Budget Committee - April 02, 2025   4/2/2025

I'm council member in Ward 6 and I serve as chair.

I do want to say a huge thank you to my colleagues on the council here for your support in having me as chair and also for having Hwa Jung Kim, our council vice president, serve as vice chair.

So we are officially kicking off our first finance and budget committee meetings here today.

I wanted to just share right off from the start that we did check in with staff, like we don't need a quorum for

We don't need a vote to do roll call nor to adjourn the meeting either.

I ask for folks to come in fully engaged and ready to learn, be curious, and also ask questions too.

This is our space to get what we need related to finance and budget committee.

And so we've been really intentional about who we bring into our meetings here and really excited for us to dig into our first conversations for today.

to say thank you to our staff as well.

So a huge shout out to my legislative aide, our council director, Jay.

Thank you to Sherry as well for all of the behind the scenes work you've been putting in just to make sure our committee here is running well, that we have everything all ready to go with the agenda, getting items attached, questions answered.

So I really appreciate you all and to everybody else who's been supporting in the entire process too.

So I would like to give a quick refresher about our Budget Committee goals.

We will be having year-round engagements with the administration, departments, public and stakeholders, have follow-up conversations on outstanding topics from the previous budget cycle, discuss and problem-solve budget-related issues that arise, identify council-wide budget priorities.

A bulk of these things we'll be doing here in the space, and some of them will be

and we will be doing behind the scenes as well knowing that our time here is really limited.

We just have an hour and a half and we're first starting off our schedule by meeting once every two weeks.

Prior to, in terms of the timeline, what we want to accomplish is that prior to the official start of the budget season, we will be having discussions and follow-up meetings to create council-wide priorities and that'll be discussion

that is led by me and also the vice chair and we look forward to having those conversations with our colleagues on the council.

We'd also like to meet with the administration to introduce early budget conversations on the council priorities that we put together.

And then lastly, this is a really great space for us to gain baseline knowledge about finance and budget topics overall.

That was a really huge interest that the council here expressed.

So I look forward to having very meaningful conversations with all of you.

and the people we bring in front of us.

calendar that we have in terms of topics we have selected to come before us.

These are topics that our Council members were very interested in.

This is a tentative schedule.

Having something like this really helps our staff make requests ahead of time.

And I do want to emphasize that the schedule here is prone to change based on the availability and willingness of speakers to come before us, and we always do.

We've also provided paper copies on each side of the council chamber in case you would like to take a look at it.

The goal in today's presentation is to set up a conversation around the council's big picture role in financial oversight and set the stage of future policy making that is done in close partnership with our finance department.

I would like to introduce our special guest presenter, Dan Tinter.

Dan is a Municipal Advisor with the Minnesota Municipal Finance Team.

He regularly assists clients with municipal debt transactions, economic development, and redevelopment initiatives, long-term financial planning, fiscal studies, and utility rate analyses.

Dan brings 10 years of direct local government experience to his role at ELLERS, most recently serving as the Director of Finance for the City of Fridley.

He also worked in leadership and administrative roles for the City of Winstead and Dakota County.

Dan has exceptional experience in developing and executing capital improvement plans, crafting and managing multimillion dollar budgets and managing public investment portfolios.

Clients rely on his wide range of municipal project experience, everything from airports to dams and municipal liquor stores to wastewater treatment facilities.

to help them achieve their community's goals.

So Dan, I said to you before this is such an impressive bio and we are looking forward to learning from you.

So thank you again for your time, for being here with us and passing on your wisdom and knowledge and I will give you the floor.

So this is our last agenda item so folks can feel free to raise your hand, to make comments or questions if we had a packed agenda.

If I may ask, we bid that you leave those till the very end, but we don't.

Well thank you Madam Chair and members of the committee.

I appreciate those compliments.

Let's hope I live up to them.

I should say that right now my partner and I do live in the city of Woodbury but before he drugged me kicking and screaming there we were proud residents of the

of St. Paul.

Thank you for your time this morning I appreciate the opportunity to present to the committee and

Chair, Chair, Chair, Chair, Chair, Chair, Chair, Chair,

but today as I mentioned we're going to talk about a few things first you know just really effective writing policy so much of developing policy language and really making it approachable for individuals to actually use it the folks that day in and day out have to actually live up to these policies enforce them understand them make good decisions with them so we'll talk a little bit about some of the best practices and even some tips and tricks that we've seen at Ehlers when we help municipalities, counties, school districts, special taxing jurisdictions draft various financial policies

And then we'll touch on a few different areas, public purpose expenditures, some professional ethics which I'll say is sometimes an overlooked area of financial policies.

People often like to charge ahead and talk about the dollars and cents but these are really foundational issues that are important to really how an organization thinks about its financial management and how it will manage any number of situations that are not always anticipated by a policy.

Fund balances, debt management, budget development, and then perhaps my favorite policy world, procurement.

So that will be fun.

So a little bit about financial policies and really why are they important.

You know, why do we go through the effort and the hassle to do all this research, write all this down, have these meetings, talk back and forth about what makes good sense.

And there's any number of rationales for them.

You know, first they really are

and the Senate.

in the course of your role in the committee or certainly as members of the City Council.

They also provide an excellent vehicle for change.

It's a nice forum in order to talk about certain shifts in policy, why you're going to do certain things and there's often a moment at the end where it's adopted and everyone knows okay now we go forth and do well and if not we will certainly amend the policy so there's always an opportunity to do that.

This certainly promotes stability and continuity in your financial practices and financial management.

And that's also true of other areas of the city.

This is not unique to the fun world of finance.

But really they allow you to prevent reinventing the wheel to respond recurring issues.

They really create a shared understanding of how financial practices and resources will be managed.

so ultimately when staff have to make decisions certainly the council and the mayor cannot give a rule for everything but having these policies and procedures allows them to take inspiration from things that the elected officials have opined on and if a situation is analogous they can usually make some sort of decision that is at least in the general vein of thinking of the elected officials that you know they're not really out on their own they're not on a limb

this situation feels like that situation so this is how we're approaching it and for the same really reasons it's not to say you can't change your approach or have little nuances but it's a nice way I'll say especially being foreign of a former staff to really where to start and how to think about certain things.

They often support your bond ratings.

Bond rating agencies love financial policies and procedures.

They will often score municipalities on what's called their management framework assessment.

So they will look through your financial practices, and they'll also make sure that one, you have the policies, and two, are you in fact following them.

And then they will assign a rating accordingly, and that rating actually then flows into the overall bond rating for a community.

So often they will ask when your staff goes through a credit rating call to be furnished with copies of let's say the fund balance policy, the investment policy, a debt management policy, things of that nature.

They'll be very interested in what it is the city is up to in those areas.

for all of your staff that get to work with our friendly neighborhood auditors.

They help ensure legal compliance so oftentimes auditors when they're reviewing the transaction and books of the cities they will engage in what's called a legal compliance review and they will test various areas of law and regulations to make sure that the city is compliant.

and often a good

and I think perhaps, and I've touched on this a little bit, most importantly for members of the City Council and the Mayor, they really allow you to set the rules of the road.

