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BUDGET TRANSMITTAL LETTER

To: The Mayor and City Council From: Mark Randall, City Administrator Subject: Budget Transmittal Letter for Fiscal Year 2014-15 Date: March 24, 2014 I’m pleased to transmit to you the attached Budget for Fiscal Year 2014-15 for the City of Pleasant Hill, Missouri. I’m also pleased to offer this Transmittal Letter, which is intended as a summary and overview of the information provided in greater detail within the Budget Document.

BUDGET DOCUMENT OVERVIEW: According to the budgeting standards established by the Government Finance Officers Association of the United States and Canada (GFOA), a municipal Budget Document should be a policy document, an operations guide, a financial plan, and a communications medium. I believe the 2014-15 Budget for the City of Pleasant Hill satisfies these requirements.

This Budget Document attempts to present and explain each Fund separately. Each Fund section includes supplemental information which illustrates what the money is going for, numbers of employees paid from it, historical funding levels, and other pertinent data. Other sections of this document, entitled “City Profile,” “Budget Overview,” “Capital Improvement Plan,” and “Appendix,” provide additional information, including past results, current assump-tions, revenue estimates, and future plans. This information is provided to illustrate for the public the process used by the Council to allocate scarce resources to meet the changing needs in this growing city of approximately 8,200.

HOW THE CITY BUDGET IS ORGANIZED: The City of Pleasant Hill operates on an April 1 to March 31 fiscal year. The Budget is

organized into 14 separate and distinct “Funds,” each of which is described in detail in the Budget Document. Budgeting is on a cash basis for all Funds except the Water/ Sewer Fund which operates on a modified accrual basis, with capital expenditures included in “Depreciation” line items in the Water/Sewer Fund section of the Budget Document.

The first Fund presented in the Budget Document is the GENERAL FUND, which is

divided into 6 expense categories as follows: Finance & Administration Municipal Court Buildings & Grounds Police Community Development Transfers to Other Funds The GENERAL FUND is the City’s primary tax supported Fund, used to account for all

funds not required by standard budgeting practice to be budgeted separately.

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The Budget includes three CAPITAL FUNDS, which were established to record expen-ditures for capital items and capital projects. They are the Capital Improvement Sales Tax Fund, the Capital Projects Fund, and the Pool Capital Improvement Fund. As the name indi-cates, the Capital Improvement Sales Tax Fund records expenditures from a sales tax which is dedicated exclusively for a variety of City capital improvements. The Capital Projects Fund details the expenditure of proceeds from bond issues, bond-like instruments called Certifi-cates of Participation, and similar revenue sources. The Pool Capital Improvement Fund was established to record proceeds from a sales tax which was established in 2013 for the con-struction a new City swimming pool. The Budget includes two INTERNAL SERVICE FUNDS, which are used to provide a service to City departments. The first of these is the Risk Management Fund, which is used to pay insurance deductibles and employee safety training expenses for the various City de-partments. The other Fund of this type is the Equipment Replacement Fund, which is used to self-finance the purchase of equipment in order to avoid interest payments associated with external financing. Each of the Internal Service Funds provide upfront cash funding which is repaid over a period of time by other Funds, with the exception of safety training expenses. The Budget contains one DEBT SERVICE FUND, which is used to record the annual payments on outstanding debt, including, General Obligation Bonds and Certificates of Par-ticipation. The money needed to make these payments comes from the debt levy and inter-Fund transfers. Finally, we have one ENTERPRISE FUND, which derives its revenues from fees for services rather than taxes. Our only Fund of this type is the Water/Sewer Fund. The matrix below illustrates which Departments operations are budgeted in each fund.

ECONOMIC CHALLENGES AND CHANGING CONDITIONS: The 2014-15 Budget for the City of Pleasant Hill and the funding priorities expressed in it continue to be greatly impacted by the economic downturn which began in 2008. While the community continues to grow at a healthy rate, new home construction is still about 100 units below prior levels, with a resulting loss in revenue to the City exceeding $500,000 per year. About half of this loss is Water/Sewer Fund revenue, with the rest impacting the General Fund and Excise Tax Funds.

Fund Finance &

Admin

Parks/

Facilities Police Public Works Community

Development

General x x x x

Street x

Park x

Public Health x

Water/Sewer x x

The Budget also contains six SPECIAL REVENUE FUNDS, which are those which have a special tax or other revenue source dedicated for a specific purpose. They are the Street Fund, the Park Fund, the Public Health Fund, the Excise Tax Fund, the Park/Stormwater Sales Tax Fund, and the Special Events Fund.

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Pleasant Hill’s position within the retail sales markets of other communities, and the lack of a major highway to attract retail development, have historically resulted in per capita sales tax collections approximately half that of nearby Lee’s Summit and Harrisonville. This has been magnified by the generally sluggish economy, with the result that sales tax collec-tions have grown only modestly since 2008. Sales tax collections were further reduced in fis-cal year 2012-13 when the courts ruled that sales taxes for boats and vehicles purchased out of state should be collected under a Use Tax instead. Enforcement of this ruling, which re-duced City revenues by approximately $50,000, has been temporarily suspended for two years. It will once again take effect unless local voters approve a Use Tax within the coming year. Flat or reduced Sales Tax collections impact the General Fund, Capital Improvement Sales Tax Fund, Park Storm Water Fund, Pool Capital Improvement Fund, Park Fund and Street Fund.

