Chapter 3.10
PUBLIC FINANCE – MANAGEMENT AND ACCOUNTING
Sections:
3.10.010 General treasury management.
3.10.020 Authority.
3.10.030 Permissible investments.
3.10.040 Terms defined.
3.10.050 Repealed.
3.10.060 Collateral safekeeping.
3.10.070 Diversification of investments.
3.10.080 Investment records.
3.10.090 Deposit of school money.
3.10.100 Basis of accounting.
3.10.110 Funds.
3.10.120 Facilities fund.
3.10.130 Repealed.
3.10.140 Fern Fuller fund.
3.10.150 Land sale fund.
3.10.160 Penalties.
3.10.170 General fixed assets.
3.10.180 Distribution of funds.
3.10.190 Review of service fees.
3.10.200 Post audit.
3.10.010 General treasury management.
The treasurer shall be responsible for treasury management, including investment and reinvestment of all revenues of the municipality from whatever source, to include the school system. [Ord. 71-5-O, 1971; prior code Ch. 7 subch. 1 §1. Formerly §3.04.010].
3.10.020 Authority.
The treasurer, or designee, is authorized and responsible for the signing of all checks upon the borough checking accounts; and to sign, enforce, accept, make, execute, and deliver checks, notes, bonds, drafts, acceptances and/or bills of exchange for deposit, discount, rediscount, or any other lawful purpose; and to do all lawful acts requisite for effecting these premises. All checks on the bank accounts of the borough are to be countersigned by the manager. If the manager is not readily available, the administrative official or mayor may countersign. The treasurer may use facsimile signatures if he deems it appropriate for checks in the amount of $5,000 or less. All checks drawn on the borough accounts for an amount over $5,000 will be manually signed by the treasurer, or designee, and countersigned as indicated in this section. [Ord. 98-03 §2, 1998; Ord. 84-02-O, 1984; Ord. 81-51-O, 1981. Formerly §3.04.015].
3.10.030 Permissible investments.
The finance director shall invest money only in the following types of security instruments:
A. Bonds, notes, or other obligations, direct or otherwise, of the United States Government;
B. Bonds and other evidence of indebtedness of the state of Alaska, or any municipality, or political subdivision of the state of Alaska;
C. Savings accounts, certificates of deposit, banker’s acceptances, repurchase agreements, and such other legal security instruments; or
D. The Alaska Municipal League Investment Pool, Inc., made in accordance with the terms of that pool’s “Common Investment Agreement.” [Ord. FY2008-08 §2, 2007; Ord. 92-29 §3, 1993; Ord. 90-35 §2, 1990; Ord. 84-30-O §1, 1984; Ord. 82-15-O(A), 1982; Ord. 71-5-O, 1971; prior code Ch. 7 subch. 1 §2. Formerly §3.04.020].
3.10.040 Terms defined.
Insofar as specific wording is used in this code, the following definitions shall apply:
“Banker’s acceptance” means an instrument utilized in the financing of foreign trade, making possible the payment of cash to an exporter covering all or a part of the amount of a shipment made by him.
“Bill of exchange” means an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer (Uniform Negotiable Instruments Law); it is synonymous with a draft or acceptance when referring to a domestic transaction.
“Bond” means a certificate of indebtedness, in writing, and often under seal.
“Collateralize” means to secure a debt in part or in full by a pledge. A note is said to be collateralized if the debtor has deposited property with his creditor as part of full security for the payment of principal or interest.
Repurchase Agreement. A “repurchase agreement,” commonly referred to as a “repo,” is a short-term sale of securities by a dealer in government securities whereby the dealer agrees to repurchase the securities from the investor at a fixed or open maturity date. The underlying instrument is a U.S. government security; therefore, there is little risk of default. The holding period is tailored to the needs of the investor and can be established for very short periods, even a few days. Interest rates on repurchase agreements are tied to the rate on treasury bills, federal funds, and loans to government security dealers by commercial banks. [Ord. 82-15-O(A), 1982. Formerly §3.04.021].
3.10.050 Collateral requirements.
Repealed by Ord. FY2008-08. [Ord. 82-15-O(A), 1982. Formerly §3.04.022].
3.10.060 Collateral safekeeping.
All items of collateral will be deposited for safekeeping with a third party. This party will be another bank. [Ord. 82-15-O(A), 1982. Formerly §3.04.023].
3.10.070 Diversification of investments.
The treasurer will diversify investments of public funds of the borough within the following guidelines to minimize the risk of exposure:
A. One Institution. No more than one-third of the funds available for investment will be placed with a single bank or investment institution at the time funds are being invested.
