Peters Township Financial Goals and Policies

In doing so, Council decides which services and programs will be offered and
at what level of service in the upcoming year. Because the budget adoption
provides an operational roadmap for the year it is important that the process
encourages public involvement, is transparent, and provides information to
assist in decision-making.

Financial Goal
Financial goals are broad and enduring guiding principles concerning the
financial position that the Township desires to attain over the long term. The
financial goals of Peters Township are:

Provide a revenue structure that is dynamic and diverse as to allow

the Township the opportunity to deliver services that residents and
businesses of the community need and desire.

Maintain a strong credit rating

Deliver services to residents and businesses in a manner that

maximizes value by focusing on quality and cost effectiveness

Provide professional financial management to insure that the

budgeting, accounting and auditing processes complies with
recognized standards, provides appropriate controls, encourages
public involvement, is transparent, and provides information to assist
in decision-making.

The budgetary policies of Peters Township are:

The Peters Township Council will adopt annual operating budget for
the General Fund, Special Revenue Funds, Debt Service Funds, and
the Capital Projects Fund.

Annual operating budgets will be adopted on a balance basis. This

means that current year revenues will equal or exceed operating
expenses and reoccurring capital expenses. Nothing in this policy
shall prohibit the use of operating revenues or existing fund balances
for the purpose of funding capital projects.

Expenditures may not legally exceed the budgeted appropriation and

the function level. As a matter of policy, supplemental appropriations
are requested whenever expenditures exceed appropriations at the
program level.
Only Council may take action to amend
appropriations. Formal budgeting integration is a managerial control
device for General Fund, Special Revenue Funds, Capital Project
Funds and Debt Service Funds. No budgets are required or adopted
for Pension Trust Funds.

Budgets are adopted as on-line item basis by departments. At any

time during the year, the Township Manager may transfer monies
among programs within a department. Appropriation transfers
between departments require Council to adopt an ordinance
amending the budget.

Budgeting is done on a cash basis while the financial statements are

prepared on a modified accrual basis. The differences between
these two methods include:
o The budget does not recognize depreciation expense

Financial Policies
A financial policy is a plan or course of action designed to set parameters for
decisions and actions of the Township. Financial Policies are derived from
the Townships established financial goals and are intended to support the
implementation of those goals. The financial policies of Peters Township fall
into six categories. These include Budget, Revenue, Expenditure, Debt,
Investment and Budgeting, Accounting, Auditing, & Financial Reporting
Policies. The financial policies of Peters Township are:

Budget Policy
The Peters Township Home Rule Charter a0nd the Peters Township
Administrative Code prescribes the budget process for Peters Township. The
process utilized to developed and implement the Townships budget adheres
to that which is provided for in the charter.
Within a budget document municipal governments provide definition to goals
and objectives by allocating funds amongst a variety of budgetary categories.

37

Peters Township Financial Goals and Policies

o

The budget recognizes the full cost of a capital asset when it

is purchased

State Liquid Fuels funds will be restricted to capital projects,

specifically the maintenance of Township roadways.

The budget does not include revenues which are accrued at

the years end

The budget calendar for Peters Township shall comply with the
provisions of the Home Rule Charter as follows:
o At least sixty days prior to the end of the fiscal year, the
Manager shall submit to the Council a budget message, a
balanced annual operating budget, a capital budget and a
proposed tax ordinance. Upon submission, the budget,
capital program, and budget message shall be a public record
in the office of the Manager and shall be open to public
inspection. The Manager shall, at the same time, make
available copies of the proposed budget, capital program, and
budget message for distribution to interested persons. Copies
of the adopted budget and capital program shall also be public
records and shall be made available to the public.

The Township shall maintain a fund balance equal to at least fifteen

percent of revenues.

Unreserved fund balances may be appropriated to fund capital

projects, emergency expenditures, and unusual nonrecurring
operating expenses.

One-time revenue sources, such as the proceeds from the sale of

property, gifts and donations, and insurance recoveries shall be
utilized to fund capital projects, emergency expenditures, and
unusual nonrecurring operating expenses.
Ongoing operating
expenses and reoccurring capital expenses will not be funded
through one-time revenue sources.