City General Fund revenues have also been reduced by other changing conditions,

including sales tax lost due to the closure of the local MFA propane sales office, and the deci-sion by the local Fire District to contract with Lee’s Summit Fire for dispatch services. These changes reduced General Fund revenues by over $50,000 per year, with another $30,000 in lost revenue spread over the Capital Improvement Sales Tax Fund, the Park/Storm Water Fund, Pool Capital Improvement Fund, and Street Fund.

To offset these and other revenue challenges, the City has taken steps to ensure that

adequate revenues exist to meet operational needs for 2013-14. These include increasing the Debt Service Levy to free up General Fund monies previously used to help with General Obligation Bond payments, and increasing fees and water/sewer rates to offset increased costs to the City.

BUDGET PRIORITIES: The state of the economy and changing conditions outlined above ensured that fund-ing would be limited for the 2014-15 Budget. Accordingly, special attention had to be paid to make sure that funding was directed to priorities established by the City Council.

The first priority was to make sure that the Budget included funding to a level sufficient to pay outstanding debt obligations, and maintain current service levels. Another priority was to fund new Public Works improvement projects to at least minimum levels previously estab-lished by the Council. That meant providing at least $600,000 for contracted street overlays, a minimum of $150,000 for water improvement projects, and at least $50,000 for sewer im-provements. In addition to achieving these goals, the adopted Budget also included a modest 1% performance based merit increase for City employees.

Another essential Budget priority involved the retaining of sufficient fund balance re-serves. Adequate fund balances are necessary for cash flow requirements and unforeseen contingencies. The Budget was also developed with attention to the concept of long-term sus-tainability. That is, even though fund balances might be drawn upon to fund a specific one-time project or fill a temporary need, regular operating expenses should be covered by de-pendable and consistent sources of revenue. Likewise, any one-time or temporary revenues should be used for one-time projects, and not depended upon for on-going funding of basic City services.

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OVERALL FUNDING SUMMARY: The expenditures for all Departments and Funds add up to a total 2014-15 Budget of $13,927,629 including inter-Fund transfers. Transfers between Funds represent $2,216,042 of this total. While inter-fund transfers are explained below, readers may find it helpful to refer to the Operating Transfer Matrix and the Debt Service Transfer Matrix contained in the Ap-pendix. The Appendix also includes detail on how revenues are estimated.

The City Budget for 2014-15 achieves the objectives identified above, and provides all Departments with sufficient funding to provide essential services, while also maintaining ade-quate fund balances. It should be noted that Fund balances increased in some Funds and went down in others. This reflects the fact that Fund balances were built up in prior years in anticipation of spending that money later for a specific purpose or project.

In 2014-15, expenditures will exceed revenues, with a corresponding draw-down of

fund balances, in the General Fund, Pool Capital Improvement Sales Tax Fund, Park Fund, Capital Projects Fund, Debt Service Fund, and the Water/Sewer Fund. As mentioned above, these expenditures from accumulated fund balances were authorized to finance specific needs this year. Revenues will exceed expenditures in the Capital Improvement Sales Tax Fund, Excise Tax Fund, Park/Storm Water Sales Tax Fund, Risk Management Fund, Street Fund, Public Health Fund, Special Events Fund, and Equipment Replacement Fund, adding to the fund balances in those Funds.

The ending fund balance in each Fund consists of “restricted” and/or “unrestricted”

money. Restricted amounts are being held for a specific purpose, and cannot be spent like regular resources in that Fund. Unrestricted funds are not being held for a specific purpose, and can be spent like regular Fund revenue. The City has set as a goal a minimum unre-stricted ending fund balance in the Budget as a whole of 8% of expenditures, excluding inter-Fund transfers. The 2014-15 Budget meets this target with an unrestricted fund balance of 10.7% excluding inter-Fund transfers.

Fund Name Beginning Balance 2015 Proposed Revenues

2015 Proposed Expenditures

General $1,388,297 $3,009,363 $3,867,366

Capital Improvement Sales Tax 123 372,000 355,101

Excise Tax 37,810 25,250 21,010

Park/Stormwater 30,827 307,000 306,780

Risk Management 205,404 8,807 8,800

Pool Capital Improvement Sales Tax 47,994 168,125 185,405

Street 168,677 1,397,498 1,381,266

Park 79,652 462,375 499,692

Public Health 13,031 80,655 80,605

Special Events 18,254 146,325 146,266

Capital Projects 1,447,158 11,250 1,118,800

Debt Service 470,029 1,418,563 1,802,883

Equipment Replacement 1,535 52,096 47,000

Water/Sewer 1,635,545 3,855,386 4,106,654

Total $5,544,336 $11,314,693 $13,927,628

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The entire 2014-15 Budget can be seen at a glance by referring to the Combined Sum-mary of All Funds Table in the Introduction Section of the Budget Document.

