Page 335 - Keller FY20 Approved Budget

CAPITAL IMPROVEMENT PROJECT FUNDS

FUND DESCRIPTION:
Capital Improvement Project (CIP) Funds are costs related to large, one-time projects which either create or improve an asset
and are project-life budget based and not fiscal year budget based. Project-life budgeting means fund are appropriated until
the project is completed, rather than on an annual basis as capital projects tend to cross over multiple fiscal years. The
Capital Project Budgets are not included in the City’s operating project budget as the funding sources are typically transfers
from an operating project, therefore the revenue source and expenditure costs have already been accounted for within an
operating project fund. CIP project funds typically do not include capital outlay expenditures such as vehicles and equipment
purchases unless the expenditure is part of a larger project. Capital outlay expenditures are included in the departmental
operating budgets and considered part of the annual operational costs.

FIVE YEAR CIP PROCESS:
The City annually prepares a five-year CIP which is a financial management and planning tool to help address changes in the
growth and service demands of the City services. The CIP summary includes the adopted 2015-16 through 2018-19 funding
and expenditure allocations, the proposed 2019-20 funding and expenditure allocations, and the anticipated 2020-21 through
2023-24 funding and expenditure allocations which are separate annual allocations for the listed projects.

The City uses project-life budgeting meaning the total proposed project funding and expenditures allocations include the prior
year allocations plus the proposed FY 2019-20 allocations. The revenues and expenditures allocations end at the close-out of
the project, rather than at the end of the fiscal year. Future allocations are for planning purposes only and does not commit
the City to any project or funding authorization. The future project information provided in the CIP is used as a guide for
preparing future operating budgets, as well as a general planning document for capital improvements financing.

CHANGES TO CAPITAL IMPROVEMENT PROJECT FUNDS:
During FY 2015-16, the City re-structured the fund design to better distinguish between operating and capital projects and to
provide better transparency to citizens. Significant changes include:
• Creation of a Street CIP with transfers from the Street Maintenance Sales Tax Fund and other applicable funding sources.
• Creating a Parks CIP with transfers from the Keller Development Corporation and other applicable funding sources.
• Creating a Facilities CIP with transfers from the General Fund and other applicable funding sources.
• Creating a Water/Wastewater CIP with transfers from Water/Wastewater Fund and other applicable funding sources.
• Re-defining the Street Maintenance Sales Tax as a Special Revenue Fund in the operating fund rather than a CIP.
• Re-defining the Fleet Replacement Fund as an internal services fund in the operating budget rather than a CIP.
• Re-defining the Park Development Fee Fund as an Impact Fee Fund, a non-operating fund rather than a CIP.
• Financial Policies have been updated to state that operating projects will transfer capital project costs to a related CIP rather
than carry them as designated fund balance. Project savings will either be returned to the original funding source or used to
offset overages in similar projects.
• Financial Policies have been updated to state that capital projects are adopted on a project-life basis and not annual basis to
allow for project completion over multiple years. This eliminates the need to provide re-appropriation of prior approved budget.

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