As provided for in the Peters Township Administrative Code, the

Township Manager shall prepare and submit to the Council a five-year
capital program at least two months prior to the fiscal date for
submission of the budget. The capital program shall include at least
the following:
o A simple, clear, general summary of the detailed contents of
the program
o The capital improvements pending or proposed for the next
fiscal year, together with the estimated cost of each
improvement and the method for financing it.
o The capital program proposed for the next four years
following, together with the estimated cost of each
improvement and the proposed method of financing it
o The estimated annual cost of operating and maintaining the
facilities to be constructed or acquired.

The Council shall hold a public hearing on the budget not less
than two (2) weeks after publication nor later than two (2)
weeks before adoption of the budget and shall consider fully
the views of the citizens expressed at the hearing.

After the public hearing the Council shall adopt the budget by
ordinance with or without amendment prior to the beginning of
the fiscal year for which the budget has been prepared.

The Council may amend the budget by ordinance during the

fiscal year for which the budget is adopted, providing that any
amendment shall fall within the estimated income at the time
of the amendment.

The Township will annually produce an operating budget and

capital improvement program document that will be submitted to
the Government Finance Officers Association for review.

Revenue Policy
The capacity of a municipality to generate revenues is a limiting factor in
determining service levels in a community. When revenues are dynamic and

38

Peters Township Financial Goals and Policies

diverse, municipalities have the opportunity to deliver services that residents
and businesses of the community need and desire. To sustain service
levels, revenues must increase at the same rate as costs. To insure that
Peters Township has the capacity to generate revenues sufficient to fund
services the following revenue policies have been adopted:

Fees shall be charged for specialized services, such as building

permits and recreational programs. Program fees shall be adequate
to cover all expenses associated with programs financed through
fees.

Revenue forecasts shall be done on a conservative basis utilizing

historical data.

Monthly reports shall be prepared providing Council with information

on revenues collected

Expenditure Policy
To insure that the Township delivers services to residents and businesses in
a manner that maximizes value by focusing on quality and cost effectiveness
it is essential for the Township to aggressively monitor expenditures.
Unexpected expenditures and cost overruns can strain the ability of the
Township to maintain a balance budget. To insure the Townships ability to
control expenditures and deliver services on a cost effective basis Peters
Township has adopted the following policies governing expenditures:

State, federal and private grants will be actively sought. Prior to

acceptance of grants, the Township will assess the benefit of a grant
in relation to restrictions and future financial obligations of that grant.
Peters Township will transfer the burden to finance capital
improvements associated with growth from existing residents to
developers and new residents. This will be accomplished by
requiring developers to dedicate land or money to enhance the
Townships park and road system and through the imposition an
additional % tax levy on the value of real estate transfer, the
dedication of open space, and the assessment of traffic impact fees.

Expenditures will be done in a manner that conforms to

Pennsylvania State law, the Peters Township Home Rule Charter,
and Township resolutions.

Expenditures will be recorded in an accurate and timely fashion.

All payments for expenditures shall be approved by Council

All checks issued by the Township shall bear two signatures. One
signature shall be a member of Council. The other signature shall be
the Township Manager or the Assistant Township Manager.

One-time revenues will be used for capital improvements or as legally

restricted to a specific purpose.

Monthly reports shall be provided to the Peters Township Council

outlining expenditures to date.

The Township will routinely monitor any amounts due and

aggressively pursue its collection including that owed for taxes.

Expenditures will be made in accordance with the procedures

prescribed in the Peters Township Purchasing Manual including:
o Requisition forms, which can be obtained from the Assistant
Township Manager, are used for all purchases under
$25,000 but greater than $5,000.

The Township will comply with restrictions contained in the Home

Rule Charter that limits rates of taxation to the maximum rate that
may be levied by second-class townships in the Commonwealth of
Pennsylvania except by referendum.

The Township will work with the Washington County Assessment

office to insure that all properties in Peters Township are assessed in
a timely and fair fashion.

39

Peters Township Financial Goals and Policies

o

Oral quotations from three vendors are required for

purchases greater than $1,000, but less than $5,000

At least three written quotations are required for all

purchases in excess of $5,000.

All purchases for items valued over $25,000 will be acquired

through a competitive bidding process.

The Peters Township Council shall review the

recommendation of the Township Manager and award a
contract to the best responsible bidder. All such awards
shall be made in a public meeting by a majority vote of the
Peters Township Council.

Competitive bidding is not required for the following:

1.

2.
3.

4.
5.
6.
7.