I like to think of policies as guide rails.

So you've provided a formal opinion of what the goals and processes and regulations and in some respects, like we'll talk about in a second here, the behaviors you expect from city staff and the individuals that engage with the city.

and that really allows you to know that you are promulgating certain values in the organization and that your strategic thinking about what happens in and around the city and with some of your partners actually permeates to the administrative levels of the organization and so you can often say well we want to do something that's big and important and complicated

and policies are an excellent way to translate those visions into actual action in a way that staff can follow through on any number of good ideas.

So I think as everyone knows, there are of course any number of regulations, laws, policies, rules, operating directives.

They take on any number of parlances.

Really for the point of our conversation today, we're focusing on things that are really in the local control or under the sphere of influence.

of the elected officials in the City of St Paul.

Certainly you are a charter city and you're obligated to follow any number of state laws.

Those certainly establish the organization, they create legal parameters, they often are approved by the state or your charter commission and I can tell you having been the Finance Director for the City of Fridley, which is a charter community, I have had all the joys of navigating some of the rules, some of them that can be unique that are baked into certain city charters.

and so that's something that you certainly have to consider when you're drafting certain financial policies or of course you can always go through some of the complicated ways that you can amend the city charter if you're so inclined as a city council.

The Mayor and City Council, what we think about your establishing, and we'll talk about this a little more when we really get into budget development, the mission and the vision of the organization, whereas the administration or your staff is focused really on establishing and directing daily operations.

And because of that, you will really adopt, draft and adopt policies that are focused on strategic goals.

of the City of St. Paul, City Council, and the City of St. Paul.

There are certain policy areas and things you want to see happen in the organization and conversely the staff will adopt their own policies that help them at a department level and translate that into regular processes or operating procedures.

I have seen some very complicated operating procedures that will have step-by-step things you do in bank reconciliation and I assure you you do not want to read those or be

but ultimately when it comes to those those global policies the things that are focusing on strategic direction, mission, vision these are the things that are approved by the governing board of the organization for those administrative activities and it depends sometimes on the delegated authority that exists in policies or state law or even federal law they can be approved by the chief administrative officer of the organization but there is sometimes some overlap where some of these operating procedures

are in fact approved by the governing body.

They are rare but we can think of really two examples and we'll touch on some of them later but certainly one of them is the federal government will actually require the governing body to adopt something called post issuance compliance policies and procedures which is basically a fancy way of figuring out how it is you're going to meet all of your continuing disclosure and arbitrage requirements related to your outstanding debt

but the federal government wants assurances that the policy has been adopted by the governing board and that you're making good on the promises that you've made related to your debt obligations.

Additionally, and this is one we'll talk about a little bit more when we talk about travel and training, but there's actually a state law that says the governing board has to approve a travel and training policy for its own members.

So you have to establish kind of what will happen and when and what the limits are if you were to engage in travel as elected officials.

Council, and the City Council.

They are really rare in that state where you have to actually dig into some of the operating procedures of the organization and so we tend to say basically the Council should focus on the big broad strategic stuff values of the organization the staff should focus on implementation service delivery procedures daily operations and naturally as you might imagine there can be a little overlap

that exists between the two areas.

So it's just something to keep in mind as you as you navigate these areas and I think also as you embark on this journey reviewing policies and potentially talking about what is you want to do kind of honoring the roles that exist for each of the parties that are involved in both policy setting and policy and service delivery.

so I mentioned that you're starting on this you know where to begin there's any number of areas where we often see governing bodies, city councils, mayors become involved in the policy process is really you know you are the the vanguard of the organization you are talking to constituents your other elected officials people that are having issues or challenges or just wonderful ideas they'd like to see the city interact with and so you help identify the issue

that can also come from staff because there can be changes in laws that they'll identify or they themselves who work with your constituents every day may think oh geez like we should maybe change some of this and that can be an area that that may bubble up eventually to either the the mayor the deputy mayor or

if it's appropriate eventually to this committee or potentially the city council for action and approval.

Often staff will conduct policy analysis.

Your city attorney's office in working with your staff will draft policy language.

Often councils will become involved again when you're revising draft policy language.

So you may review something in this committee or as part of a council meeting and you may ask questions about it.

Committee.

You may want to see additional clarity.

You may want to see the city take a slightly different posture so there is an opportunity to fiddle with what may be included in the policy at that point and certainly you would adopt any policies that require city

The thing that we often see missed in this policy loop and is highlighted on the slide here is we often see organizations not take as active a role in educating and training or evaluating their policies.

And when we talk about educating and training, this doesn't have to be anything complicated.

In fact, we often encourage clients when we draft something to say, you know, whoever the department director is, it's in charge of the policy or maybe the chief administrative officer.

In the case of a city, let's say it has a city manager.

We often encourage organizations to

of the City of St. Paul.

We also consider developing a policy inventory this is really a roster of all of the various city Council and administrative approved policies and we encourage communities to assign a regular interval at which those policies are reviewed usually every three to five years depending on the policy.

and often you don't have to amend the policy but you at least want to look at it make sure laws haven't changed the position of the City Council hasn't changed there aren't new or interesting issues that are bubbling up in the community that would warrant a policy change so even if you go through the process and you figure out you know what this is working just fine that's okay but at least you've made an active concerted decision about what is the policy position of the city

you are

a policy inventory that insists that everything should be reviewed on a regular interval I think takes away some of the consternation that can exist when you want to address some of these issues it's that we are not necessarily approaching this issue because we have a problem or an issue or we want to see a change we've made a commitment as an organization to be forward-looking in our regulatory posture and we want to make sure that we're addressing these things on a regular basis that we're consistent with law and

we're thinking about best practices we're responding oftentimes to changes in technology and how that impacts procedures and so a policy inventory can be a really a wonderful way to kind of begin those conversations rather than someone raising their hand and saying hey I want to talk about this policy that everybody has strong feelings about that can sometimes create some friction early in the process so this is a nice way to remove some of that thinking

Last thing I'll say is you always want to use brands and templates.

We often look with communities through their policies and we see that they have any number of different writing styles, a number of different layouts.

Often they use different language, they will have different definitions for the same word.

or City Council.

And I think I'm seeing it right now on your next slide.

But sort of in that space of evaluation, I think one of the things that we sometimes conflate is what is the point or impact

Committee.

It feels like it's also helpful to have a goal statement or intent named for said policy.

Thank you Madam Chair, Councilmember Kim.

Yes, so as you mentioned and kind of leading into this slide, when you're drafting a policy we generally include that you have some kind of purpose or policy statement really underpinning the reason or the rationale for why the policy is in place, what goals are you trying to attain and the reasons for them.

To your point,

And as mentioned on the previous slide, you also want to have in your feedback loop some amount of evaluation that occurs.

The level and type of evaluation, perhaps unsurprisingly, and this is a wonderful finance answer, is it depends.

Because it often depends on how complicated the policy is, what are the stated goals of the policy.

