Reading the pages in the Expenditure Section requires some orientation if the reader is unfamiliar with the way in which the City of Hartford presents its budget. The budget is presented in terms of how much money each department will require to operate in the new fiscal year and how many positions will be funded by these expenditures. This information is summarized at the department level, and for each of its divisions. Each departmental budget is presented in a format that includes the Mission Statement, Legal Requirements/Primary Responsibilities, Department Budget, and Budget Highlights.

The Legal Requirements/Primary Responsibilities and Budget Highlights give information about the relationship between the budget and the services provided. Department Budget provides information about the changes between Fiscal Year 1999-00 and the Fiscal Year 2000-01 adopted budgets.

The Department Budget Summary contains  information  by division and tells the reader how much money was spent and how many positions were authorized and funded in 1998-99 under the heading "Actual;" how much money was legally appropriated in the current year under the heading "Adopted;" and an estimate of how much will be spent this year under the heading "Revised;" Under the heading "Adopted," are the City Council’s approved spending levels for the new fiscal year. This financial information may be shown as "division" totals, "responsibility center" totals or both. A "division" may be defined as an organizational unit composed of one or more "responsibility centers" or "activities" that perform related tasks. Other Funds refers to expected outside funding a department will receive through grants from other agencies, the State and/or Federal Government, or by charging fees. Below are listed abbreviations used in the tables and their definitions.

FY - Fiscal Year (July 1 to June 30)

POS - Position

RWY - Regular Work Years (expressed as a decimal)

Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. The City’s accounting records of the General Fund, the Special Revenue Funds, the Capital Projects Funds, the Debt Service Funds and the expendable trust and agency funds are maintained on a modified accrual basis which records revenues in the accounting period in which they become available and measurable. Expenditures are recognized in the accounting period in which the fund liability is incurred, except for general long-term debt which is recognized when due. Unencumbered appropriations in the General Fund lapse at the year-end (but not in the Capital Projects Funds) and outstanding encumbrances are recorded as a reservation of fund balance thereby providing authority to complete these transactions. The accounting records of the other funds are maintained on an accrual basis.

The accrual basis of accounting is used for the Enterprise, the Internal Service, the Non-expendable Trust and Pension Funds. Their revenues, including investment earnings, are recognized when earned and their expenses are recognized when incurred.

Department maintains centralized budgetary control of disbursements and encumbrances against appropriations, by major program of activity and by principal object of expenditure. The Board of Education is controlled only as to total appropriations.

The City’s accounting system is organized and operated on the basis of funds or account groups, each of which is a separate accounting entity. Each fund is accounted for with a set of self-balancing accounts comprised of assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Resources are allocated to the individual funds upon the approval of the Court of Common Council for specific purposes. The funds are grouped into seven generic fund types and three broad categories. The two account groups are not funds since they are only concerned with the measurement of financial position and not with the measurement of results of operations. The types of funds and account groups are as follows:

General Fund - The General Fund is used to account for the major general operations of the City except those required to be accounted for in a separate fund.

Special Revenue Funds - Special Revenue Funds are used to account for revenues restricted by law for specific purposes such as Education, Health, and Community Development Block Grants.

Debt Service Fund - The Debt Service Fund is used to account for the payment of principal and interest on the City’s general long-term debt.

Capital Projects Funds - Capital Projects Funds are used to account for the proceeds of general obligation bonds and other financing resources for the planning, acquisition and construction of improvement of major capital facilities such as new schools and urban renewal projects, except for those accounted for in proprietary fund types.

Enterprise Funds - The Enterprise Funds are used to account for the operation of the G. Fox Building and the American Airlines Building which are financed and operated in a manner similar to private business enterprises where costs are financed or recovered primarily through user charges.

Internal Service Fund – A Self Insurance Fund is used to account for and finance the City’s uninsured risks of loss for Employee Benefits, Worker’s Compensation, and Liability and Property Damage.

Trust and Agency Funds - Trust and Agency Funds are used to account for assets held in a trust capacity for others. These include Expendable Trusts, Non-expendable Trusts, Pension Trusts and Agency Funds.

General Fixed Assets Account Group - Fixed Assets used in governmental fund type operations are accounted for in the General Fixed Assets Account Group and not in governmental funds.

General Long Term Obligations Account Group - This account group is used to account for the general obligation bonded debt of the City, the vested compensated absences of employees paid from the governmental funds, workers compensation liability and other long term financing agreements. Long term liabilities of the Enterprise Funds are accounted for in those funds.

The following policies on the use of long and short-term debt represent the City’s long standing practice in the field of municipal finance. They are included in the annual Capital Budget and are reinforced by the City Charter and Code:

1. Bonds are issued only for large, nonrecurring permanent public improvements useful to the delivery of municipal services. They are not used for small, recurring maintenance work, rolling stock, operating costs, salaries, furnishings, equipment or private subsidies.