BUDGET SUMMARY FOR EACH FUND:

The following is a summary of the financial condition of each of the 14 Funds:

The Budget for the General Fund anticipates total resources of $3,009,363, which in-cludes revenues of $2,941,687 plus a $67,676 transfer from the Water/Sewer Fund. The in-coming transfer represents a reimbursement to the General Fund for trash service payments included in water and sewer bills. Fund expenditures of $3,867,366 include amounts needed for operations in the General Fund Departments identified above. In addition, expenditures include a $300,000 transfer to the Street Fund for contracted street overlay projects, a $719,946 transfer to the Debt Service Fund for payments on previously issued bonds, a $1,907 reimbursement to the Risk Management Fund, and a $346,500 transfer to the Water/Sewer Fund for a sewer interceptor construction project. After operating expenses and trans-fers-out are subtracted from available resources and the carryover fund balance from the prior year, the General Fund is expected to end the year with a fund balance of $530,294. $212,972 of this is restricted, consisting of $20,000 in municipal court bonds and $50,000 re-stricted for taxes paid under protest, with the remainder being money held back for a future project and a planned transfer to the Debt Service Fund for early payment of outstanding bonds.

The Park Fund will benefit from a $222,000 transfer from the Park/Storm Water Sales Tax Fund and $325 from the Risk Management Fund. When combined with regular Park Fund revenue, this Fund will have total resources of $462,375. Expenditures will total $499,692. The $37,317 difference between revenue and expenditures represents money taken from the accumulated fund balance for the pur-chase of a tractor. The Park Fund will end the year with a $42,335 ending fund balance, all of which is unrestricted.

As mentioned above, the Park/Storm Water Sales Tax Fund provides substantial

support for the Park Fund. Each year, the City Council decides how best to distribute money from this sales tax between park improvements and storm water projects. It is expected to have revenues of $307,000 in 2014-15. Budget highlights include an allocation of $222,000 to the Park Fund, $50,500 to the Street Fund for storm water work, and $22,000 to make pay-ments on a street sweeper. Total expenditures will be $306,780 which is $220 under reve-nues. The Park/Storm Water Sales Tax Fund will have a $31,047 ending fund balance, all of which is unrestricted.

Resources in the Street Fund are expected to total $1,397,498, including revenues

and transfers from other funds. Transfers include $300,000 from the General Fund, $50,000 from the Capital Improvement Sales Tax Fund, $50,500 from the Park/Storm Water Fund, $625 from the Risk Management Fund, and $20,000 from the Excise Tax Fund. Budgeted ex-penditures of $1,381,266 include $600,000 for the contracted street overlay program. The an-ticipated ending fund balance will be $184,909, all of which is unrestricted.

The Public Health/Codes Fund records expenditures for Animal Control and nui-

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sance code abatement. It is anticipated that resources will total $80,655, including a $105 transfer from the General Fund. Expenditures will total $80,605. The ending fund balance is anticipated to total $13,081, all of which is unrestricted.

The Excise Tax Fund, which derives its funding from development fees, is used to

make improvements to the existing street system necessitated by new development. This year we expect the Fund to have revenues of $25,250. Expenditures from this Fund will be $21,010. The difference between revenues and expenditures will be added to the fund bal-ance for spending in future years. It’s anticipated that the ending fund balance, all of it unre-stricted, will be $42,050.

The Special Events Fund was created to record revenues and expenditures associ-

ated with the annual Cass County Fair, which is hosted by the City of Pleasant Hill. Revenues are expected to total $146,325, and expenditures are estimated at $146,266. The estimated ending fund balance will be $18,313.

The Capital Improvement Sales Tax Fund will have resources of $372,000, including

a $35,000 transfer-in from the Park Fund to help pay for a new tractor. Budgeted expendi-tures total $355,101. Expenditures are for a variety of capital items, including a police car, a tractor, computer equipment, and improvements to building and grounds. Expenditures also include transfers to other Funds, including a $50,000 transfer to the Street Fund for street im-provements, a $24,096 repayment to the Equipment Replacement Fund, and a $130,025 transfer to the Debt Service Fund for payments for capital items previously purchased with bonds. The Budget shows an anticipated ending fund balance of $17,022, all of which is un-restricted.

The Capital Projects Fund exists to record the expenditure of bond funds, Certificates

of Participation (COP), and similar sources of revenue for major capital projects. The 2014-15 Budget shows resources of $11,250, which represents the proceeds from federal grants obtained for completion of the City Lake Trail and its connection to the Rock Island/KATY Trail through Downtown Pleasant Hill. Total expenditures will be $1,118,800, which reflects the expenditure of bond funds carried over from the prior year for the construction of a new municipal swimming pool and the final payment on the Trail to City Lake project. The Fund will have an ending fund balance of $339,608. $180,000 of this is restricted for pool construc-tion, leaving an unrestricted balance of $159,608. This unrestricted amount represents funds originally held in reserve for a final bond payment which has since been freed up by the early retirement of outstanding bonds.