For example, if let's say you have an affordable housing policy.

and you're trying to create

but often times when you're developing the policy area you can talk about and I'll even reach to perhaps some of the things that we've been working on with the Office of Financial Services with electronic payments is trying to reduce the number of paper checks that exist and are used by the city because that creates additional cost.

so you can calculate something like the cost per transaction.

You can just do a very rudimentary analysis of how many checks are we cutting versus how many electronic payments that we have.

You can talk about time to reconcile.

There are any number of areas in which you can really try to understand are we meeting the policy goals.

But to reach back to my earlier comment, what those look like, what performance measures you would use, how easy it is to do really depends on the tone, tenor, and nature of the policy itself.

But to your point earlier, Councilmember Kim, it really starts with a very clear, well articulated policy statement to understand what are we up to and why.

I mentioned this a little bit before.

Definitions, you certainly want to define key terms.

We often see confusion when there aren't key terms well defined.

That's often at the staff or sometimes the city attorney level when they're trying to figure out what exactly was the intent of the organization when they adopted this and what is the there there.

we often encourage people to include statutory or governing policy references and we'll talk about this in another slide but it's often very easy then if people want to go look at certain state laws or they want to look at certain federal regulations they don't have to go search for them themselves they can actually figure out what it is you're referencing to form their own opinion

Speaking back to the policy purpose and statement, you know, you really want really clear and concise policy statements, you often want to use very clear language.

Sometimes policies and procedures can take on a little bit of a legalistic sound or feel and that can be a little more challenging to interpret.

It's not to say that's always inappropriate, but really the bias should be towards trying to make them as easy to understand as possible.

step-by-step and procedures if they're needed and I will say this and I think if you take one thing away from this presentation it would be this a good form solves a lot of problems.

it doesn't have to be a paper form it can be an electronic form it can be through you know some form of web form what have you but I have encountered any number of situations where staff is asked to do a certain thing and they will write memos they will create PowerPoint presentations they will draft very very lengthy responses to certain areas and if you have a form that asks them

of the City Council.

it can take a little time and making a form is certainly an art but as you can tell I am an evangelist for forms so primary contacts we often encourage people to have primary contacts listed in the policy but not an individual we often see folks say that you should reach out to Dan Tinter really it should be a position because those people will change folks will leave folks will be promoted they may take advantage of other opportunities but you want to make sure folks have an opportunity to reach out to someone to get any of their questions questions answered

that's important in terms of saving them time, making sure they comply with the policy, but it also helps the staff and saves them from potentially breaking the policy if they have the opportunity to chat with someone.

Chair.

Thank you Mr.

Chair.

Adoption and revision dates I' m a big fan of these primarily because you can look to see how old is the policy when was the last time we looked at it should be revised again.

In perusing the city' s website I did note your meal reimbursement policy is established by a letter from mayor

So certainly that date in there is very helpful but it may be time to say well you know there's been a handful of years between then and now perhaps we should look at some of the things that we're up to there in that area.

If you were to draft a policy inventory you may want to list some of those first certainly up to you.

And then you want to establish who is the approving authority.

So as I mentioned there are generally pretty clear lanes about is this a council policy?

Is it something that's set by the mayor?

Is it something that's set by the deputy mayor?

Is it something that's set perhaps by a department director?

It's very clear to know, it's very helpful to know very clearly who is the approving authority?

Who has ultimate responsibility?

Who can fiddle with this?

And that's primarily because if somebody wants to change anything they can go and talk to the right person.

and if someone has given an opinion on a policy they are heard from and you're not ultimately stepping on anyone's toes or depending on the nature of the policy, violating state or federal law because you had an inappropriate body or level approve the policy.

We have seen people run into issues with that as well.

Thank you, Madam Chair.

First of all, I just want to say thank you already for this presentation.

Your enthusiasm for the subject is palpable and contagious, which it's hard to get contagious enthusiasm for this kind of material.

So I just wanted to note, just mostly for my colleagues, that I think this idea of a forum is a really interesting one we've talked a lot about.

the format of the budget presentations that we receive from departments, which have typically been in the form of PowerPoint presentations.

And I think we've gone back and forth on the right way to get the information that we need and also make it not too time consuming for our department staff.

And so this idea of a form is something that I'm thinking about.

It's just maybe a really interesting, clear-cut way to get that, even just as a cover sheet in addition to a PowerPoint presentation during our budget presentation.

Madam Chair, Council Members, I think that's an excellent observation.

We work with a number of cities that will actually draft operating budget forms and then capital request budget forms and we'll ask a series of questions and we'll even have a methodology for how it is that they want to see the cost calculated.

A classic example with a capital budget form is it will include a discussion of what are the impacts on the operating budget and can you quantify that.

so if you approve let's say a big capital project you know let's say an expansion of a building have you thought about things like anything from you know pretty ordinary like utilities but the one that we often see missed a lot which is do we need additional custodians who's going to be cleaning this this building and so it's a nice avenue to bring up those conversations and just make sure you're addressing some of those issues that is when you're talking about

very big complicated budget decisions that can sometimes get lost in the discussion.

And thank you, I will admit that I am a total dork for this.

I didn't use that word.

It's a label I use on my own.

I don't mind at all.

So some tips and tricks, we talked about some of these when I was walking through the different policy areas but these are very common things that we see folks kind of put in policies that really lend themselves to confusion, often are a little nebulous, don't provide people with clear expectations about how it is they should proceed.

So one of the most very common ones is we see something like approved by city staff.

really it should be approved by an individual.

The other thing you can do here and this is especially true of large organizations is sometimes we'll see something like approved by the finance director or their designee and so the finance director in this example could say really it's the city treasurer that's responsible for this and sometimes you can even draft a memo that says here are my list of designees so people understand what their responsibilities are and how it impacts their job

it's also very helpful for workload management in terms of making sure who's doing what is are we asking too much for an individual person why is all of this flowing potentially to one individual it's a good way to make sure that you're thinking about what happens on a daily basis for the folks that are dealing with these policies we often like very clear timelines people will often put in five days but then the question we always get is that business days or calendar days

it's a good question we don't know that is a most common question that comes up if you ever have an appeals policy for a resident or a business owner if it says we'll respond in 30 days was it calendar days or business days and often in appeal situations these are usually contentious situations so you don't want to create more confusion in the process that just leads potentially to more consternation

and perhaps more conflict.

now if you don't want to you can certainly amend the policy at that point in time but it saves you from having to go back in and amend a policy just because something has changed at a different level and oftentimes when we do policy reviews those are the issues we run into a lot because people will take statutory language inserted in their policy that statutory language has changed and now that policy is no longer congruent with state law

and so you have to go in and make these minor administrative amendments and really it ends up being busy work most of the time because often I can't say always but often communities will say well yeah we just want to do that anyways so this is just an extra step it's another memo it's not a review by the city attorney etc it's just a lot of extra work simple language as I mentioned you know I just noted something in your ordinances cbi committee you can just say committee

you don't have to keep saying CBI committee over and over again in fact I think the ordinance even says something like the capital investment and budget committee which here and after for ease of understanding will be referred to as the CIB committee I would say that most of that language is unnecessary but I should also say at this point

that I

make sure that people can understand what it is that you're up to.