Debt Policy
Pennsylvania state law regulates the size and type of debt obligations
available to municipalities. The Township realizing that decisions concerning
the issuance of long-term debt affect the future ability of the Township to
deliver services and maintain a good credit rating has imposed additional
restrictions. The debt policies of the Township are:

Labor, material, supplies or services furnished by

one Township department to another Township
department.
Contracts for labor, material, supplies or services
available from only one (1) vendor.
Contracts of labor, material, supplies or services
aggregating less than $10,000 for the item in the
year supplied.
Contracts relating to the acquisition or use of real
property.
Contracts for professional or unique services.
Contracts for insurance and surety bonds.
Contracts with other governmental units.

For professional or unique services where competitive bidding is not

feasible, the procedure outlined below shall be followed:
o A public announcement of the project or service to be
performed shall be listed in the official newspaper for Peters
Township.
o

Negotiations of the contract shall then be held between the

Township Manager and the vendor of first preference. If not
successful, the Township Manager shall negotiate with the
candidate vendors in order of preference until a successful
negotiation is completed.

The Township Manager shall interview all qualified persons

answering the ad.

40

As mandated by Pennsylvania state law non-electoral debt is limited

to 250% of the annual average of certain revenues collected by the
municipality over a three-year period. Electoral debt is limited to
350% of the annual average of certain revenues collected by the
municipality over a three-year period.

Debt service payments will not exceed 10% of available funds.

Available funds include cash balances and current revenues.

Debt service payments including principal and interest will be

budgeted annually in amounts to insure their fully and timely
payment.

The issuance of debt will be tailored to approximate the useful life of

the asset acquired.

Debt may only be issued to fund Capital Projects. Capital projects

are items that cost over $25,000 and have a useful life of over 5
years.

It is the Townships policy to minimize borrowing. Borrowing is for

capital expenditures and only when sufficient current funds are not
available or municipal needs are unable to wait until current funds
are available.

Peters Township Financial Goals and Policies

o

The issuance of new bonds will be done through a competitive

bidding process.

The Township will annually provide bond rating

counsel, banks, and other financial institutions
Comprehensive Annual Financial Report as
communicating current information concerning
financial condition.

agencies, bond
copies of the
a means of
the Township

It is the objective of the Peters Township investment program to

maintain sufficient liquidity to meet all anticipated as well as
unanticipated operating requirements. This will be accomplished
by:
o Structuring the investment portfolio so that securities
mature on a schedule that meets cash flow requirements
o Investing in financial instruments with active secondary or
resale market

A secondary objective of the Peters Township investment program

is obtaining yields equal to market averages.

The Treasurer's performance as an investment officer shall be

judged based upon a "prudent person" standard. If the Treasurer
acts according to this policy and exercises due diligence, the
Treasurer will be relieved of responsibility for changes in an
individual security's credit risk or market price. The Treasurer shall
provide timely notification to the Township Manager and the Peters
Township Council of any concerns. The Treasurer with the
approval of the Township Manager will take appropriate action to
insure the safety of the investment's principal.

The Treasurer shall prepare and submit to the Township Manager

and the Peters Township Council a quarterly investment report.
This report shall be formatted to allow the reader to ascertain
whether the investment activities conform to the requirement of the
investment policy. The report shall include:
o A list of individual securities held at the end of the reporting
period
o Listing of investments by maturity date
o Listing of the portfolio by type of investment and related
percentage

Investment Policy
Pennsylvania State law regulates the investment of public funds. While the
Township attempts to obtain a fair return on the investment of idle funds the
foremost concern for the Township is the preservation of principal. For this
reason, the Township has adopted an investment policy that restricts
investment beyond that required by the state. The investments policies of
Peters Township are:

The safety of principal is the foremost object of the Peters

Township investment program. Investments shall be made in a
manner to insure the preservation of the Township's capital by
minimizing credit and interest rate risk.

Credit risk shall be mitigated by:

o Limiting investments to only those provided for by
Pennsylvania state statute

Pre-qualifying financial institutions

Diversifying the investment portfolio

Investing in securities whose yields do not greatly exceed

market averages.

Interest rate risk is that risk associated with fluctuations in the value
of securities resulting from changes in the interest rates. Interest
rate risk shall be mitigated by:

41

Structuring the investment portfolio so that securities

mature on a schedule that meets cash flow requirements
Investing in securities with short term maturities

Peters Township Financial Goals and Policies

o

Listing of the portfolio by issuer of security and related

percentage

U.S. Government Agencies

Investment Pool
Commercial Banks
Savings and Loans

The Township shall restrict investments of idle funds to financial

instruments provided for by Pennsylvania state law as contained in
the Second Class Township Code.