The Pool Capital Improvement

Sales Tax Fund is a new fund estab-lished in this Budget to separately record the proceeds from a sales tax estab-lished in 2013 to pay for a City swimming pool. Revenues are expected to be $168,125. Expenditures are anticipated to be $185,405, including a $178,680 transfer to the Debt Service Fund to make payments on bonds issued for pool construction. The $17,280 difference between revenues and expenditures will be covered by the carryover fund balance from the prior year. The Fund will have an ending balance of $30,714, all of which is unrestricted.

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The Risk Management Fund was primarily created to provide a source of funding for insurance claim deductibles and safety programs. It can also be used as a funding source for contingencies. The fund balance came originally from “dividend” disbursements from MAR-CIT (now MPR), the self-insurance pool to which the City belongs. Departments are required to repay deductibles advanced for them from this Fund in subsequent years. Departments are not required to repay funds provided to them for safety programs. 2014-15 revenues in this Fund are expected to be $8,807. $6,900 of this represents a return of premiums from MPR for safety and wellness activities, with the remaining $1,907 coming from the General Fund to repay a previously paid claim deductible. Barring the payment of any deductibles in the coming year, expenditures will be $8,800, which includes purchase of safety equipment, program materials, and transfers to various departments to pay for safety programs. $2,900 will go to the General Fund, $625 to the Street Fund, $325 to the Park Fund, $105 to the Pub-lic Health Fund, and $245 to the Water/Sewer Fund. The ending fund balance, all unre-stricted, will be $205,411.

The Equipment Replacement Fund was created to provide an internal funding

mechanism for the purchase of equipment and other capital items. Individual departments which use this fund for purchases are required to repay the money in future years to keep this an on-going, revolving fund. Resources for 2014-15 total $52,096, which includes a repay-ment transfer of $28,000 from the General Fund and $24,096 from the Capital Improvement Sales Tax Fund. Expenditures total $47,000 for the purchase of a milling head for the Street Department and a utility mapping system for the Water/Sewer Department.

As mentioned earlier, the Debt Service Fund exists to record the debt payments on

outstanding General Obligation Bonds and Certificates of Participation. The money to make these payments comes from the G.O. Bond Levy and transfers from other Funds. This year, resources will total $1,418,563, including $349,500 in taxes and $1,069,063 in transfers. Transfers include $719,946 from the General Fund, $130,025 from the Capital Improvement Sales Tax fund, $178,680 from the Pool Capital Improvement Sales Tax Fund, and $40,412 from the Water/Sewer Fund. This Fund will end up with a fund balance of $85,709, all of which is unrestricted. Although this money is being held in the fund balance to help with a future bond payment if necessary, it is being shown in the Budget as unrestricted because it originated from the General Fund, and could be drawn upon for other uses if circumstances made it necessary in the short term to transfer it elsewhere.

The Water/Sewer Fund budget shows resources of $3,855,386, including a $346,500

transfer from the General Fund and a $245 transfer from the Risk Management Fund. The large General Fund transfer represents money authorized by the City Council to help pay for a new sewer interceptor. Expenditures are anticipated to total $4,106,654, including a $64,776 transfer to the General Fund which represents trash service payments collected with water and sewer bills. Another $40,412 will be transferred to the Debt Service Fund for pay-ments on previously issued bonds. Expenditures in this fund will exceed resources by $251,268, which represents a one-time cost to retire State Revolving Fund (SRF) debt on the City sewer treatment plant which has since been purchased from the City by the Middle Big Creek Sewer District (MBC). MBC previously paid the City the amount needed to pay off that debt, and that money is being carried over in the beginning fund balance. The 2014-15 Budget reflects a $251,268 reduction in the fund balance to cover the SRF payment. The Water/Sewer Fund will have an ending fund balance of $1,384,277. $1,286,223 of this amount, however, is restricted. The restricted portion consists of bond reserves, and money reserved for future bond payments and water/sewer projects. The unrestricted fund balance for 2014-15 will be $98,054.

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CONCLUSION:

The 2014-15 Budget for the City of Pleasant Hill identifies and addresses several needs, provides adequate funding for City operations, and is a good financial plan for the coming year. It also provides adequate reserves for contingencies and cash flow require-ments. All of the information contained in this Budget Message can be found in greater detail in the Budget Document. This Budget was prepared in cooperation with the Mayor, City Council, and Depart-ment Heads. Special commendation is due to the City Hall staff, and in particular Shelby Teufel, Assistant City Administrator/Finance Director, and Amy Johnson, Accountant, for their outstanding work putting together the 2014-15 Budget for the City of Pleasant Hill, Missouri. Respectfully submitted, Mark Randall City Administrator