And if you looked at the research, it's something like 70% of all people are visual learners.

So if you lean into that idea, you actually make your policies more approachable.

The word I would stress on this slide, though, is the term accessible.

As we move more towards electronic policy documents, websites, what have you, when you're drafting things, especially tables and charts, you want to make sure that you're doing so in a way that's accessible for persons with disabilities.

and in fact for an organization of your size there's any number of regulations related to website content and federal rules around the Americans with Disabilities Act but often we see people wanting to use charge tables and figures and that is certainly laudable but sometimes they don't think about that kind of last step in the process to make sure everyone in the community can use them.

So now we'll jump into some individual policy areas.

and some of these slides have a lot of information so I won't necessarily go through all of it but if there's anything that you see that you want to talk about please feel free to stop me.

I've already made a comment about how I am I am not an attorney but really when you look at public purpose policy expenditures you really want a policy that supports something like this you really want to think about what are permitted and prohibited expenditures of the organization

how are you going to use certain assets and I'll talk about some examples of that in a second any documentation requirements so as we mentioned before any forms that need to be filled out things that need to be completed stuff that should be filed accordingly in case someone comes asking about it and then really making sure that everything meets a public benefit and you may ask what is a public benefit and our friends on the Minnesota Supreme Court have actually established a four part test for this

and it must be authorized explicitly or implicitly by statute or charter.

It must have as its primary benefit the community as a whole.

it has to be directly related to a function of government and it cannot have its primary objective the benefit of a private interest.

The reason I mentioned that you should have a public purpose expenditure policies is really when we look at things like implicitly benefit of the community related to a function of government one of the things that the office of the state auditor has said if a city council makes certain findings that these tests are satisfied it can be considered a public purpose expenditure

even if it's not explicitly authorized by state law.

So that is an opportunity for potentially the council to breathe some life into what is around public purpose doctrine and what complies with the public purpose law.

Of course I would tell you in full disclaimer if you tend to do any of these activities you would want to consult with your own legal advisor to make sure that they feel comfortable with the process but this really is an opportunity to say we have certain programs, policy preferences and we think that this is

for the public's benefit, it meets the tests in law and here are the reasons why.

So we look at a few policy areas and as I mentioned these are some of the areas where you may want to take a little time to think about them either at a city council or probably with some of these at an administrative level.

I will tell you if you ever look at the the letters and reports for the office of the state auditor

and I have because I previously mentioned I'm a dork.

Meals and refreshments are perhaps the number one finding of the Office of the State Auditor.

The other that we'll talk about is travel and training.

You will find more State Auditor level letters and reports on these areas than any other.

So you want to think about what are sponsored events, volunteer events, recognition processes, service awards, et cetera, meal hours.

So if you have to have a meeting over the meal hour, what happens in those situations?

Our friends at the OSA have said that you cannot schedule a meeting over a meal hour and have the city buy food just because you scheduled over the meal hour.

That is dubious.

They would say that you need an actual reason for holding that meeting over the meal hour.

It's not good enough that you just schedule it over the meal hour.

And that's an area where we often see cities run into some problems with the OSA.

Uninterrupted work is a good example as well.

Oftentimes you have to feed staff that can't stop to eat.

you know they can't go on a lunch break perhaps let's say if it's a police officer pursuing a major crime if there's a water main break things of this nature typically food will be provided because people cannot step away from that essential public service staff recognition there's actually a state law that says you have to adopt a policy if you want to have a recognition program a recognition program and wellness as a matter of fact they combine those two which creates a little confusion in the process and general gifts and appreciation you actually really can't give gifts

under minnesota state law there's a de minimis test you can't give gifts and even if you have a recognition policy sometimes if you are giving a gift between a subordinate and a supervisor that can run afoul of the state's conflict of interest laws so this is an area where you have to be quite careful in terms of gifts and general appreciation but there's also statements of opinion and position from the OSA on things as as specific as the use of gift cards and even the gifting of flowers which flowers are unallowable

of the state of the state of minnesota

membership and dues.

This one's fairly self-explanatory.

You're essentially allowed to pay for things that really benefit municipal operations.

So you think about perhaps having a city engineer that's a member of the Minnesota City Engineers Association.

Interesting local organizations.

There is no public purpose to join local organizations unless it's authorized in state law.

So an area where cities often talk about this is you cannot join a chamber of commerce.

interesting though there's another part of state law that says you can give thousands of dollars to them in partnership for certain programs but you actually can't pay dues there's no statutory authorization for dues borrowing equipment and use of public assets this is where a lot of organizations tend to get in trouble and where a policy can be very helpful essentially you can borrow equipment if it's de minimis you know think about if a employee uses the city's computer and printer to print off a form for their private life

Generally, that is viewed as being acceptable because it's de minimis.

But it is, as far as the law is concerned, a borrowing of public equipment.

But there are other things you can't do.

We worked with the community once who was allowing their public works professionals to wash their private cars in the city car wash. That would not be allowable.

Or to store their vehicles in the fire bays when they were on a cold night.

Also not allowable.

or there was one county in particular where they had a handful of staff that were running an entire real estate business using the city computers, phones and multifunction machines.

Certainly not allowable.

So we talked about professional ethics.

Really, we talked about this before.

You really want to have statements that allow you to guide behavior and decision making.

You have a fairly robust conflict of interest policy.

It was last adopted in 2007.

Again, probably reaching back to the

the policy inventory idea it may be time to perhaps just revisit it make sure everything makes good sense but as I mentioned you're really trying to create expectations of accountable conduct for officials and staff that you're really telling them this is how we expect people to conduct themselves in their daily interactions both professionally and with constituents and that is really designed and ultimately results in promoting confidence integrity in the public process

of the City of St. Paul, City Council, and the city of St. Paul.

I want to make sure everyone is doing what they are saying, they are operating with a certain level of professionalism and when things go sideways they take accountability.

There are any number of resources you can reach out to I would mention a lot of these they have a confidential ethics hotline.

If you have questions about is this behavior ethical or not

listen to you and opine on whether or not they think something is ethical or not.

a few areas you might want to address and I've talked about some of these personal standards upholding you know professionalism and integrity you really want to make sure that people are operating with the highest ideals of honor and integrity in their personal relationships to merit respect and trust accountability particularly when it comes to financial areas that they're prudently managing funds and they're taking due care whenever they execute a transaction and that really they are upholding both the letter and the spirit of the law

and the Senate.

This is the most important thing they are complying themselves but reporting anyone they view not complying.

It is not enough in this area to be an ethical actor to report yourself or follow the rules if you see someone breaking the rules

this is probably the area in the whole presentation I'm most excited about it's actually a professional ethic to make sure that staff and the council are maintaining the knowledge and expertise that's necessary to perform the job and meet the best practices of really the local government industry so this includes things like providing for travel and training professional licensures

It also extends to encouraging new talent and career growth that you really want people to move to the next level.

And if they do so, you celebrate that and you encourage them to go forth and do well.

