A RESOLUTION of the Board of the Regional Transit Authority for the Pierce, King and Snohomish Counties region adopting budget policies for the Authority.

WHEREAS, on November 5, 1996 at a general election held within the RTA District, the voters approved local-option taxes to support implementation of the Ten-Year Regional Transit System Plan; and

WHEREAS, R.C.W. 81.112.040 identifies budget adoption as a "major decision" requiring two-thirds Board adoption by; and

WHEREAS, Sound Move financial policies establish certain guidelines and budget policies to be followed by the RTA; and

WHEREAS, on December 13, 1997, the RTA Board adopted its first full year budget and six-year capital plan; and

WHEREAS, prudent financial management practices dictate adoption of budgetary policies to establish clear expenditure authority to insure accountability for the expenditure of public funds;

NOW, THEREFORE, BE IT RESOLVED by the Board of the Regional Transit Authority that the RTA does hereby adopt the attached RTA Budget Policies which details the procedures, content, schedule, and expenditure authority for RTA annual budgets.

ADOPTED by the Board of the Central Puget Sound Regional Transit Authority at a regular meeting thereof held on the day of 1998.

____________________

Bob Drewel
Board Chair

ATTEST:

____________________

Marcia Walker
Board Administrator

Approve budget policies for RTA.

The attached budget policies establish the content, schedule, adoption process, and authorization procedures for the annual RTA budget. They answer the following questions:

What will be in the budget?

When will the budget be submitted?

What does the Board authorize when it passes the Budget?

Implementation of Sound Move’s aggressive schedule will require the ability to manage resources flexibly to respond to changing conditions. In addition, it will also be essential to maintain streamline, efficient lines of authority to allow for quick decision making.

However, the need for flexibility and streamline procedures must be carefully balanced against accountability. The RTA has committed to deliver a system of transportation improvements on time and on budget. The Agency must administer its resources to the highest fiduciary standards and must retain the confidence and trust of the public.

The attached budget guidelines balance the RTA’s needs for general budgetary flexibility while maintaining accountability. The policies grant the Executive Director authority for administering the Agency’s budget. Under the policies, the Board would set the "bottom line" of total agency expenses, and the Executive Director would have the flexibility to move funds between budget line items and between Departments, so long as the total "bottom line" agency expenses were not exceeded.

The Board would retain tight control over Agency expenditures by several means. First, Resolution No. 78, which requires all contracts over $200,000 to receive Board approval, would remain the controlling policy for authorization of agency expenses. The Board would also have to grant, per Resolution No. 78, final authorization on all capital projects. In addition, the budget policies do not allow any transfer of capital outlays between capital projects. Finally, the Board would be able to monitor budget expenditures on a regular basis through the "Budget to Actuals" reports and capital project reports.

Sound Move Financial Policies (Appendix B)

Resolution No. 78

R.C.W. 81.112.040

1997 Adopted Budget

1998 Adopted Budget

The policies establish the required content of the budget, which is similar in scope to that required of many other jurisdictions. In keeping with the adopted financial policies, these policies require itemized information on revenues, expenses and personnel. The policies also require that the budget include a six-year capital plan.

The policies establish a schedule for budget submittal and consideration, and procedures for Board adoption.

• Submitted no later than 60 days before end of fiscal year
• Public hearing required
• Budget reviewed and recommendation for adoption by Finance Committee
• Resolution to adopt budget (requiring a super-majority vote of board) prior to end of fiscal year

The policies grant the Executive Director necessary flexibility in managing the budget, while still retaining a high degree of accountability to the Board and public.

• Resolution No. 78 remains key process for authorization of expenses.
• Board adopts only total budget expenses and outlays (not line-item budget).
• Board endorses six-year capital plan.
• Executive Director allowed to reallocate expenses between budget line items so long as total agency expenses do not exceed Board adopted budget and so long as items were referenced or of the type included in the budget.
• For capital projects, budgeted funds can be moved between years and between costs elements, so long as total project budget is not exceeded.
• No transfers allowed between capital projects.
• Transfers between Departments allowed without Board approval, so long as total agency budget is not exceeded.
• Executive Director can submit a supplemental budget resolution at any time for Board and Finance Committee consideration.

 ALTERNATIVES:

The Board could choose not to adopt budget policies at this point in time.

The Board could also choose to implement budget policies which give the Executive Director less flexibility in managing the agency’s budget. As example, the Board could grant the Executive Director only line-item authorization – no line item in the budget could exceed its budgeted level and no transfers between Departments or line items would be allowed. Each item in the budget would be an appropriation, which could be exceeded only if direct Board approval was received. This approach, however, could reduce project management responsiveness.

The consequence of the Board not adopting budget policies at this time would be that the Agency would continue to expend funds without any formal budget "rules". While the Executive Director is currently spending funds consistent with the 1998 Adopted Budget, and in keeping with Resolution No. 78, it is not clear to what extent he has flexibility to manage the budget.

Staff anticipates that the budget policies will need to be refined over the coming year, as the agency’s financial management system is finalized, and resubmitted to the Board for consideration.