MEMORANDUM
TO: All Taxing Units
FROM: Dan Jones, Assistant Budget Director
RE: Additional Appropriation and Transfer Procedures (IC 6-1.1-18-5; IC 6-1.1-18-6)
DATE: July 1, 2013
IMPORTANT NOTICE
Under IC 5-11-1-4 and IC 5-11-13-1, the Department of Local Government Finance (“Department”) may approve the annual budget or additional appropriation request for a political subdivision (“unit”) only if it has electronically filed with the State Board of Accounts (“SBOA”) its Annual Financial Report and Annual Salary Report (100R). The Annual Salary Report must indicate whether the unit offers a health plan, a pension, and other benefits to full-time and part-time employees. Pursuant to IC 5-11-13-1.1, units must implement an anti-nepotism policy and submit a statement by the executive to SBOA certifying that such a policy has been implemented before the Department can certify a budget or an additional appropriation for the unit.
Effective July 1, 2012, the Department, in compliance with IC 5-1-18-7 and 8, may not approve an appropriation or a property tax levy associated with a debt (including a lease) if a debt issuance report has not been submitted to the Department, unless the Department has granted a waiver for good cause.
ADDITIONAL APPROPRIATIONS
The additional appropriation process is used to appropriate money in excess of the Department’s certified appropriations for a unit for the current budget year. Although the fiscal body of a unit must act on all additional appropriations, approval by the Department is only required for funds that receive revenue from property taxes levied under IC 6-1.1 or the Motor Vehicle Highway (“MVH”) Fund (IC 8-14-1-1), Local Road and Street (“LRS”) Fund (IC 8-14-2-4), Rainy Day Fund (IC 36-1-8-5.1), or the Library Improvement Reserve Fund (“LIRF”) (IC 36-12-3).
Other additional appropriations must only be reported (“reporting-only funds”) to the Department. Since the Department must acknowledge reporting-only funds, submission of the unit’s financial information is necessary to ensure that adequate funds are available to support the additional appropriation request. Therefore, the Department will require a Certified Copy of Additional Appropriation to be completed for all reporting-only funds. Additional appropriations from the proceeds of bonds and loans are reporting-only funds and do not require Department approval unless the proceeds are deposited in a fund receiving property tax or state distributions. Additional appropriations meeting the requirements of IC 8-16-3-3(c) (Cumulative Bridge Fund) also are reporting-only funds and do not require Department approval. The Department will acknowledge the receipt of information for reporting-only funds. The Department relies heavily on individual fiscal officers to provide accurate information. The Department will approve additional appropriation requests only after tax rates have been certified for the county for the current year.
SBOA recommends appropriating all grants. If grant monies are receipted into a previously established fund requiring appropriation, the unit must follow the additional appropriation procedures for that fund as outlined herein. If the grant monies are provided by the state or federal government as a reimbursement of an expense made by the unit (IC 6-1.1-18-7.5), the grant monies do not need to be appropriated or reported to the Department by the taxing unit in order to make expenditures. Grant monies must be expended in accordance with the grant budget.
PROCEDURES
The following steps must be followed to obtain an additional appropriation that was not included in the certified annual budget and certified appropriations of the unit as reflected on Line 1 of the final version of the unit’s Fund Report. Pursuant to IC 6-1.1-18-6, units with departmentalized budgets should follow the procedures for transfers of appropriations when an equal amount of appropriations are reduced in one department and re-appropriated to another department within the same fund.
STEP 1
The proper officers of a unit must give notice of their proposed additional appropriation. The notice shall state the time and place at which a public hearing will be held on the proposal. The notice shall include each fund name and number, a categorical breakdown of the proposed additional appropriation for each fund, and the total of the proposed additional appropriation for each fund. The notice shall be published one time in two newspapers published in the unit (if only one newspaper is published in the unit, publication in that paper is sufficient) not less than ten days before the public hearing on the proposal, in accordance with IC 5-3-1-2(b). (A sample notice is appended to this memorandum.)