We do run into some organizations sometimes that are not as excited as perhaps seeing their people move on to the next stage of their career, but I would tell them that that is unethical.

I have a question for you on the slide labeled Professional Ethics Policy.

more about professional ethics you really want to be providing reliable information both from a staff level and then also as an elected official to the public that you know there are accurate financial reports everything's free of material misstatement that you are not purposely omitting any material facts and that really you are respecting private and confidential information.

this is similar to some of the areas we mentioned on the previous slide you're exhibiting loyalty you're operating really with a duty of trust and a duty of care in the affairs and interests of the government you're not knowingly party to or condoning any illegal activity and then of course as we move into conflicts of interest you're discharging your duties without favor you're not seeking or accepting personal gain which would influence or appear to influence

any of your decision making and that ultimately you're not using any public resources for personal or private gain.

The thing I would say, particularly when it comes to conflicts of interest and I'm sure as elected officials you can certainly appreciate, oftentimes the claim rings much larger and louder than the verdict.

and so when I say it's important to avoid the appearance of impropriety that's almost as important of avoiding actual impropriety because the claims that people will make are often reported much more in the newspaper than the actual investigation and outcome of the process and so really being buttoned up on the front end can save an organization a lot of headache and a lot of consternation

So fund balances, the amount of money that the organization has.

You can think of fund balances as all of the money your organization has accrued since its inception.

so it's what you have

for the City of St. Paul.

The city of St. Paul is designed to protect the financial position of the organization.

The other thing I would say is they are also helpful for unforeseen circumstances these are things like emergencies or what we commonly see when there are elections on the governing body.

There are oftentimes turnover in elected officials and those elected officials may have different ideas about how they want the organization to

to make some of those decisions independent of financial constraints.

Of course, money is finite and there will always be financial constraints, but my general goal is oftentimes to make sure that money is not a reason to do something or not do something.

Sometimes that has to be the case, but if you have thoughtful fund balance policies, you can certainly avoid some of those challenges, but not always.

you should really include a number of different areas we talk about the general fund a lot but capital project funds are good for fund balance policies especially if they're used regularly if you have special revenue funds and certainly any enterprise and debt service funds that you have you may want to consider fund balance policies as well and again this is to ensure cash flow because ultimately you don't want to be in a position any of those other funds where potentially you have to borrow from another fund in order to make that fun whole then the accounting staff gets to deal with a bunch of do-tos and do-froms and inter-fund loans and

As I mentioned you want to have defined clear policies for your unassigned fund balances there are certain

as you might imagine, they party as hard as you might think.

They really tell you to look at your unassigned fund balance policies, that you really want to include the process for adjusting fund balances over time.

And this might be an area where the council may have an opinion.

Are you trying to increase your fund balances because perhaps you want to bolster your financial position?

Or do you have excess fund balances

I use that term gently because we don't run into a lot of communities that have excess fund balances but it happens and you may want to spend them down over time or you may want to try to say kind of as even keeled as possible at a certain percentage.

you want to define any conditions or use and if you do spend them down you want to think about your plan to replenish them so rating agencies for example understand that certain government activities are episodic you may go through a series of savings and then a series of spendings and they don't mind if you go below your fund balance policy but the question they will ask you is what is your plan to replenish it and generally we advise clients that you want to replenish it in three to five years

of the state legislature or sometimes you see it with donations.

I once worked with an organization who had a hospital district that dissolved and they get a portion of the assets and suddenly they had an extra $2 million

I have a question for you.

It is, yes, Madam Chair and members of the committee.

Moving into this next slide, I think may answer your question.

Really when we look at small governments, we'll ignore that one for the time being, but really all local governments, they tend to adopt a 35 to 50% of fund balance based on next year's expenditures.

and so when you're doing a long-term projection and you're making financial decisions, you want to make sure that your fund balance remains at a certain level and that you're adjusting your revenues and expenditures accordingly in future years so you don't inadvertently start spending down money that's in your reserves.

The other thing to keep in mind is that the GFOA, the Government Finance Officers Association, they recommend 35 to 50%.

In fact, the Office of the State Auditor says you should have five months of operating revenues, of next year's operating revenues in reserve.

If you're doing the math there, that's 42%.

so there are a number of organizations that would be applicable to the city that kind of have a pined on very specific reserve levels.

Additionally credit rating agencies will have their own methodology in terms of what your reserve should look like for the different rating categories.

and so they may say okay your reserves are a little too low compared to your peers that's more of a double A amount of money you have in reserves than a triple A amount of money you have in reserves.

Thank you.

Council President.

Thanks Madam Chair.

I'm just curious since we have members of OFS staff here Mr. McCarthy or others if they might

to share with us how our fund balance policy compares to this.

I haven't seen it in terms of subsequent year expenditures before compared to just total percentage of general funds.

So can you speak to how ours works?

Sorry to put you on the spot.

Chair Yang, Council President Naker, yes, we do have a council adopted fund balance policy and it is

budget, much like our policy minimum is 15%, but as we've communicated to the Council, we try to measure or manage more to a 20 to 30% to be more in line with OSA recommendations, rating agency recommendations, and similar.

We have debt fund balance policy we have on several of our special funds we have specific policies many of them fall under that kind of operating policy category that we referenced earlier in the presentation that don't have official counsel

Council adopted policy statements but that we managed to very similar levels depending on the fund and depending on the revenue source.

Our old street maintenance fund is a good example where the same kind of we get sort of specific timing revenues come in at a certain time of year and so we would manage to a specific fund balance policy for that fund as an example.

Our sewer utility fund is another one that we manage really closely with

Director McCarthy, thank you to you and our financial services staff for being here and for taking the questions too.

I do have a couple of follow-up requests.

I'm not sure where the policy for the fund balance lives.

And so can you send that to the council?

That way we have that.

Thank you.

OK, great.

Moving into debt management, there's an

Mr. McCarthy touched on some of these areas as we kind of talk about debt management and debt service funds.

They really help you establish parameters for when you're going to issue debt.

There are also, in the case of the City of St. Paul, some charter restrictions related around the use of debt that would inform this kind of policy development, but really they're designed to help you manage the debt portfolio and really help you understand in what situations will we issue debt, in what situations will we not issue debt, what kind of terms and structures are we most comfortable with,

of the City of St. Paul, City Council,

as I mentioned they'll talk about types and terms, debt limits and metrics and so perhaps reaching back to Councilmember Kim's question there in this area there are a number of performance measures that you can use to basically ask yourself is how much debt do we have and is it too much so to speak and then we won't touch on this today it's a little beyond the brief but you can actually have policies that relate to how the city will issue private activity bonds and conduit bonds and under what circumstances you would do so and what you may ask in return for that issuance.

So sometimes the term, we often see the policy really to be less than the useful life of the project.

A really good general rule is you do not want to issue debt longer than the thing that you're issuing the debt for will last.

So you don't want to, let's say, have a 20-year facility that you issue 30-year debt for because now you're paying principal and interest on a facility that you're no longer using.

Or if you have to issue another series of debt, now you're paying twice the amount of debt in those additional 10 years while it's overlapping.

