Page 164 - Microsoft Word - Budget FY 19

Capital Improvement Program Budget: A Capital Improvement Program (CIP) Budget is a separate
budget from the operating budget. Items in the CIP are usually construction projects designed to improve
the value of government assets. Examples of capital improvement projects include new roads, sewer
lines, buildings, recreational facilities, and large scale remodeling. The City Council receives a separate
document that details the CIP costs for the upcoming fiscal year.

Cash Basis Accounting: A basis of accounting in which transactions are recorded when cash is either
received or expended for goods and services.

Cash Balance: The amount of cash on hand and cash equivalents at any point in time, net of inflows
and outflows.

Cash Management: The management of the cash that is necessary to pay for government services
while investing temporary cash excesses in order to earn interest revenue. Cash management refers to
the activities of forecasting the inflows and outflows of cash, mobilizing cash to improve its availability for
investment, establishing and maintaining banking relationships, and investing funds in order to achieve
the highest interest and return available for temporary cash balances.

Character: A basis for distinguishing types of expenditures; the five major characters used by the City of
Forest Hill are: personnel services, supplies, contractual services, capital outlays, and debt service.

•The Personnel Services category includes all salary, benefit and supplement costs associated with
employees compensations.
•The Supplies category includes expenditures for items costing less than $5,000 per unit, or for items
costing more than $5,000 with a useful life of less than two years. Examples of supplies include basic
office supplies, books and magazines; materials used in city operations including paving material,
streetlights, signals, and library books; postage, uniforms, and vehicle related costs including parts,
supplies and fuel. In addition, minor equipment is budgeted as a supply cost. Minor equipment is
distinguished from capital outlays by the $5,000 cost per unit threshold and includes items like minor
audio/video equipment, water meters, scanners, fax machines, and minor appliances.

•Expenditures in the Contractual category represent activities performed under expressed or implied
agreements involving the use of equipment or commodities; and for professional, specialized or trade
services rendered. In addition to external contracts for goods and services, this category includes
services provided to City departments through Internal Service Funds including Information Technology
services, labor charges for Equipment Services, and copy and graphic services provided through the
Office Services Fund. Contractual services also include payment of utilities for electricity, gas, water,
wastewater, and storm water. Finally, transfers among Funds are captured as contractual costs. These
include transfers for insurance, healthcare, and administrative services.

•The Capital Outlays category reflect all outlays that result in the acquisition of, or additions to, the
City’s fixed assets (assets of a long-term nature which are intended to be held or used beyond the
current fiscal year and which may be eligible for depreciation), including real and tangible assets. Capital
Outlays must cost at least $5,000 and must have an expected life of two or more years. Primarily four
types of fixed assets (Capital Outlays) are used: 1) Land; 2) Improvements other than buildings; 3)
Buildings; and 4) Equipment.

•The Debt Service category includes money paid on loans and bonds by the City, as a borrower, of the
principal and interest.

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