siamlu Cox
Attachment(s):
A. Proposed Budget Adjustment Policy
B. Proposed Budget Transfer Request Form
C. Resolution