I mentioned this earlier, there's general obligation debt that is a pledge of the City Council basically of your full faith and credit and any of your resources to repay the debt.

This is perhaps my one bar trivia for the day but in fact this is the only time when issuing a general obligation that a current City Council can bind a future City Council.

Your general obligation pledge is irrevocable.

In fact, even if you tried to revoke it, state law says the county is obligated then to levy those taxes on your behalf and make those debt service payments.

So there have been some enterprising city councils in the past that maybe tried to get out from underneath that and there is a belt and suspenders approach at the state level.

of the state.

I want to talk about statutory authorities and uses and certainly what it is you' re willing to do or not do and structure and limits this can be you want to retire a certain amount of principles sometimes we do see things like keeping the total length of the maturity of any general obligation that' s at or below 20 years or

of the debt issue and that's generally designed to help you save interest expense over time because you don't have as much principal outstanding for as long of a period.

You can also have limits to a specific amount or metric.

Some communities will use a certain percentage of their property tax levy will not will be debt let's say 10% or they may look at debt per capita or debt per household and say we don't want to exceed something like four thousand dollars per capita or five thousand dollars per household or something to that effect.

So something to keep in mind there.

you'll also discuss how you'll handle your reserves and at what level and potentially what refundings and that's a fancy bond word but really means refinancing

We call it refundings for whatever reason.

Often times your policy will say that you need to achieve a certain percentage of savings to go through the refinancing process, usually 3% of the net present value of the bond.

And so that will describe when you would go through the time and hassle and the cost of potentially doing a refinancing.

Thanks Madam Chair.

On this topic and also a little bit on the fund balance topic, we do have a AAA credit rating and we're very proud of that and we seek to maintain it.

At the same time we have certain types of debt that have remained at the same levels for decades, so for example our capital improvement.

and City Council.

of increasing that bonding, what we're often told and what we often struggle with is this issue of our credit score being affected.

And I'm wondering how it seems to me that there should be a way to assess objectively whether or not there is that risk or what that risk is, rather than just constantly shying away from it because there is some risk.

Chair, Councilmember.

So there are a few ways that you can do it.

One, like my firm Ehlers, we will do credit rating analyses and look through the various rating criteria for an individual city and we can load in additional debt and see if that would impact the credit rating generally.

Of course, we can't provide any guarantees in that regard because ultimately the credit rating is the opinion of a third party.

But we do it from time to time with communities that are usually contemplating quite large projects.

and the City Council.

you do have to pay for it and it tends to cost an amount similar to a credit rating but essentially you can furnish them with your ideas and ask them how they would respond to them and they will give you what they call an indicative rating because it's not an actual rating and they will provide you with a letter that outlines their rationale as I mentioned that letter is confidential and is not published to the market.

So budget development and management.

So just another fun fact for you.

In fact, I was just curious this morning, and in case you're wondering, a million dollars in hundred dollar bills weighs 22 pounds.

So a million dollars in hundred dollar bills weighs 22 pounds.

So that means really when I got off the scale this morning, I'm worth about nine million dollars.

Just a little something to keep in mind if you're ever wondering about that.

But really your budget and management policy I'm sure you know as council members you're very familiar with the budget process.

Often communities will have more articulated budget development policies that really guide the creation of the budget, the long-term financial plan and helps establish the annual budget.

They will often describe compliance levels so from a council perspective the question ends up being when is someone over budget?

are they over budget if the department has gone over budget?

Are they over budget if the fund has gone over budget?

Are they over budget if a business unit has gone over budget?

And so often you will have a policy that will describe what we call the compliance requirement that you would say, okay, and I'm just making this up, Public Works is a department.

So if Public Works goes over as a department, they're quote unquote over budget.

But if the city engineer goes over, but they're underneath the Public Works budget, they're still in budget.

And these are decisions that Council can make to basically describe how much money can be moved around in the budget administratively, when does the Council want to be notified that perhaps something is happening with an operating budget or capital project.

And so these policies can be very helpful in describing to the Council generally and to the public and for your own benefit when you exercise oversight.

when do we want to know that when you are quote unquote over budget understanding that the administrative staff is of course doing their best and a budget is a snapshot in time you know you pick a date and adopt a budget and then the world changes you know I like to joke with clients when I do annual budgets or long-term financial plans if I'm sure of anything they're wrong and so that's always something to keep in mind and so this is an opportunity to say well when we do get it wrong or something happens when do we need to be notified

and again, as I mentioned earlier with policies that can be very helpful for staff to know because then it gives them a clear understanding about what their obligations are.

As I mentioned, you'll include an operating or capital improvement policy.

You can also include things like a performance measurement program.

So you sometimes see cities that attach performance measures to their budget outcomes, capital asset policy, when you capitalize things and how they get depreciated and when they're gonna be replaced.

And then we also encourage people if you serve as a fiscal agent for a third party,

that you establish a fiscal agent policy because that will describe how it is that you budget for them and account for them and what fees you're going to charge and what your reporting requirements are for them and what interaction you would have as you extend certain services of the city.

And we've talked about this a little bit in the fund balance area, but it may also talk about the treatment and use of certain funding sources.

So we will run across organizations that will say, because local government aid can be volatile, we're not going to put more than 10% of our local government aid allocation into our operating budget.

It's all going to go to capital.

Because if the state pulls back, then we're in a position where we just have to delay projects.

We don't have to lay people off.

Or we don't have to eat a very large increase in the property tax levy to backfill.

or given on the amount of budget we put in the budget, we're comfortable that we would have to levy an additional 3% or something like that if that comes to pass.

That's a way that you can manage some of the risks that can be inherent in your budget process when you're relying on other parties to fund certain activities.

I always like to remind people that the municipal budgeting is the most important

of the City of St. Paul.

It is an annual task for elected officials.

It really is when you are setting the policy, when you are deciding where the finance resources of the organization will go.

I always caution elected officials that comparing to other communities and your peers can be very challenging and it is not always fair.

In fact sometimes it can be dangerous because different organizations pay for things

of the City of St Paul.

and these variables can be very difficult to understand when you're trying to make apples to apples comparisons about what it is that you're up to in any given year.

It's not to say it can't provide context and it can't provide inspiration for some of your decision making.

I always just like to say you need to take it with a little bit of a grain of salt knowing that you don't have oftentimes in those comparative analysis complete information about where they're at in the life cycle of their city and what decisions they have made to date.

Vice Chair Kim.

Thank you.

My ears perked up when you talked about the life cycle of a city.

So I'm also a non-profit executive director.

Right now I'm doing a lot of strategic planning and we're looking at the life cycle of my organization through sort of various of different topics and themes and like when do you know when you sort of need to like.

What does that look like?

Is it size?

Is it sophistication of financial management?

of the City of St Paul.

Committee.

I want to talk about the real impacts on what your fund balances look like, what your capital plan looks like, the amount of debt you need to issue, and in what amounts can also change, because in the case of a community that is expanding, you may be issuing a lot of water and sewer debt because you are extending utilities, you are building new roads, etc.