2. General obligation bonds, approved at public referendum, are issued to finance traditional public improvements. They are retired by substantially equal serial maturities from the general operating fund over a term substantially shorter than the useful life of the improvement and beginning within one year of issuance. Bonds are sold at public bid and should be sold as late in the fiscal year as feasible to minimize the impact of annual debt service on General Fund cash flow.

3. Revenue or limited obligation bonds may be used within statutory parameters only to finance those special projects or programs which directly support the city’s long-term economic development or housing interests or which service a limited constituency and are clearly self supporting. To date, the city has utilized revenue bonds consistent with this policy for three housing projects.

4. The city’s overall debt structure including overlapping debt should fall well within statutory limits and should decrease as rapidly as is financially feasible. Net direct debt should not exceed prior year tax collections including payments in lieu of taxes and net debt service should not exceed 5 percent of the annual operating budget. Net direct debt should not exceed 2 percent of assessed value.

5. Short-term debt may be used to provide interim cash flow, to facilitate the timing of bond sales, to avoid locking in high long-term interest rates during period of market turmoil or to partially finance projects whose final cost is uncertain. It is not to be used to defer the operating budget impact of bonded debt service or to speculate with market rates.

6. In planning and structuring each bond sale, balanced consideration should be given to each of the following objectives:

a) Providing cash in advance to meet project expenses;

b) Spreading debt service increases evenly to minimize the impact on the General Fund;

c) Minimizing net borrowing costs; and

d) minimizing the impact of debt service payments on annual cash flow.

7. Whenever possible, capital costs should be financed by means other than borrowing. In addition to soliciting outside grant funding, the city should utilize pay-as-you-go methods such as regular contributions from the general fund, build-up of a reserve fund, down payments from operating funds and inclusion of smaller projects in the General Fund.

8. Full disclosure of all material information concerning the city’s financial position will be made to the public. Official statements prepared for each bond sale will be prepared in accordance with GFOA Disclosure Guidelines and the annual financial report will continue to conform to the highest national standards, to State Statute and to generally accepted accounting and reporting practices.

An analysis of the city’s debt position and the various indicators of municipal credit shows that the City’s debt ratios are well within credit industry standards and the City’s own financial ability. This is due to the rapid retirement of current debt, favorable borrowing costs on prior issues, and the offset of school construction grants.

The City follows these procedures in its budget process.

• By the third Monday in April, the City Manager must submit to the City Council a recommended operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them.

• The City Council holds public hearings to obtain residents’ and taxpayers’ comments on the recommended budget.

• The City Council modifies the budget by resolution (except revenues, debt service, and pension requirements), and then submits the budget as amended to the Mayor for certification no later than May 21.

• The Mayor may approve, reduce, and/or disapprove the budget within 48 hours, but no later than May 23.

• Upon action by the Mayor, Council has until May 31 to adopt the budget, the appropriation ordinance and the tax levy ordinance.

After the budget has been adopted and the new fiscal year begins an appropriation may be amended. The City Manager may, at any time, transfer any unencumbered balance or portion thereof, from one classification of expenditures to another within the same department. This is done through the Budget Change process.

In order to move available funds from one account group to another within a department, the head of a department must complete a Budget Change request form. This Budget Change requests must be reviewed and recommended by the Management and Budget Director and then must be approved by the Finance Director who ensures that funds are available. The City Manager has final approval of all expenditure Budget Change requests.

 Fourth Quarter Transfers

At the request of the City Manager, but only within the last three months of the fiscal year, the Court of Common Council may transfer by resolution, any unencumbered appropriation balance or portion thereof from one department, office or agency to another.

Supplemental appropriations are made on the recommendation of the City Manager upon certification by the Director of Finance that there exists an available general fund cash surplus to meet this appropriation.

The fund is comprised of intergovernmental and private grants. This fund includes grants received from the Federal Gonvernment, the State of Connecticut, and various non-governmental resources. Also included is the Section 8 Housing Program which provides housing assistance payments under four grants received from the Department of Housing and Urban Development (HUD).

This fund is comprised of intergovernmental and private grants to support healthcare initiatives. The fund is administered by the City’s Health Department for community health and clinic services.

The entitlement grant is received from the Department of Housing and Urban Development (HUD).

This Federally funded grant from HUD is used for housing and community development activities under the Community Development Act of 1974. It serves the low and moderate income residents of Hartford.

This grant fund is received from the Department of Housing and Urban Development (HUD). The fund was established under the national Affordable Housing Act of 1990. The purpose of the Home Program is to expand the supply of decent, affordable housing for low income families.

The fund is derived from the proceeds of general obligation bonds and intergovernmental capital improvement resources. The capital improvement Fund is used for acquisition, construction or improvement of major capital facilities, such as new schools and urban projects.

The fund is raised through fees which users are charged. The Enterprise Funds are used to account for the operation of the American Airlines building, G. Fox building, and the Hartford Parking Authority, which are financed or recovered primarily through user charges.

The fund is derived from employee pension contributions. This pay-as-you-go plan accounts for the payment of retirement and survivor benefits to pensioners.