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Budget Process

The City’s annual budget covers a twelve-month period beginning April 1 and ending March 31. The budget is an ongoing process that includes phases of development, adoption, imple-mentation, and oversight throughout the year. The City budget is one of the most important policy documents adopted by the City Council each year. The budget allocates funding for the City’s priorities for the current and future years. The budget preparation process is coordinated by the Budget Team, which consists of the City Administrator, Finance Director, and Senior Accountant. Basis of Budgeting Budgeting is conducted on a cash basis for all Funds except the Water/Sewer Fund which is budgeted on a modified accrual basis. Under the cash basis of budgeting, revenues are rec-ognized when received (cash in hand) and expenditures are recognized when the fund liabil-ity is incurred (cash spent). Under the modified accrual basis of accounting, revenues are recognized only when they become measurable and available to finance expenditures of the fiscal period. Expenditures are recognized when the fund liability is incurred. Basis of Accounting The accounting records are prepared using the modified accrual basis. Budget Framework Development The City Council provides a general framework of long– and short-term goals for community improvement. These goals provide staff with the framework to drive budgetary decisions. Departmental Requests, Review, and Analysis Department Heads prepare operating budgets necessary to maintain services at the current level. Additional evaluation is undertaken for budget requests which exceed the current year. Expansion requests are discussed with the Budget Team and submitted apart from the main-tenance budget.

Building the Proposed Budget The Budget Team prepares an initial projection of revenue for the upcoming fiscal year look-ing at historical trends, reasonable assumptions, proposed user fees, and the best available information from the State. Spending priorities are based on the City’s policies, mandated requirements, a focus on maintaining services, and debt requirements. Presenting the Proposed Budget The City Administrator and Finance Director present a proposed budget to the City Council. This includes a budget which meets the unrestricted fund balance policy, provides adequate services, and expansion items which can be accommodated within the budget. Additional ex-pansion items are presented to Council for consideration and are added per Council direction. City Council Adoption After receiving the Proposed Budget, public meetings are conducted with the City Council to familiarize members of the Council with its contents. The City Council makes revisions as necessary and approves the budget for the next fiscal year.

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Policy for Establishing Budget Priorities To the greatest extent possible, effort shall be made to build up positive fund balances in

all City Funds. Avoid “Feast and Famine” budgetary actions, which allow some City operations to thrive

while others fail in their public mission. Attempt to budget in a manner which allows no “Feast and Famine”, but which keeps all departments healthy.

Give priority to those items necessary to maintain current service levels. Funding for ex-panded services and new programs will be considered after existing services are ade-quately funded.

Design the Budget Document so that it is a useful management tool for the Mayor, City Council, and Department Heads.

Provide in the Budget Document and outline of the organization of city government. This includes listing the mission of each department, along with a summary of services pro-vided.

To the greatest extent possible, the Budget shall be structured to provide City employees with a safe and pleasant work environment, adequate compensation and proper tools to accomplish the tasks assigned to them.

Budget Calendar for Fiscal Year 2015

Date Description December 9, 2013 - Discuss budget instructions at staff meeting January 3—17, 2014 - Departments enter budget requests into Budget System January—February 2014 - Revenue and expense projections finalized March 10, 2014 - Presentation of Proposed Budget to Council March 18, 2014 - Budget Review Work Session with Mayor and Council March 26, 2014 - Final consideration and adoption of 2015 Budget

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Budget and Financial Policies

The budgetary and financial policies below provide a general framework of goals and objec-tives for the operating budget, debt management, financial reserves, financial reporting, in-vestments, and the capital budget.

Budget Development Policy

The budget shall be divided into Department and Fund Types in a manner consistent with good budget practices.

The Department Heads shall be responsible for the preparation of that portion of the budget.

Budget requests shall take two forms: “Maintenance” requests which, if funded, will allow a department to maintain current service levels, and “Expansion” requests which propose new programs, equipment, personnel or services.

If revenue and fund balances are insufficient to fund requested operations, the City Ad-ministrator shall reduce the maintenance requests for all funds before consideration of ex-pansion requests.

Input from Department Heads and City Council direction shall be used in prioritizing ex-pansion requests.

Care shall be given to attempt to maintain adequate fund balances after requests are funded.

Budget Amendment Policy

If a department wishes to exceed a budget appropriation, the Department Head must sub-mit a budget amendment to the Finance Director.

Line item amendments within the same fund without exceeding the total appropriation for the departmental budget can be approved by the Finance Director and City Administrator.

Amendments which cannot be accommodated with the departmental budget and/or which affect the budget’s fund balance must be approved by City Council.

No budget amendment shall be requested without the approval of the City Administrator and Finance Director.

Budget Administration Policy Department Heads may not exceed their budget allocation, create any new positions, or

purchase any capital equipment, which was not included in the budget without approval of the City Administrator and/or Mayor and Council.

The Finance Director shall notify any Department Head who is in danger of exceeding his/her budget allocation. It is also the responsibility of each Department Head to keep track of budget position and to control spending accordingly.

If a budget is exhausted, the Finance Department shall not issue any additional orders or make any purchases until the budget-overrun situation is addressed through a budget amendment.

