Title
Consider a memorandum/resolution readopting the Financial Governance Policy, to include the Investment Policy.
Body
DATE: February 18, 2025
TO: Kent Cagle, City Manager
FROM: Judith Tangalin, Executive Director of Finance
SUBJECT: Financial Governance Policy and Investment Policy Annual Review
BACKGROUND AND FINDINGS:
Killeen’s Financial Governance Policy was first adopted by City Council on December 19, 2017. The governance policy establishes the framework for the fiscal management of the City and aids in the evaluation of current operations, proposed programs, and the long-term financial stability of the City.
The Financial Governance Policy requires an annual review to begin no later than January of each year. The Investment Policy is part of the Financial Governance Policy. Texas Government Code, Chapter 2256, known as the Public Funds Investment Act (PFIA), requires the Investment Policy to be reviewed and adopted by resolution at least annually.
The review of the Financial Governance Policy began at the February 4, 2025, City Council Workshop. At the workshop, staff briefed City Council on proposed changes to the governance policy. The changes were the result of staff monitoring the application of the governance policy over the past year and identifying changes to improve the application of the policy.
Highlights of the requested changes include:
• Section VIII(C)(1)(2), Water and Sewer Rates - Removed rates and only reference the tiers to which water and sewer rates are billed and added “Most current rates are established in City ordinance, effective October 1st of each year”
• Section IX(C), Purchasing- The City Manager may approve all contract change orders that involve an increase or decrease to the original contract of $50,000 or less, added “or designee” to allow the City Manager to appoint a designee to assist in the approval of these change orders
o Removed “The City will move towards centralized purchasing in accordance with a plan to be established by the City Manager” since the City has already moved to centralized purchasing
• Section IX(D), Classification of Operating Expenditures - Removed Support Services, Minor Capital and Professional Services and added “Miscellaneous Services and Charges” to align with the new Chart of Accounts (COA) that was created using Government Finance Officers Association (GFOA) best practices
• Section XIII(A), Capitalization Threshold -Added “Intangible assets -Subscriptions if they meet a threshold of a $100,000 or more and are for a term more than two years” and Capitalization thresholds will be applied to individual items and “bulk purchases if they meet a threshold of a $100,000 or more and their useful life is two years or more” in order to align with Governmental Accounting Standards Board (GASB) 96 standards
• Section XVI(B), Investments - Added “The City’s Investment Policy is imbedded within the Financial Governance Policy under section XXIII” to make reference to the Investment Policy
• Section XVII(A)(2), Computer Data Processing - Removed language stating that the user access levels to the City’s financial system is to be implemented by Information Technology Services Department (IT) and added language that IT is responsible for creating new users during the initial setup but that both IT and the Finance Department can make changes to Security Groups and User Account Access Groups as needed. This change is to align with the City’s Enterprise resource planning (ERP) system
THE ALTERNATIVES CONSIDERED:
NA
Which alternative is recommended? Why?
NA
CONFORMITY TO CITY POLICY:
Yes, the City of Killeen Financial Governance Policy document which includes the investment policy states that the policy will be reviewed and adopted by resolution of the City Council at least annually. The Investment Committee reviews the investment policy and if necessary, recommends revisions to the investment policy each year to ensure compliance with the Public Funds Investment Act.
Texas Government Code 2256.005 states that the governing body of an investing entity shall review its investment policy not less often than annually. The statue requires the governing body to adopt a written instrument by rule, order, ordinance, or resolution stating that it has reviewed the investment policy and that written instrument so adopted record any changes made to the investment policy.
In addition, the Financial Governance Policy is a comprehensive source of financial policies developed within the parameters established by applicable provisions of the Texas Local Government Code, the Texas Government Code, the Texas Tax Code, the City of Killeen Charter, the Government Finance Officers Association, and the Governmental Accounting Standards Board.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
N/A
Is this a one-time or recurring revenue/expenditure?
N/A
Is this revenue/expenditure budgeted?
N/A
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
N/A
RECOMMENDATION:
City Council readopt the Financial Governance Policy, to include the Investment Policy, as amended.
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Financial Governance Policy
Presentation