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2001-2 Budget Requirements

January 12, 2001

TO: Counties, Cities, Villages, Townships, Authorities, and Other Municipal Agencies

FROM: Richard L. Baldermann, Administrator Local Audit and Finance Division

SUBJECT: Budget Requirements

Public Act 493 of 2000 amended certain budgeting related sections of the Uniform Budgeting and Accounting Act and were given immediate effect. The amendments:

1. Clarified the definition of an authority or other organization subject to budgetary requirements and added public school academies to the definition;
2. Remove the fiscal officer definition and references thereto since the chief administrative officer already has the responsibilities in the Act;
3. Remove debt service funds as funds that need a budget; and
4. Remove capital budgeting and informational summaries from the requirements for the recommended budget since the next section of the act does not require the information to be in the final budget document.

Section 2d(4) of the Act (MCL 141.422d[4]) defines a "local unit" that is required to comply with the budget requirements as follows:

As used in sections 14 to 20a, "local unit" means any of the following: (a) A village
(b) A city
(c) A school district
(d) An intermediate school district(e) A public school academy established under part 6a of the revised school code, PA 451 of 1976, MCL 380.501 to 380.507
(f) A township
(g) A county
(h) A county road commission
(i) An authority or organization of government established by law that may expend funds of the authority or organization
Authorities or organizations of government established by law would include:
    a) Authorities or organizations of government established by act of the legislature; and
    b) Authorities or organizations of government formed by a local unit or local units under the
        Urban Cooperation Act of 1967 (MCL 124.501 et al) or other shared power/cooperative statute.

Section 2a(4) of the Act defines a "budget" as:

. . . a plan of financial operation for a given period of time, including an estimate of all proposed expenditures from the funds of a local unit and the proposed means of financing the expenditures. Budget does not include any of the following: (a) A fund for which the local unit acts as a trustee or agent.
(b) An internal service fund.
(c) An enterprise fund.
(d) A capital project fund.
(e) A debt service fund.
Section 16(1) of the Act requires a general appropriations act: . . . for all funds except trust or agency, internal service, enterprise, debt service or capital project funds for which the legislative body may pass a special appropriation act.Therefore, a budget and general appropriations act are required for the general fund and each special revenue fund.

Section 15 of the Act (MCL 141.436) requires that the recommended budget include at least the following:

(a) Expenditure data for the most recently completed fiscal year and estimated expenditures for the current fiscal year.
(b) An estimate of the expenditure amounts required to conduct, in the ensuing fiscal year, the government of the local unit, including its budgetary centers.
(c) Revenue data for the most recently completed fiscal year and estimated revenues for the current fiscal year.
(d) An estimate of the revenues, by source of revenue, to be raised or received by the local unit in the ensuing fiscal year.
(e) The amount of surplus or deficit that has accumulated from prior fiscal years, together with an estimate of the amount of surplus or deficit expected in the current fiscal year. The inclusion of the amount of an authorized debt obligation to fund a deficit shall be sufficient to satisfy the requirement of funding the amount of a deficit estimated under this subdivision.
(f) An estimate of the amounts needed for deficiency, contingent, or emergency purposes.
(g) Other data relating to fiscal conditions that the chief administrative officer considers to be useful in considering the financial needs of the local unit.
The recommended budget for the general fund and special revenue funds must include for each fund:

· Actual expenditures for the most recently completed fiscal year;
· Estimated expenditures for the current fiscal year (to be arrived at by using actual expenditures to date and estimating expenditures to the end of the fiscal year);
· An estimate of the expenditures in the next fiscal year;
· Actual revenue for the most recently completed fiscal year;
· Estimated revenue for the current fiscal year (to be arrived at by using actual revenue to date and estimating revenue to the end of the fiscal year);
· An estimate of the revenue in the next fiscal year;
· Beginning and ending fund balance for each year;

The Department of Treasury will amend the Uniform Budget Manual during this year.

If you have questions or need further assistance, please call (517) 373-3227 or write our office: Michigan Department of Treasury, Local Audit and Finance Division, P.O. Box 30728, Lansing, Michigan 48909-8228.