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Capital Budget Policy A five-year capital improvements program will be developed and updated annually, includ-

ing anticipated funding sources. The City will coordinate development of the capital improvements budget with develop-

ment of the operating budget. The City will maintain all its physical assets at a level adequate to protect its capital invest-

ment and to minimize future maintenance and replacement costs.

Debt Management Policy Capital projects financed through the issuance of bonds or lease agreements will be fi-

nanced for a period not to exceed the expected useful life of the project. The City’s general obligation debt shall not exceed the statutory limit set forth by the Mis-

souri Constitution. Financial Reserve Policy

The City will establish a reserve to pay for expenditures as a result of unforeseen emer-gencies or for shortfalls caused by revenue declines.

The City will establish reserves to comply with the terms and conditions of the debt instru-ments used to finance capital improvement projects.

The City will review fund balances/reserves annually during the budget process.

Financial Reporting Policies Full disclosure will be provided in the general financial statements and bond presenta-

tions. An annual audit will be performed by an independent public accounting firm. Timely reports of budget position will be provided to the City Administrator, the Depart-

ment Heads, Mayor, and City Council. The City will maintain a budgetary control system to ensure adherence to the budget.

Investment Policy

The City’s investment objectives in priority order are: Safety, Liquidity, and Yield. Internal controls will be reviewed with the independent auditor annually to ensure that as-

sets are protected from loss, theft, or misuse. The City will diversity use of investment instruments to avoid incurring unreasonable risks

inherent in over investing in specific instruments, individual financial institutions or maturi-ties.

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Taxation

Property Tax The chart below demonstrates the various entities that levy property tax within the City of Pleasant Hill by percentage to the whole. This is based on the 2013 property tax rates levies. The amount of each levy is listed beside the chart.

The chart and table below reflect what the City of Pleasant Hill levies in property tax per $100 assessed valuation.

Sales Tax The chart below demonstrates the various entities that levy property tax within the City of Pleasant Hill by percentage to the whole. This is based on the 2013 property tax rates levies.

Entity Property Tax Rate

Cass Co. Road & Bridge 0.2300

State 0.0300

Hospital Maint. 0.1360 Library 0.1500

Shelter Workshop 0.0500 Fire District 0.7500 Pleasant Hill R-3 4.7345 City of Pleasant Hill 0.9944

7.0749

Cass Co. Road & Bridge

3%

State0%

Hospital Maint.

2%Library

2%

Shelter Workshop

1%

Fire District11%

Pleasant Hill R-3

67% City of Pleasant Hill

14%

Levy

General Fund 0.3667

Streets/Roads 0.1375

Parks 0.0734

Public Health 0.0734

Debt Service 0.3434

Total 0.9944

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Fund Balance

The General Fund encompasses the City’s activities not required to be segregated into sepa-rate funds. The fund balance available can be appropriated as specified by the City Council. Internal service funds are considered general fund revenue but have been segregated into separate funds by the City to more easily track revenues and expenditures. Special Revenue Funds are required to be segregated since there are statutory restrictions regarding expenditures and appropriation of fund balances. Any unrestricted fund balance within these funds is required to be used for purposes within the designated fund and cannot be used for other purposes. Restricted fund balances can be statutorily placed or as deter-mined by the City Council. The Water/Sewer Fund encompasses the City’s enterprise fund activities. The fund balance available can be appropriated for use on utility services, utility infrastructure, and related debt obligations. Restricted fund balances reflect bond reserves, utility deposits, and future project related funds.

FUND BALANCE PROJECTION

General Fund Internal Service Funds

Special Revenue Funds

Enterprise Fund TOTAL

Balance April 1, 2014 $ 1,388,297 $ 206,939 $ 2,313,555 $ 1,635,545 $ 5,544,336

Budget 2014-15

Revenue 3,009,363 60,903 4,389,041 3,855,386 11,314,693

Expenditures (3,867,366) (55,800) (5,897,808) (4,106,654) (13,927,628) Restricted (212,972) - (180,000) (1,286,223) (1,679,195)

Projected Unrestricted Balance March 31, 2015 $ 317,322 $ 212,042 $ 624,788 $ 98,054 $ 1,252,206

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Revenue Summary

The following represents Fiscal Year 2015 budgeted revenue. The total revenue, excluding transfers is approximately $9 million. The total financial program will be balanced through transfers in/out and planned drawdowns of fund balances. The numbers represented below include transfers in from other funds.