And so when you look at the life cycle of a city, you can certainly look at, given the stage of development that they're in,

do some of these

I'm working with a community now that hasn't invested money in their city hall.

Well, they've invested some.

I shouldn't be unfair.

But, you know, they need to make a kind of a generational investment in it and they're going to issue probably close to a hundred million dollars in order to build out, expand, renovate this city hall and police station.

And so when you look at it, that's another kind of idea about where you're at in the life cycle.

Your facilities have degraded, passed a certain useful life, and now you have to make an investment.

And when you talk about life cycles, those are the things that I like to caution about because you may have a community that just made the decision to do that and they're doing it.

And then you can look and say, well look, our tax rate's so much lower than theirs.

But then a few years from now, you're going to make that big investment and you're going to be back to where you were before.

and so those comparisons can be very difficult.

The last thing you can look at purely from a financial perspective is the health of certain funds and how those funds are functioning.

So as I mentioned earlier often with like capital project funds you will go through a period of saving and spending and so when I look at financial statements for a community and I see that they don't have a lot of capital outlay and they're building reserves that tells me they're about to spend a lot of money.

you know they've made a purposeful decision to save some cash now they're going to spend some cash maybe even issue some debt along with it in order to do something and so when you look at the development when you look at the development of the community when you look at the state of their facilities and equipment and their needs and then you look at their financial posture you know from my perspective as a municipal advisor those are the three things that I tend to look at when I think about well where are you at in your in your life cycle

because sometimes, for example, when we look at like a financial management plan, we're looking at 10 years, I will say to cities, you know, we're looking at your capital plan.

I don't see anything to like, you know, I don't know, replace roofs at the fire station or potentially build a new annex on the police station.

Like where are those projects?

I want to say I appreciate the Vice President's question because I think about that a lot, especially with street maintenance.

tell folks it's not necessarily that St Paul public works engineers just don't know how to build streets like they do in the suburbs, but we literally have streets that are a century older than our surrounding communities.

And when those communities get to be 150 years old, they too will have these kinds of expenses and this kind of street degradation.

Almost regardless of how much they invest along the way, there just gets to a point where these need to be replaced.

and at that point, everyone becomes in that same financial boat.

So it doesn't mean we don't need to be constantly tracking and investing and doing deferred maintenance, but just general life does seem to be a critical factor.

Just doing a quick time check.

It's been a great conversation, so I will keep boot scooting here.

One thing I would like to stress when we're talking about budgeting is that it really meets a number of different requirements.

It is something that's defined by state statute in your city charter, something you have to do.

But it's also a process to incorporate needs at once.

It's an opportunity to set goals.

It's a timeline, usually 12 months.

I do know that there has been some conversations potentially about a biennial budget.

The thing to keep in mind is that statute at this point does not allow for a biennial budget.

So you would still have to go through the process every year to set the budget.

You still have to make active choices about the property tax levy and adopting the budget.

A lot of cities that do biannual budgets, they will adopt kind of a state posture, where maybe they do the operating budget one year and they do the capital budget the other year.

Understanding sometimes they may have to make little tweaks to the operating budget or capital budget in the off years.

But generally, once they get into that cadence, they understand that like, oh, this year is a capital year.

We're going to focus more on capital.

Yeah, we may hire new people or we may have like a union settled, so we got to fiddle with the operating budget, but we don't necessarily, we're not focusing on that this year.

So you can definitely do it.

It's certainly an option.

You have a little more say in how it happens since you're a charter city, so you could certainly explore ways with the city attorney that potentially you could move more towards a biannual budget, but right now the certification process for state law is that you have to certify something every single year.

of the City of St Paul.

Budget and hierarchy, I won't spend too much time on this since we're running a little short on time, but really for the Council, as you can see on the slide.

As elected officials, you're really focusing on vision, strategic plan, program plans, and financial plans.

And as you drill deeper down, that becomes more the area that staff helps you in the process and make sure that service delivery and the decisions that you've made previously in the process are honored later in the process.

and so on.

I once worked with a mayor one time who asked a city engineer, like, well, why are we doing this?

How did this project wind up in the annual budget?

And he said something to the mayor, he's like, well, Mr. Mayor, if you recall, the council adopted this pavement management plan last year.

and so we're following the payment management plan and the mayor kind of sat there for a second and you're saying so it was me I'm the one that put the project in the annual budget and it was great because the answer was yes you told us what you wanted to do and now as we move down these kind of

based on the strategic priorities and goals that have been established by the elected officials and it's not to say you can't change your mind later in the process but like we've talked about before that gives staff the opportunity to really drill in and understand and help you I think more importantly as elected officials understand how some of these decisions eventually impact you financially and if the process is done well help you understand opportunity costs and trade-offs in the process with your limited financial resources.

I will skip over these since we don't have as much time but this is just generally the process.

I'll say that usually you're developing and refining a financial management plan.

and some of your goal setting earlier in the year.

And then as you get later in the year, you're adopting a budget.

The city does have some hard and fast dates established in ordinance.

I will say that is a little unusual from my perspective at Eller's.

We often don't see budget deadlines in ordinances and that's usually because the budget's a little dynamic and there's some flexibility that can happen in the process.

So something you could possibly think about as you're going through this process.

is certainly give instruction and guidance that you want these things in certain times, but it can be a little challenging sometimes if you're trying to hit like an exact date, especially in when it comes to capital projects.

And then as you know, you have to do a truth and taxation hearing.

So procurement purchasing, something to keep in mind here.

Really, it like we've talked about before, it really allows

the organization to ensure accountability and transparency when money actually leaves the city coffers that you're promoting kind of fair and open competition and in fact you have a statutory obligation to do so depending on the value of the contract and we'll talk about how that looks in a second and perhaps most importantly it protects you from legal liability if you adhere to the state process

and in fact in some cities, charter cities and I'll say Plan B statutory cities, which is a city manager form, there's actually a language that says if a staff person makes an outlay without proper approval, it becomes a personal liability of that staff member.

So again, if you're following these processes, you are ameliorating yourself.

You're making sure that you are not legally responsible for any of the process.

There are two areas that really the city has to think about.

One's called the Uniform Municipal Contracting Law and that's really applicable to capital projects.

It doesn't necessarily apply to professional services, although most organizations will take a same or similar standard.

We'll talk about what that looks like.

but then you also have Chapter 82 in the City Ordinance which describes your purchasing procedures and your public contracts.

So as I mentioned the policy should define roles and responsibilities, it establishes appropriate levels, who approves at what level and for how much, it addresses any procurement methods so things like sole source contracts, when you'll do competitive bidding and for how much and how and then any exceptions to the process that the Council would be so inclined to entertain.

it's really for the acquisition of goods and services not for professional services so you don't necessarily have to take the lowest bidder for let's say legal services or a consultant or someone of that nature you get to make a determination about what's the best value for the organization in terms of what those consultants offer

and the one area I always encourage councils to think about are bid protest procedures.

We don't often see these in policies but we do see occasions where contractors will protest the decision of the city and you'll have to ask yourself well what do they go through, what process do they undertake to do that and it usually will include an appeal and some discussion and what have you.

