Rules for Missouri Fire Protection Districts - Page 11

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

The Office of the State Auditor provides budget forms for county governments. A generic budget template is provided. Clicking on the “Generic Budget” will provide an Excel Worksheet. The website states that this budget is for officials and boards for funds held outside the county budget. The Fire District may modify the form or use it as a template to create a budget form.

No expenditure of public moneys shall be made unless it is authorized as provided by law (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 before the beginning of the fiscal year, no funds can be spent (67.030; 67.080). 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. FPD funds are public money.

Budget officer

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 — maybe the fire chief. Everyone connected with the FPD 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 officer must attest to the fact that preparation and adoption procedures were conducted in the manner prescribed by law ( 6 7. 0 6 0 ) .

Fiscal year

The budget law does not specify the FPD’s fiscal year. The FPD statutes used to mandate that the FPD’s fiscal year be the calendar year, January to December (321.180); however, that law was repealed. Many FPDs use the calendar year as their fiscal year; however, some FPDs follow the July-June fiscal year used by other local governments, while some FPDs follow the October-September federal fiscal year, and a few FPDs use a November-October fiscal year to best match local property tax receipts (property taxes are due November 1st and past due January 1st. A decision to change an FPD’s fiscal year should be in consultation with the FPD’s accountant and/or auditor.

Budget contents

At a minimum, the budget must have these five elements (67.010.1):

  1. A budget message pointing out changes from the prior budget;
  2. Estimates of revenue for the coming year, the year currently in progress and the previous year;
  3. Estimates of spending for the coming year, the year in progress and the previous year;
  4. A list of note payments due the coming year and report of balances remaining; and
  5. A summary.

The budget may use cash on hand at the beginning of the fiscal year, but the budget must balance (67.010.2; 67.030). It is also acceptable to leave cash on hand at the end of the fiscal year.

Typical FPD Funds:
Capital Projects Fund (CPF)
Debt Service Fund (CSF)
General Fund (GF)
Pension Fund (PF)

Generally, auditors will advise their clients to have cash on hand to pay at least three to six months of operating expenses. Excessive amounts of cash on hand could bring criticism, because it becomes difficult for the board to justify the taxes levied if the FPD is just going to hoard cash. If there is a legitimate reason for additional cash, for instance, for a “rainy day” or to purchase land or replacement vehicles with cash accumulated over several years, the board should work with its attorneys, accountants and/or auditors to establish “funds” to properly set aside monies for these types of purposes.

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 uncertain, and the current year’s total spending 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 forms may be more complex than FPDs will want because they are designed for counties. Designing your own simple budget form is acceptable.

Failure to adopt

If the board fails to adopt a budget by the start of the FPD’s fiscal year (67.030), the last-adopted budget remains in effect until the board approves a new budget (67.070). This means spending for whatever purpose cannot exceed the amount allotted in the last budget, until a new budget is adopted.

As a practical matter, the budget has to be adopted before property tax rates can be set, which is by Sept. 1 or Oct. 1 (67.110; 321.250) — otherwise, how can the board justify the rates?

Changes

Resolution
A written motion attached to the meeting minutes; signed by the chair; sealed by the secretary

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 in written form “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.

To benefit from the budget, the board should receive monthly updates as part of the treasurer’s report. 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.

(See Financial statement and penalties section under Chapter VI. Treasurer Powers and Duties for more information about budgets being included on financial statements.)

Keeping documents

While Chapter 67 mandates keeping budgets on file for three years, the local records retention schedule promulgated under Chapter 109 RSMo designates budgets as a permanent record to be archived and kept indefinitely.

Long-term purchases

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 two-thirds of the voters. Once a bond passes, it becomes a lien against all taxable property in the FPD.

To budget for bond debt retirement, a separate Debt Service Fund (DSF) budget must include the year’s installments and interest payments on the bonds as well as any miscellaneous expenses for maintaining the separate sinking fund as well as bond banker fees for distribution of installments and interest payments to bond holders.

(See Chapter XVII. Bond Issues for more information on bonds.)

(See Lease purchases section under Chapter XI. Purchasing, Bids and the Bidding Process for information regarding lease purchases in lieu of bonds.)