STEP 2
The proper officers of the unit shall hold the public hearing on the proposal as advertised. At the public hearing, action shall be taken to approve, modify, or disapprove the proposed additional appropriation as advertised. If the unit’s fiscal body tables the request until the following meeting, the additional appropriation does not have to be re-advertised provided the tabling of the request is stated publicly and included in the minutes of the correctly advertised meeting. The fiscal body shall not adopt appropriations exceeding the amount advertised. (Samples of resolutions/ordinances are appended to this memorandum.)
NOTE: Any additional appropriations by a unit whose annual tax levy must be adopted by a city, town, or county fiscal body under IC 6-1.1-17-20 or by a legislative or fiscal body under IC 36-3-6-9 must be adopted by the same fiscal or legislative body by ordinance before the Department may approve the additional appropriation.
Libraries subject only to non-binding review but whose additional appropriations would increase their budgets by a percentage greater than the assessed value growth quotient must have their additional appropriations approved by the city, town, or county fiscal body described in IC 6-1.1-17-20.3(c).
STEP 3
After the public hearing, the proper officers of the unit must complete and file with the Department a Certified Copy of Additional Appropriation (“Certified Copy”) and any other relevant information, including the unit’s financial information. The requested amount of additional appropriation shown on the Certified Copy must not exceed the advertised amount or the fiscal body’s adopted amount, if applicable. (A sample of the Certified Copy is appended to this memorandum.) Units must use the format of the appended Certified Copy sample.
If the miscellaneous revenue amount entered on Line 4 of the Certified Copy exceeds what was determined on Line 8B of the Fund Report, a revised Form 2 (Estimate of Miscellaneous Revenue) must be attached to the Certified Copy supporting the documented increase. When a unit is reporting a tax distribution received in the current year that is for taxes due in the previous year, this amount should be added to the miscellaneous revenue amount on the Certified Copy. The unit must submit a revised Budget Form 2 along with the Certified Copy showing the revenue as the previous year’s taxes received in the current year. Entries should be made in whole dollars and cents should not be included. The revised Form 2 must show the new total amount of Miscellaneous Revenues in Column B—the amount previously reported—plus any additional amount available to be appropriated. If no revised Form 2 is received, the unit’s request will be processed using the miscellaneous revenue amount on Line 8B of the current year’s Fund Report. If revenue is available from carry-over cash that is not encumbered from the previous year or the current budget, supporting evidence is not necessary.
The unit must, if the information is available, document on the Certified Copy the amount of revenue it will lose due to circuit breakers. The Department will take this figure into consideration so as not to approve appropriations for which the unit will not have adequate funding.
When a unit is requesting an additional appropriation for a Bus Replacement Fund, debt fund, or Capital Projects Fund (“CPF”), a brief explanation of the purpose of the request and the accounts affected will facilitate the processing of the request. In some cases, amendments or emergency amendments to CPF plans and bus replacement plans may be required. Units should consult the appropriate memoranda and statutes for more information.
Incomplete documentation may result in the denial of the request or the Department may return the Certified Copy to the unit.
STEP 4
When the Department receives a Certified Copy for a proposed additional appropriation that requires its approval, the Department will determine whether sufficient funds are available during the calendar year for the proposal and whether the proper procedures have been followed before issuing a written determination within 15 days of receipt of the proposal. All requests for additional appropriations must be submitted to the Department on or before December 15. The Department will limit the amount of the additional appropriation to the amount of funds available or to be made available and that have not been previously appropriated. Additional appropriation requests will be accepted through December 31 for reporting-only funds.
STEP 5
A unit may request reconsideration of the Department’s denial or modification of a proposal by filing a written request with the Department within 15 days of receipt of the determination. The Department must act upon a request for reconsideration within 15 days of receipt. A request for reconsideration must state with reasonable specificity the reason for the request for reconsideration.
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