The purpose of this Mayor and Council Communication (M&C) is to provide the City Manager with delegated authority to take a number of actions in order to clean-up and close-out the City's legacy capital project funds. Under this delegated authority, actions include balancing receipts and appropriations for old, primarily completed, projects in the legacy capital project funds; making correcting budget transfers/general ledger entries to prepare for project closure; and moving any residual receipts and appropriations into the corresponding capital project funds in the new financial management system.
The Financial Management Services Department (FMS) has been conducting a comprehensive review of legacy capital project funds and providing recommendations regarding closure. The goal has been to verify and "cleanse" data in all of the old funds, bring old projects into balance on the ledger to facilitate their closure, and close funds that are no longer needed so that the City's financial records are in the best possible condition. The City created 49 legacy capital project funds during ERP Phase II for conversion from MARS to PeopleSoft Financials, of which 33 remain active on the City's ledger and will be considered within the scope of this M&C.
FMS leads this effort with the collaboration of many City Departments. Therefore, certain actions noted may be performed by assigned departments and FMS to help facilitate the closure.
For financial reporting purposes, each legacy fund is "rolled up" with its new-system counterpart and reported as a single fund because the two are considered to be the same fund under generally accepted accounting principles. To more accurately reflect this structure, rather than appropriating residuals in the legacy capital project funds and then transferring them to the new funds, staff proposes moving any excess appropriations or revenues from the legacy capital project funds to the corresponding new funds.
To the extent any identified residuals constitute appropriated programmable projects in the legacy funds, they will be appropriated programmable funds in the corresponding new funds. To the extent there are residuals that cannot be spent without re-appropriation, those will be treated either as unappropriated, "unspecified" or within a new-fund equivalent of the static/programmable projects where they currently reside. This approach will simplify future monitoring and auditing of the funding sources by maintaining the distinct character of each. The movement of funds and appropriations will not result in a net increase of appropriations; however it may be necessary to reduce appropriations in order to close out projects in the legacy capital project funds.
If applicable, any legacy capital project fund that contains residual debt proceeds will be analyzed to determine if the amounts should be moved to their respective debt service fund to defer future interest/borrowings and/or moved to a new capital project fund in which the proceeds can be tracked for reporting requirements.
With the enhanced budgetary and expenditure controls built into PeopleSoft Financials, correcting budget transfers/general ledger entries may be necessary in order to properly close out projects within the legacy capital project funds. As noted earlier, this action will not result in an increase to overall appropriations and will allow the projects to be closed appropriately.
Providing the City Manager with delegated authority will allow the City to more efficiently expedite the clean-up and closure over the identified legacy capital project funds. Delegated authority shall end when the final legacy capital project fund is closed.
This M&C does not request approval of a contract with a business entity.