B. Percent of Investments. The borough will make no investments at any point in time to hold an amount greater than five percent of the total investments at any one bank or financial institution.
C. Investment Mix. Although a quantitative figure is not provided, the treasurer should attempt to have a good mix of various types of permissible investments in the borough portfolio consistent with the market and period.
D. Savings and Loans. No investments in savings and loan banks that would exceed the limits of insurance provided by FSLIC.
E. Mortgage Securities. Only federal government mortgage securities shall be accepted as mortgage collateral for investments. [Ord. 84-50-O, 1984. Formerly §3.04.026].
3.10.080 Investment records.
Investment records will be maintained as provided for by the standards of generally accepted accounting practice. In addition, the treasurer shall obtain and keep a record of all bids for each investment made. [Ord. 84-50-O, 1984. Formerly §3.04.027].
3.10.090 Deposit of school money.
All school money shall be deposited in a centralized treasury with all other borough money. [Ord. 71-5-O, 1971; prior code Ch. 7 subch. 1 §3. Formerly §3.04.030].
3.10.100 Basis of accounting.
Accounting of the budget will be prepared on a modified accrual basis, which is described as: revenues being recognized when cash is received, including the school district, state and federal grants, which shall be recognized whether received or not, and expenditures being recognized as soon as they result in liabilities for benefits received. [Ord. 81-20-O, 1981; Ord. 71-5-O, 1971; prior code Ch. 7 subch. 1 §4. Formerly §3.04.040].
3.10.110 Funds.
Funds as required will be established, which should include, but are not limited to, the following:
A. Kodiak Island Borough general fund;
B. Kodiak Island Borough payroll fund;
C. Tobacco tax fund;
D. Debt service funds;
E. Capital projects funds;
F. Fire service district fund;
G. Sewer and water utility fund;
H. Other enterprise funds as needed; and
I. Land sale fund. [Ord. 83-24-O, 1983; Ord. 71-5-O, 1971; prior code Ch. 7 subch. 1 §5. Formerly §3.04.050].
3.10.120 Facilities fund.
A. The facilities fund is established as a separate special revenue fund which is distinct from all other funds. The fund consists of all proceeds received from the sale of Shuyak Island property to the Exxon Valdez Oil Spill Trustee Council. All income from the fund shall be deposited to the fund. The assembly may, by ordinance, make additional appropriations to the fund at any time. Any additional funds added to the fund, aside of Shuyak Island proceeds, shall become part of the fund as a whole and subject to the regulations of the facilities fund.
B. The fund may be invested only as provided in KIBC 3.10.030. The fund may not be appropriated or spent, except as provided in this section. The earnings or principal shall at no time run or supplement the running of government except as specified in this section.
C. Repealed by Ord. FY2008-08.
D. The excess income of the fund is defined as 85 percent of the annual investment income from the fund. The excess income of the fund is available for appropriation by the assembly in the fiscal year following the year in which the income is earned. The excess income of the fund may be appropriated only for the following purposes:
1. Maintenance and repair of existing borough facilities;
2. Insurance paid by the borough for borough buildings;
3. Upgrade and reconstruction of existing facilities; or
4. Debt service on general obligation bonds issued for facilities construction – up to 50 percent of excess may be used for this purpose.
E. A portion of the fund may be appropriated for another purpose only upon approval of an ordinance ratified by a two-thirds majority of the qualified voters at a regular or special election. [Ord. FY2008-08 §4, 2007; Ord. 96-13 §2, 1996; Ord. 94-17 §2, 1994. Formerly §3.04.051].
3.10.130 Education fund.
Repealed by Ord. FY2009-14. [Ord. 96-14 §2, 1996. Formerly §3.04.052].
3.10.140 Fern Fuller fund.
A. The Fern Fuller fund (fund) is established as a separate fund, distinct from all other funds, which consists of all contributions received from the Fern B. Fuller charitable remainder unitrust (unitrust). All income from the unitrust shall be deposited to the fund. The assembly may, by ordinance, make additional appropriations to the fund at any time, which, aside from unitrust proceeds, shall become part of the fund as a whole and subject to the regulations of the fund.
B. The fund may be invested only as provided in KIBC 3.10.030. The fund may not be appropriated or spent except as provided in this section. The earnings or principal shall at no time fund or supplement the funding of government except as specified in this section.