It's rare admittedly but when it does happen it's nice to have those in place.

This is just some examples.

The city uses currently different purchasing levels, really $50,000 is the threshold for the city, but I would just point out that state law actually says that you can go up to $175,000.

Kind of to the comment earlier about the value of bonds for the street projects, purchasing thresholds have also increased over time.

In fact, the state used to have

of the state.

The state regularly changes it understanding the inflationary pressure that exists on capital projects.

You can definitely see that for lower ones you can do quotes or even purchase in the open market and as you get to the more expensive projects you can graduate to doing the sealed bids and having the council approve the process.

This is something you could certainly entertain changing if you were so inclined.

It wouldn'

that much of a change and you could even as I mentioned before just make reference to state law if you were comfortable with that approach.

Procurement cards

This is a fun one.

They tend to be really more for, this is more of an administrative policy but it's an expanding way that we see procurement happening and something I just like to make elected officials aware of.

They're really, you can think of them as kind of credit cards for the city.

They are for individual card holders so they can go out and essentially swipe the card

Chair and members of the committee.

We have a lot of questions about how to make a claim and acquire things they need in daily operations or even for larger projects.

We have situations where your accounts payable person needs to process a certain claim to acquire a piece of equipment and we have situations where the

for the City of St. Paul.

The reason they do that is that purchasing cards have rebates attached to them much like you would see with a personal credit card so cities can actually get thousands and thousands and thousands of dollars back if they push more activity to their purchasing card programs but we often caution folks and say you do not want to issue purchase cards just for the purpose of maximizing rebate because it is a control issue and you have to make sure that you do have policies and procedures and authorization levels in place to make sure that the right folks are approving these and that the documentation is appropriate.

and so this is just an example it's not necessarily to say what the city does but you would see that for example when you have like a department director perhaps they could purchase up to two thousand dollars no more than ten thousand dollars in a month and then the expectation would be that the deputy mayor or mayor would be the one that would counter sign those purchase card approvals because everything needs to be verified by someone who's not making the purchase.

the other thing to keep in mind is you always want to have a counterparty for any purchase so let's say if the deputy mayor does have a purchasing card the mayor has a purchasing card you would still want to make sure that the deputy mayor countersigns the mayor or the finance director countersigns the deputy mayor it's not necessarily about being you know someone superior or not it's just about appropriate checks and balances and internal controls

So travel and training, this is the other area the OSA really, really, really likes to talk about.

It provides clear guidelines for really reimbursement processes or perhaps the area where people get tripped up the most.

And it's really designed to promote accountability in the process.

And it really does apply, as I mentioned, to employees and officers, but also elected officials.

You have to have an adopted policy that says how it is that you'll undertake your own travel and training.

And it should cover in-state and out-of-state travel.

In fact, we even have organizations that will have in their travel policies that they prohibit international travel.

They will only send people, or they'll even only send people to the continental 48 states.

So you can't book a conference in Hawaii.

Try you might.

Again, really you want to make sure that you're covering, that it's cost effective, you're covering any appropriate arrangements.

An area where we see a lot of older policies kind of fall down is Airbnbs and VRBOs are not contemplated.

Some organizations will say that's just fine.

It's another way of accommodations.

Other organizations have taken the posture that it's a safety concern, that people are just staying by themselves individually in some neighborhood.

It's totally up to the Council and the administration about what makes the most sense.

The other thing is you're going to want to list prohibitive expenditures.

This is usually things like you can't upgrade to first class, you can't buy alcohol, you need to travel on days that are appropriate.

So a common area where we'll talk about is

If someone is going to pick on DC and they want to stay for a couple days because they want to do some sightseeing, that's totally fine, but the policy would say we'll only reimburse you for the lower cost of the ticket.

You've extended your trip and if that ticket is more expensive, we're not going to pick up the difference because you decided to do sightseeing.

That's not city business, so you have to reimburse us for that.

And again, we do see it very common that there's higher level approvals if people want to do out-of-state travel.

often because there's more scrutiny

is here today to talk about the federal regulations of course in some areas reign supreme state statutes are always important because all municipalities are a creature of the state so you have to make sure that you are being sensitive to what it is the state is up to and what they are thinking.

Often I' m sure you will have your legislative affairs folks and lobbyists helping out in that regard to make sure you'

The offices of the State Auditor and the Attorney General have a number of statement positions or Attorney General opinions.

One of my favorite facts though about an Attorney General opinion is one time I worked with the City Attorney and they said, well you know what they say about an Attorney General opinion?

It's just the opinion of one attorney.

and so they certainly provide a lot of guidance but we do run into occasions where sometimes city attorneys may opine a little differently than the Attorney General but generally you try to follow what the Attorney General is providing in terms of guidance.

Of course the city attorney and any consultants including your friendly neighborhood municipal advisors can lend a hand.

of the government finance officers association league of minnesota cities the association minnesota counties you may ask like we're a city why is a county on here but they have great policies as well for other administrative activities and you do things that overlap with counties so those can often be a resources for cities and vice versa in terms of trying to figure out like what are other organizations up to because some of the questions about financial management are

I always try to give a little attribution usually in a footnote

I do want to make sure we leave a few minutes for any last comments or questions too.

Okay, well I'm on the last slide so it works out well.

So just always remember rules are your friend.

People always talk about red tape but I really think of them as guardrails or as the slide suggests, they're your parachute.

They make sure that you land softly and so thinking about them thoughtfully can ultimately save everyone a lot of headache and consternation.

Plan like a pro.

It's an old saying, but failing the plan is essentially planning to explain yourself later.

So if you take a little time to think in advance, you do have the opportunity to save yourself some headaches.

Write it down.

This is a presentation about policies.

So basically, if it's not written down, it doesn't exist.

If you're ever under an examination by a third party, the IRS, your auditors, they will ask you for

and the City Council.

Good morning, everyone.

I want to thank you for being here today.

The policies help you have a radar and something is pinging your radar and you' re not taking shortcuts you' re avoiding conflicts and ultimately no awkward headlines.

Really if you' re following the policies you' re being thoughtful about it you avoid a lot of these issues and that can be very helpful for organizations because of course everyone is very busy and

if someone just would have followed the policy, done a little training or even if you would have adopted something and thought a little more about what it is you want to do in this area.

So I know I'm at the end and that went a little long.

Thank you.

members, around drafting ordinances, making sure that we are being really thoughtful about policy making and then even just thinking ahead about how the things that you shared are really relevant to our upcoming budget season two.

lastly I will share that I really as chair I am invested in making sure that we do have an organized structure for how we can get the council information that we need especially for the budget and so I agree with you Council President Eaker around wanting to put together a form or a template on the budget so that presentations and coming before us are actually reflect what we want and it's also helpful for all of the staff and directors who are going to come before us to to

so that they can prep for those things ahead of time.

So that's something that I will be digging into.

Anybody else have anything to share?

Questions?

All right.

So with that, thank you again, Dan.

Thank you, Madam Chair, members of the Commission.