Utility Payments The City’s largest revenue source is the City’s Enterprise Fund which accounts for water, sewer, and trash utility collections. The City forecasts collecting $1,406,500 for water sales, $1,459,000 for sewer service, and $530,352 for trash collection. These amounts represent 38% of the City’s total revenue. Revenue in these funds should be sufficient to cover operat-ing and capital expenses associated with the maintenance and operation of the systems. Sales Tax The City’s second largest revenue source is local sales tax. Currently, the City levies 2.75% on all retail sales within the City. The projects the local sales tax will produce $1,791,625. This is 20% of all revenue. The General Fund is allocated one cent sales tax for general op-erations of the City. The City allocates 1/2 cent for Capital Improvements, Park and Stormwa-ter Projects, Street operations and improvements, and 1/4 cent for Capital Improvements at the Swimming Pool. Property Tax The City’s third largest revenue source is property tax. Property tax revenue for all funds is projected to be $1,039,000, accounting for 11.5% of all incoming revenues. The basis of this tax is the assessed valuation of taxable real and tangible personal property in the City. All property within the City is assessed at fair market value. Property is classified into various classes and assessed at different percentages based on classification. Property taxes are levied for the following funds: General, Public Health, Street, Park, and Debt Service. Franchise Fees Currently, the City levies a franchise tax of 5% of gross receipts for commercial accounts op-erating within the City limits for electric, gas, phone, and cable. The total estimate for fran-chise fees is $983,500 or approximately 10% of total collected revenue. More information regarding revenues and basis of budget projections can be found in the ap-pendix.

Non-Major Funds: 4% Park 3% Capital Imp Sales Tax 3% Park/Stormwater 1% Public Health 1% Pool Cap Imp Sales Tax 1% Special Events Less than 1% Excise Tax Less than 1% Risk Mgmt Less than 1% Capital Pro-jects Less than 1% Excise Tax

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Expenditure Summary

The following represents Fiscal Year 2015 budgeted expenditures. The total expenditures, excluding transfers is approximately $12 million. The total financial program will be balanced through transfers in/out and planned drawdowns of fund balances. The following numbers represented below do not reflect transfers out to other funds.

Expenditure Highlights Include:

Retirement of the 2009 Certificates of Participation which previously financed im-provements to City facilities, engineering and installation of water lines, and the pur-chase of equipment

Retirement of the State Revolving Fund debt on the sewer treatment plant Completion of Phase 2 of the Old MoPAC Trail Beautification in the downtown area along the Old MoPAC Trail Construction of an outdoor swimming pool and demolition of an existing indoor

swimming pool $600,000 for contracted street overlay Roof repairs at City Hall and the Police Department Purchase of a tractor for the Parks and Recreation Department Purchase of a Police Car Purchase of a Milling Head Purchase of an inventory and GIS Mapping system of utility lines, meters, and

valves for the Water/Sewer Department Computer system upgrades

General21%

Debt Service15%

Capital Projects10%

Non-Major4%

Street12%

Park4%

Water/Sewer34%

Expenditures by Fund (excluding transfers)Non-Major Funds:1% Capital Impr S/T1% Special Events1% Public Health1% Equip ReplLess than 1% Excise TaxLess than 1% Park/StwtrLess than 1% Risk MgmtLess than 1% Pool Cap Imp Sales Tax

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BUDGET SUMMARY

ACTUAL YR. ENDING

03/31/12

ACTUAL YR. ENDING

03/31/13

ESTIMATE YR. ENDING

03/31/14

BUDGET

03/31/15

GENERAL FUND

REVENUE 2,963,405 4,160,069 3,031,717 3,009,363

EXPENSE:

Administrative & General Expense 548,548 566,342 615,395 549,961

Community Development Expense 281,528 441,196 276,790 286,802

Economic Development Expense - - - -

Bldg. & Grounds Expense 132,766 160,009 149,425 152,695

Police Expense 1,344,042 1,372,149 1,376,061 1,409,215

Municipal Court Expense 76,792 68,932 76,969 72,340

Transfers 572,577 2,591,238 548,325 1,396,353

TOTAL EXPENSES 2,956,253 5,199,866 3,042,964 3,867,366

REVENUE OVER EXPENSES 7,152 (1,039,797) (11,247) (858,003)

EXCISE TAX FUND

Revenue 23,364 13,766 27,270 25,250

Expenses 25,354 10,460 21,808 21,010

REVENUE OVER EXPENSES (1,990) 3,306 5,462 4,240

RISK MANAGEMENT FUND

Revenue 307,632 31,567 29,755 8,807

Expenses 326,677 1,613 34,115 8,800

REVENUE OVER EXPENSES (19,045) 29,954 (4,360) 7

PARK/STORMWATER

Revenue 296,332 296,712 292,290 307,000

Expenses 311,087 301,916 278,989 306,780

REVENUE OVER EXPENSES (14,755) (5,204) 13,301 220

POOL CAP. IMPRV. SLS TAX FUND

Revenue - - 47,994 168,125

Expenses - - - 185,405

REVENUE OVER EXPENSES - - 47,994 (17,280)

CODES/PUBLIC HEALTH FUND

Revenue 85,031 86,664 79,605 80,655

Expenses

Animal Control 80,907 83,194 74,771 80,605

TOTAL Expense 80,907 83,194 74,771 80,605

REVENUE OVER EXPENSES 4,124 3,470 4,833 50

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*Shortfalls covered by fund balance

BUDGET SUMMARY

ACTUAL YR. ENDING

03/31/12

ACTUAL YR. ENDING

03/31/13

ESTIMATE YR. ENDING

03/31/14

BUDGET YR. ENDING

03/31/15

STREET FUND

Revenue 1,117,109 1,113,829 1,848,127 1,397,498

Expense 1,285,530 963,240 1,934,102 1,381,266

REVENUE OVER EXPENSES (168,422) 150,589 (85,976) 16,232

PARK FUND

Revenue 633,648 459,722 407,981 462,375

Expense 605,805 416,325 408,203 499,692

REVENUE OVER EXPENSES 27,843 43,397 (223) (37,317)

