FINANCIAL PLANNING COMMITTEE

TUESDAY OCTOBER 8, 2002


On motion of member Bowe, seconded by member Vance and approved by all present, except member Dieterle who abstained due to absence on October 8th,  minutes of the meeting held on October 8, 2002 were approved. 


 

Members Present:  Chairman, Richard Weaver;  James Bowe, Allen Fidler, Philip Newmuis;  Phil Vance;  Elaine Gibbs; Robert M. Pellegrino and Nancy Crescenzo

 

Chairman Weaver called the meeting to order at 8:30 AM

 

Approval of Minutes:  Mr. Bowe moved to approve the September 10, 2002, minutes;  Mr. Vance seconded the motion, which passed unanimously.

 

Old Business:

 

Capitalization Policy of Fixed Assets:  Ms Gibbs reported submission was made to the auditors and she would anticipate something to report at the November meeting.  It was briefly discussed that this item is related to values and life of fixed assets, effecting larger townships and impacts bond rating.

 

Uses of Reserve Funds:  Members discussed Newtown Township’s fund balance of 35% of the budget, when state guidelines recommend 5%.  Past practice has also been for the carry over amount to not be shown in the budget.  The intent of maintaining a fund balance is to assure avoiding a budget deficit situation or for an unforeseen emergency.  

 

There was some discussion of upcoming capital expenditures – funding for municipal expansion and the Wiggins parcel being two.  Members concurred that paying for capital items of this nature could appropriately occur with long term financing, noting that currently interest rates are low. 

 

There was discussion on what might be a more appropriate fund balance to maintain;  somewhere 5% and 35%.  Members agreed that a minimum of 15% and a maximum of 20% seems more appropriate.  They would prefer seeing funds in excess of 20% deposited into a capital account for future capital needs.

 

Nancy Crescenzo asked for a definition of capital – and it was explained to her that it would be for larger expenditures, not consumed within 3 years – examples being parks, roads and building expansion.  She asked about the procedure of purchasing capital items and it was explained that the process typically begins with the various departments submitting proposals to the Financial Planning Committee, early in the year. Many times recommendations for capital items are proposed several years in advance.  There are exceptions to the process depending on needs and funds available. 

 

Members discussed what an appropriate balance recommendation might be for a budgetary guideline for the fund balance.  It was noted that 7 of the past 9 township budgets have been appropriated for the use of some of the fund balance (excluding 1994 & 96), although each year the fund balance is not reflected in the budget. 

 

Members agreed that any use of the fund balance  within the 15% minimum guideline should require a unanimous vote of the Board of Supervisors and would be only for an emergency or one time situation.   Spending within the budget carry over range of 15% and 20% would be discretionary.  Fund balance should also be shown in the budget.

 

It was agreed that any budgetary guideline should be re-evaluated every two years.

 

The Capital Planning Committee recommended the following guideline for use of reserve funds (or fund balance) in the General Fund:

 

  1. Maintain a minimum of 15% of General Fund appropriations as a reserve fund from year to year

 

  1. Transfer any reserve funds in excess of 20% of General Fund appropriations to the Capital Improvement Fund to fund capital projects beginning with the 2003 budget

 

  1. Reserve funds between 15% and 20% could be appropriated to balance the annual budget

 

  1. Appropriations from the 15% reserve fund should only be authorized by a unanimous vote of the Board of Supervisors and should be for emergency or for expenditures of a non-recurring nature

 

  1. The policy should be re-evaluated every two years

 

New Business:

 

Budget Hearing is scheduled for 6PM on Nov. 12.  If more time is needed, the Nov. 18 work session at 7PM will be used for this purpose.  Members will receive a copy of the budget once it is available – prior to the next meeting.

 

Meeting adjourned at 9:50AM.  Next meeting 11/12 at 8:30 AM

 

 

 

Respectfully Submitted:____________________________

                                                Judy Setar

 

 

 

 

 

 

 

 

 

Financial Planning 10/8/02 – Pg. 2