All investments made by the Township shall be collateralized in

conformance with Pennsylvania state law.

Investment maturities shall be scheduled to coincide with projected

cash flow needs. No investment shall have maturity longer than
one year without authorization from the Peters Township Council.
Investments should be held to maturity with the following
exceptions:
o to minimize loss of principal
o to facilitate a security swap that improves the quality, yield
or target duration of an investment
o to meet unanticipated cash needs

Accounting, Auditing & Financial Reporting Policies

Pennsylvania state law and the Peters Township Home Rule Charter
establish legal standards for accounting, auditing and financial reporting. In
addition Peters Township attempts to conform to generally accepted
accounting principles as promulgated by the Governmental Accounting
Standards Board (GASB), the American Institute of Certified Public
Accountants (AICPA), and the Government Finance Officers Association
(GFOA). The policies governing accounting, auditing and financial reporting
are:

The Township shall diversify the investment of idle funds by type of

investment as follows:
Investment Type
U.S. Treasury Obligations
U.S. Government Agencies
Investment Pool
Certificate of Deposit
Commercial Banks
Savings and Loans

Maximum Percentage
100%
100%
50%
50%
15%

In addition to diversifying investments by type, the Township shall

diversify the investment of idle funds by issuer of securities as
follows:
Insurer
U.S. Treasury

100%
50%
25%
10%

Maximum Percentage
100%

42

Prepare and present monthly financial reports that analyze,

evaluate, and forecast the Townships financial performance.

Employ the services of an independent auditor to conduct annual

audits of the Township and earned income tax collectors office.

The Township will on a timely basis issue annual financial reports

in accordance with generally accepted accounting principles
(GAAP) as outlined in the Governmental Accounting, Auditing
and Financial Reporting (GAAFR) publication.

The Township will annually produce a Comprehensive Annual

Financial Report that will be submitted to the Government
Finance Officers Association for review.

Fund Accounting - The accounts of Peters Township are

organized on the basis of funds and account groups, each of
which is a separate accounting entity. The operations of each
fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund equity,
revenues, and expenditures or expenses, as appropriate.
Government resources are allocated to and accounted for in
individual funds based upon the purposes for which they are to be
spent and the means by which spending activities are controlled.

Peters Township Financial Goals and Policies

The various funds are grouped as follows:

(earned income taxes), licenses and permits, and fines are considered
"measurable" when in the hands of the Township or its collection
agency.
Deferred revenue has been recorded for liened and
delinquent real estate taxes and special assessments that, although
measurable, are not available to finance current operations.
Anticipated refunds of such taxes are recorded as liabilities and
reductions of revenue when they are measurable and their validity
seems certain.

A. Governmental Fund Types

General Fund - The General Fund is the general operating fund
of Peters Township. It is used to account for all financial
resources, except those required to be accounted for in another
fund.
Special Revenue Funds - Special Revenue Funds are used to
account for the proceeds of specific revenue sources (other
than special assessments, expendable trusts, or major capital
projects) that are legally restricted to expenditures for specific
purposes.

Expenditures are generally recognized under the modified accrual

basis of accounting when the related fund liability is incurred, except
that principal and interest on general long-term debt which is
recognized when due.

Debt Service Funds Debt Service Funds are used to account

for the accumulation of resources for and the payment of
general long-term debt principal , interest, and related costs

The Proprietary Fund and Pension Trust Funds are accounted for
using the accrual basis of accounting. Their revenues are recognized
when they are earned, and their expenses are recognized when they
are incurred.

Capital Projects Funds - Capital Projects Funds are used to

account for financial resources used for the acquisition or
construction of major capital facilities.
B. Fiduciary Fund Types
Trust and Agency Funds. Trust and Agency Funds are used
to account for assets held by Peters Township in a trustee
capacity or as an agent for individuals, private organizations,
other governments, and/or other funds.
Basis of Accounting - Basis of accounting refers to when revenues and
expenditures or expenses are recognized in the accounts and reported
in the financial statements. It relates to the timing of the measurements
made, regardless of the measurement focus applied.
All Governmental Funds are accounted for using the modified accrual
basis of accounting. Their revenues are recognized when they
become measurable and available as net current assets. Revenues
accrued under this basis, include charges for investment income,
intergovernmental grants, charges for services and special
assessments. Real estate taxes and taxpayer assessed taxes,

43

Peters Township Financial Goals and Policies

44