C. Both principal and earnings on principal may be spent for the fund’s intended purpose. As outlined in the unitrust, each contribution will be used for purchase of health care equipment for the Kodiak Island Hospital and Care Center known as Providence Kodiak Island Medical Center. Equipment will be purchased upon receipt of invoice from the hospital not to exceed the total amount of the payments received. All assets purchased with the payments will be the sole property of the Kodiak Island Borough.
D. In recognition of the valuable bequest of this fund and the services of the unitrust’s most recently serving trustee (trustee), the borough shall, without limiting its rights set forth above, accept for consideration any suggestions from the trustee regarding equipment purchases and provide the trustee any information reasonably requested concerning equipment purchases made by the borough with funds transferred from the unitrust. [Ord. 99-06 §2, 1999. Formerly §3.04.053].
3.10.150 Land sale fund.
The land sale fund has been established and is maintained as a separate and distinct self-balancing entity of this government to receive, maintain, and eventually disburse monies in relation to land sale activities, including but not limited to design, construction, maintenance, and administration of land sale activities delineated annually by the assembly in the approved budget for that fiscal year. [Ord. 83-24-O, 1983. Formerly §3.04.055].
3.10.160 Penalties.
The following provisions shall apply to all land sale agreements entered into by the borough fol-
lowing the enactment date of the ordinance codified in this section:
A. Late Payment Fees. All payments made to the borough pursuant to any land sale contract or deed of trust note not made within 15 days of the due date will be deemed to be late, and all such late payments shall be assessed a late payment fee of four percent of the payment per occurrence. [Ord. 83-67-O, 1983. Formerly §3.04.056].
3.10.170 General fixed assets.
General fixed assets of the borough shall be valued in accordance with generally accepted accounting principles (GAAP).
A. Land Valuation. Generally, land shall be valued at cost. If cost is not known, then land will be valued at fair market value at date of acquisition. Land acquired through foreclosure or default on land sale payments will be valued at fair market value at date of foreclosure or default. Donated land will be valued at fair market value at date of acquisition.
B. Buildings and Improvement Valuation. All buildings and structures shall be valued at cost or cost of construction. If cost is not known then buildings and improvements will be valued at fair market value at date of acquisition. Donated buildings and improvements will be valued at fair market value at date of acquisition.
C. Other Fixed Assets. Other fixed assets are those fixed assets (property, plant, and equipment) of the borough defined as tangible assets with a useful life in excess of two years, an initial cost of $5,000, and those items that do not lose their identity when used with or applied to another asset.
D. Exceptions Prior to the Fiscal Year Ending June 30, 2003. No road, bridge, culvert, viaduct, or other such major asset will be capitalized. These public assets by virtue of their nature claim a degree of immunity from pilferage, vandalism, and misappropriation. There shall be no exceptions starting with the fiscal year beginning July 1, 2003.
E. Providence Medical Center shall be given the authority to dispose of all obsolete hospital equipment by any means they deem appropriate. Any funds received for said equipment will revert to the borough. An itemized list including KIB identification tags will be forwarded to the finance department at disposal for removal from fixed asset schedules. [Ord. FY05-11 §2, 2005; Ord. 00-05 §2, 2000; Ord. 86-03-O(A) §2, 1986. Formerly §3.04.057].
3.10.180 Distribution of funds.
A. All funds shall be disbursed according to the budget as approved by the assembly.
B. The school district shall submit the claims that have been approved by their board to the central treasury for payment. [Ord. 71-5-O, 1971; prior code Ch. 7 subch. 1 §6. Formerly §3.04.060].
3.10.190 Review of service fees.
Not less than on the beginning of every calendar year, the finance director shall prepare a list of all fees for services charged by the various departments of borough government. The list shall be submitted to the departments involved for comments concerning the fees and a recommendation as to whether or not the fee or fees should be raised, lowered, or remain the same. The finance director shall submit a report of his findings, including the department comments and recommendations, to the manager for presentation to the assembly. The assembly may, by resolution, raise or lower any fee on the submitted list. [Ord. 98-03 §2, 1998; Ord. 83-2-O §1, 1983. Formerly §3.04.065].
3.10.200 Post audit.
The assembly shall provide for an independent annual audit of all municipal accounts, or more frequent audits as deemed necessary. Such audits shall be made by a certified public accountant, or firm staffed by such accountants, who have no personal interest, direct or indirect, in the fiscal affairs of this municipality or any of its offices. The assembly may, without requiring competitive bidding, designate such accountant or firm. [Ord. 71-5-O, 1971; prior code Ch. 7 subch. 1 §7. Formerly §3.04.070].