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Rules for Missouri Fire Protection Districts
X. Budgets and the Budget Process
Parenthetical numbers in the text refer to sections of the current Revised Statutes of Missouri, abbreviated as RSMo.
Rules and enforcement
No expenditure of public moneys shall be made unless it is authorized as provided in Chapter 67 of the Missouri Revised Statutes (67.080). Not a single cent of public money can be spent until a budget has been formally adopted following procedures and including the contents set out in the statute (67.010). The statutes are very clear on this point. Unless a formal resolution to adopt a budget has been accepted by a majority board vote, no funds can be spent. There are no budget police going around inspecting, nor squads of inspectors general making sure every one of the state’s political subdivisions complies, but that does not mean this requirement cannot be enforced. District funds are public money.
Every political subdivision must designate someone as budget officer (67.020), and that person must prepare a proposed budget for the board. Logically, this should be the secretary or treasurer. Everyone connected with the district must furnish to the budget officer any facts or figures requested. The proposed budget is given to the board, which may, as often as necessary, return it for revisions before adopting it (67.030).
The budget law does not specify the district’s fiscal year. However, the FPD statutes mandate that the district’s fiscal year be the calendar year, January to December (321.180).
At a minimum, the budget must have these five elements:
- A budget message pointing out changes from the prior budget;
- Estimates of revenue for the coming year, the year currently in progress and the previous year;
- Estimates of spending for the coming year, the year in progress and the previous year;
- A list of note payments due the coming year and report of balances remaining; and
- A summary.
The budget must balance (67.010).
Much of the budget will be based on previous years’ numbers and the budget officer’s best estimates. How much revenue will come in is unknown, and the current year’s total is incomplete. The last solid figures will be from two years ago. Because of this, budgets are subject to revision as the budget year progresses. Neither the budget officer nor the board can anticipate everything that will happen 13 or 14 months in the future.
Budget forms are available from the Office of the State Auditor. However, these may be more complex than districts will want because they are designed for counties. Designing your own simple form is quite acceptable.
Fire Protection District Budget Outline (PDF)
Any increase in spending over what has been budgeted during the course of the year must be approved by board resolution (67.040). The resolution must state “the facts and reasons making the increase necessary.” Internal transfers may be made that shift money from one fund to another, as long as they do not put the budget out of balance and money that was collected for one purpose is not used for another. Total spending can be no more than revenues received plus any balance on hand at the year’s beginning.
As far as the law is concerned, once a district prepares a budget, it can be put away until next year when the time comes to prepare a new one. But to benefit from the budget, the board should receive monthly updates. Regularly monitoring the budget can make it possible to find ways to save money, expand existing programs or add new ones. It is best to amend the budget, if necessary, before the end of the year, so that it balances.
Failure to adopt
If the board fails to adopt a budget by the start of the district’s fiscal year, the last-adopted budget remains in effect until the board approves a new budget. This means spending for whatever purpose cannot exceed the amount allotted in the last budget, until a new budget is adopted (67.070).
Financial statement and penalties
Each fire district must have an annual report of its financial transactions prepared in the format prescribed by the state auditor (105.145). As mentioned in Chapter VI. Treasurer Powers and Duties, the Office of State Auditor provides an electronic financial statement form (Microsoft Excel). The financial statement is to be filed with the Office of State Auditor within four months of the end of the district’s fiscal year.
A copy of the auditor’s form, with instructions, is provided in the Sample Forms section of this manual
Because an FPD’s fiscal year ends in December, the financial statement is due by the end of April. The penalty for an overdue financial statement is that board members receive no pay or expense reimbursement until the report is submitted.
Documents related to the budget must be kept on file for three years. These are public records, open to being viewed on request by anyone during reasonable times (67.060).
Long-term and lease purchases
The fire district board cannot obligate its successors in office. Any purchase in an amount greater than the year’s anticipated revenue plus balances on hand requires voter approval of a bond issue. To pass a bond issue requires an exceptional majority, usually by two-thirds of the voters. Once a bond passes, it becomes a lien against all taxable property in the district. (See Chapter XVII. Bond Issues.)
Many public entities dodge the bond issue requirements with lease-purchase arrangements. Such an agreement must be cancelable by a new board when elected, even if the members do not change. This puts the vendor at additional risk, which usually is factored into the price quoted. A board should enter into such agreements with caution.
DM4002, new June 2011
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