ALTERNATIVE EXPENDITURE LIMITATION-UERS REPORTING Pat Walker, Pat Walker Consulting & Dennis...

ALTERNATIVE EXPENDITURE LIMITATION-UERS REPORTING

Pat Walker, Pat Walker Consulting & Dennis Maschke, CliftonLarsonAllen

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Overview

• Why, What, How & When?

• Home Rule (Alternative Exp. Limitation)

• Permanent Base Adjustment

• One-time Override

• Election/ Timeline Requirements

• Resources

• Questions?

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Why & How…

• 1979-80 Legislation was designed to “limit” city & town expenditures

• Property taxes were rising

• Debt was rising

• ARS §41-1279.07 & Arizona State Constitution, Sections 20 & 21 to Article IX limit city & town spending

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Why & How…

• State expenditure limitation base year is 1979-80 actual expenditures

• Economics Estimate Commission (EEC) adjusts 79-80 baseline exp. annually for population & inflation

• Exclusions are allowed – Exp. from specific revenues such as federal grants, bond proceeds, debt, etc.

• Result—alternatives developed

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Why and How…

State Expenditure limitation formula:

1979-80 Base Limit X Population Factor X

Inflation Factor = State Imposed Limitation + Exclusions = Total Allowable Expenditures Under State Imposed Limit

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Home Rule (Alternative Exp. Limitation)

• Does what it says “Home Rules”

• Expenditure limitation set by budget each year

• Must be renewed every 4 years beginning with fiscal year after voter approval

• If fails, must wait 2 years

• Requires resolution by Council and voter approval

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• Projection of state imposed expenditure limitation & alternative expenditure limitation

• Uses EEC, ADOA population projections & ADOR inflation factors

• Determination of whether you need an alternative first!

• Must estimate revenues by Federal, State or Local Source

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• Estimate expenditures by “specific areas” not funds

• Must hold 2 public hearings and publish notice of hearings two consecutive weeks

• “Projections” provided to Auditor General contained in Detailed and Summary Analysis with approved Council resolution

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• Projections must be submitted to Auditor General for approval 60 days before election

• Publicity pamphlet submittal to Auditor General for comment

• If August 26, 2014 election, you are too late!

• If November 4, 2014 election, you have until the first week in July.

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Permanent Base Adjustment

• No limitation on amount of adjustment

• Same analysis as HR must be approved by Auditor General

• Same deadlines

• No public hearings required

• Passage of resolution by Council required

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Detailed Analysis for HR Or Permanent Base

• Estimate expenditure amounts for next 4 years

• Areas that they will be spent in i.e. General Government, Public Safety, etc.

• Estimate revenues for next 4 years with assumptions

• These is hardest step and will be unique to each community.

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Summary Analysis Worksheet For HR or PermanentFirst Formula:

2015-16 Population from ADOA for FY14

Divided by 1978 Population = Population Factor.

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Summary Analysis Worksheet For HR or PermanentSecond Formula:

Then to calculate state imposed limitation for next 4 years is taking 1979-80 base limit (provided by EEC) X Population Factor (Calculated in first formula) X Inflation factor (provided by ADOR) = State Imposed Limitation + Exclusions = Total Expenditures allowed under state imposed limit.

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Summary Analysis For HR or Permanent

• Takes information from Detailed Analysis and Summary Analysis Worksheet & Summarizes

• Must be placed in publicity pamphlet

• Make sure totals match on all analysis & forms!

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One-Time Override

• Requires 2 public hearings and Council approval of resolution

• Requires voter approval of a specific amount

• Can be at special election (third Tuesday in May) or regular election prior to fiscal year needed

• Effective 1 year

• No Auditor General review

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Elections/Timing

Home RuleRegularly scheduled election for nomination or election of council members2 year waiting period before re-proposalPermanent Base AdjustmentRegularly scheduled general election, or nonpartisan election for nomination or election of governing board membersOne-Time OverrideRegularly scheduled election for nomination or election of governing board members, or special election on the third Tuesday in May

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Assistance

• Arizona League of Cities & Towns at

www.azleague.org (Tom Belshe is a great resource!

• Accounting Services Division at [email protected], call (602) 553-0333

• Check out the webinar and forms as well as the FAQ’s on the Auditor General’s website!

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Questions?

Pat Walker Consultingpwalkerconsulting @aol.com(480) 694-7179

©2012 CliftonLarsonAllen LLP

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UERS Report

Dennis V Maschke, CPA, MBAAudit Manager

CliftonLarsonAllen LLP


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Expenditure Limitation Report - Format


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Reconciliation


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Reconciliation – Items not requiring working capital


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Reconciliation - Example

Flows through to Part II – Line A


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Reconciliation – Example (continued) – Statement of Expenditures, Revenues, and Changes in Fund Balance


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Reconciliation – Example (continued) – Statement of Revenues, Expenses, and Changes in Net Position


Footnotes - Example

• Note 1 – Should explain where amounts can be found in the financial statements

• Subsequent notes should recap how additional amounts can be derived

Intergovernmental Revenues

Federal Grants $30,000

State Grants 9,816

HURF Revenue excess 530,177

Total Intergovernmental $569,993


Part II – HURF Calculation

Maximizing Carry Forward

HURF Revenue $ 530,177

Base Limit 200,000

Available for Exclusion 330,177

HURF Expenditures $ 520,000

Base Limit Revenues (200,000)

Non-HURF Revenues (15,000)

Excludable Revenues Expended in the CY $ 305,000


Revenue Expended and claimed as exclusion in the CY 305,000

Excludable Revenues Carried Forward $ 25,177

Maximizing Exclusions

HURF Revenue $ 530,177

Base Limit 200,000


HURF Expenditures $ 520,000

Available for Exclusion (330,177)

Non-HURF Revenues (15,000)

Based Limit Expended $ 174,823

Base Limit 200,000

Base Limit Expended 174,823 Unspent Base Limit Revenues Not excludable in future years. $ 25,177

CY Exclusion Used


Part I

• Calculates the “bottom line”

• The individual signing the report needs to be communicated to the AG’s office

• Adjustments– Disasters declared

by Governor– Voter approval one

time excess• If over budget – a

hearing will be held and entity may lose tax revenue


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cliftonlarsonallen.com

twitter.com/CLA_CPAs

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Dennis V Maschke, MBA, CPAManager, State and Local [email protected]

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ALTERNATIVE EXPENDITURE LIMITATION-UERS REPORTING Pat Walker, Pat Walker Consulting & Dennis...

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