CAP. IMPRVMT. SALES TAX FUND

Revenue 383,037 333,239 344,421 372,000

Expense 411,225 347,637 381,623 355,101

REVENUE OVER EXPENSES (28,189) (14,398) (37,202) 16,899

CAPITAL PROJECTS FUND

Revenue 261,166 9,300 2,695,210 11,250

Expense 265,238 33,592 1,525,791 1,118,800

REVENUE OVER EXPENSES (4,072) (24,292) 1,169,419 (1,107,550)

DEBT SERVICE FUND

Revenue 652,917 2,689,845 748,560 1,418,563

Expense 875,684 2,183,450 788,696 1,802,883

REVENUE OVER EXPENSES (222,767) 506,395 (40,136) (384,320)

WATER/SEWER OPR. FUND

Revenue 3,553,686 3,681,904 4,011,011 3,855,386

Expense 3,563,243 3,866,900 4,394,666 4,106,654

REVENUE OVER EXPENSES (9,557) (184,996) (383,655) (251,268)

SPECIAL EVENTS FUND

Revenue 123,693 130,075 143,463 146,325

Expense 127,674 129,458 125,729 146,266

REVENUE OVER EXPENSES (3,981) 617 17,734 59

EQUIPMENT REPLACEMENT FUND

Revenue - 82,483 13,858 52,096

Expense - 76,276 18,530 47,000

REVENUE OVER EXPENSES - 6,207 (4,672) 5,096

REVENUE - ALL FUNDS 10,419,870 13,089,175 13,721,261 11,314,693

EXPENSE - ALL FUNDS 10,834,677 13,613,927 13,029,988 13,927,629

REV. OVER EXP. - ALL FUNDS (414,807) (524,752) 691,273 (2,612,936)

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Combined Summary

General Cap. Imp. Excise

Tax Park/

Stmwtr Risk

Mngmt. Pool Cap

Imp Street Park

Fund Fund Fund Fund Fund Fund Fund Fund

Resources: Revenue 2,941,687 337,000 25,250 307,000 6,900 168,125 976,373 240,050

Transfers In 67,676 35,000 1,907 421,125 222,325

Total Resources 3,009,363 372,000 25,250 307,000 8,807 168,125 1,397,498 462,375

Expenditures: Operating Expenses 2,471,013 150,980 1,010 34,280 4,600 6,725 1,381,266 464,692

Transfers Out 1,396,353 204,121 20,000 272,500 4,200 178,680 - 35,000

Total Expenditures 3,867,366 355,101 21,010 306,780 8,800 185,405 1,381,266 499,692

Revenue Over(under) Expenses (858,003) 16,899 4,240

220 7 (17,280) 16,232 (37,317)

Unliquidated Encumbrance-Prior Year -

Beginning Fund Balance @ 4/1/14 1,388,297 123 37,810 30,827 205,404 47,994 168,677 79,652

Anticipated Fund Bal. @ 3/31/15 530,294 17,022 42,050 31,047 205,411 30,714 184,909 42,335

From the Anticipated Fund

Balance @ 3/31/15 the following is the Restricted Balance 212,972 - - - - - - -

leaving the following as:

Unrestricted Fund Balance 317,322

17,022 42,050 31,047 205,411 30,714 184,909 42,335

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Combined Summary

Public Health

Special Events.

Capital Projects

Debt Service

Equip Repl.

Water/Sewer

Fund Fund Fund Fund Fund Fund TOTAL

Resources: Revenue 80,550 146,325 11,250 349,500 - 3,508,641 9,098,651

Transfers In 105 - - 1,069,063 52,096 346,745 2,216,042

Total Resources 80,655 146,325 11,250 1,418,563 52,096 3,855,386 11,314,693

Expenditures: Operating Expenses 80,605 146,266 1,118,800 1,802,883 47,000 4,001,465 11,711,585

Transfers Out - - - - - 105,189 2,216,043

Total Expenditures 80,605 146,266 1,118,800 1,802,883 47,000 4,106,654 13,927,629

Revenue Over(under) Expenses 50 59 (1,107,550) (384,320) 5,096 (251,268) (2,612,936)

Unliquidated Encumbrance-Prior Year -

Beginning Fund Balance @ 4/1/14 13,031 18,254 1,447,158 470,029 1,535 1,635,545 5,544,335

Anticipated Fund Bal. @ 3/31/15 13,081 18,313 339,608 85,709 6,631 1,384,277 2,931,399

From the Anticipated Fund

Balance @ 3/31/15 the following is

the Restricted Balance - - 180,000 - - 1,286,223 1,679,195

leaving the following as:

Unrestricted Fund Balance 13,081 18,313 159,608 85,709 6,631 98,054 1,252,204