City Council Pre-Approval of Accounts Payable_Repayment of Claims Copyrighted
May 7, 2018
City of Dubuque Action Items # 4.
ITEM TITLE: City Council Pre-Approval of Accounts Payable
SUMMARY: City Manager recommending that City payments be first
approved by City Council and further recommends
exceptions to that policy consistent with state law.
RESOLUTION Approving Pre-Payment of Claims
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Adopt
Resolution(s)
ATTACHMENTS:
Description Type
Council Preapproval of Accounts Payable-NNM Memo City Manager Memo
Staff Memo Staff Memo
Resolution Resolutions
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TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Council Pre-approval of Accounts Payable
DATE: May 3, 2018
Finance Director Jean Nachtman is recommending that City payments be first approved
by City Council. Jean also recommends exceptions to that policy consistent with state
law.
After a conversation with the State Auditor's Office, during a review of the City's fiscal
year 2016 audit, the City conducted a survey of the accounts payable practices among
other large lowa cities. It was noted that about half of the cities have a policy stating
that their city payments are held until approved by City Council.
In Dubuque, the City Council does approve payments through the budget process.
However, to align with best practices and to be consistent with the interpretation of the
State Auditor, it is recommended that the City switch to City Council review and
approval of accounts payable before payments are made, unless a specific exclusion is
given.
The current practice is to issue and mail checks weekly for all accounts payable
expenses. The list of checks issued in the prior month is presented as a consent item
to the City Council at the first Council meeting each month. The new process would
require City Council preapproval of expenses unless the expense is exempt according
to the proposed resolution.
The City is transparent with all its expense payments. In addition to the payment lists
provided for City Council consent, the City provides Open Expenses on the City website
that allows visitors to browse payments from a high-level summary to a detailed view.
This information is updated weekly as accounts payable is processed. The City
publishes monthly vendor payments in the Telegraph Herald. The same information is
available on the Finance DepartmenYs website for the current and past months.
It is the Finance DepartmenYs goal to provide meaningful and timely financial data to
satisfy the need for sound fiscal policy and full disclosure. City Council review and
approval of payments adds another layer of fiscal control.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
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Mic ael C. Van Milligen
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Attachment
cc: Crenna Brumwell, City Attorney
Teri Goodmann, Assistant City Manager
Cori Burbach, Assistant City Manager
Jean Nachtman, Finance Director
2
Dubuque
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TO: Michael Van Milligen, City Manager
FROM: Jean Nachtman, Finance Diredor
SUBJECT: Councilpre-approvalofaccountspayable
DATE: May 3, 2018
INTRODUCTON:
After a conversation with the State Auditor's Offce, during a review of the Citys fscal year
2016 audit, the City conducted a survey ofthe accounts payable pradices among other large
lowa cities. It was noted that about half of the cities have a policy stating that their city
payments are held until approved by Council. The code per the State auditor is lowa Code
§372.13A1.
372.13A Payments without prior authorization of council.
1. If concurrent vacancies exist on the council and the remaining council
members do not constitute a quorum of the full membership, the city clerk is
authorized to make the following payments without prior approval of the
council:
a. For fxed charges including but not limited to freight, express, postage,
water, light, telephone service, or contradual services, after a bill is
fled with the clerk.
b. For salaries and payrolls if the compensation has been fxed or
approved by the council. The salary or payroll shall be certifed by the
offcer or supervisor under whose direction or supervision the
compensation is earned.
2. If concurrent vacancies exist on the council and the remaining council
members do not constitute a quorum of the full membership and the offce of
city clerk is vacant, the county auditor of the county where the city is located
shall make the payments described in subsection 1 without prior approval of
the council.
3. The bills paid under this section shall be submitted to the city council for
review and approval at the next regular meeting following payment in which a
quorum ofthe council is present.
The City Attorney's Office has reviewed §372.13A and does not agree this section mandates
preapproval of every expenditure by the City Council at the time an invoice is paid. The
provision specifically relates to the handling of expenditures when there is not a quorum of
the City Council.
Although this code does not explicitly state payments must be approved by Council, by
itemizing specific exceptions to council pre-approval, it is possible to infer a payment not part
of the stated exclusions should be approved by council prior to payment.
DISCUSSION:
In essence, the Council does approve payments through the budget process. However, to
align with best practices and to be consistent with the interpretation of the State Auditor, I
propose that the City switch to Council review and approval of accounts payable before
payments are made, unless a specific exclusion is given.
The current practice is to issue and mail checks weekly for all accounts payable expenses.
The list of checks issued in the prior month is presented as a consent item to the Council at
the first Council meeting each month. I propose that the City adopt a new process that
requires council preapproval of expenses unless the expense is exempt according to the
proposed resolution.
The City could establish a primary check run with items that require Council approval. The
approval list will be generated on the Thursday prior the scheduled council meeting. The
checks are released for mailing after council approval. On alternate weeks, a secondary
check run that consists of only of those items that are already authorized by council can be
generated (e.g. construction contracts, equipment purchases, debt service payments, etc.).
There are a few categories of checks that have historically been mailed as issued as well
due to timing issues, such as monthly routine utility bills, reimbursements to employees for
budgeted purchases, and deposit refunds. A complete listing of all items being requested
for authorization to release is listed below.
Items on the secondary list check would be mailed immediately, as they have already had
Council action to approve the expenditure. It is possible that some of the pre-authorized
expenses will be processed as part of the primary check run, simply because of the due date
of the invoice. Regardless of which check run an item is processed, a complete
report/register of all checks issued is sent to each council meeting for review and approval.
This change in procedure will delay the payments to our vendors from weekly to bi-monthly.
Departments will be informed to closely watch due dates to avoid incurring late payment
penalties and to take advantage of early payment discounts.
The City has always been transparent with all its expense payments. In addition to the
payment lists provided for Council consent, the City provides Open Expenses on the website
that allows visitors to browse payments from a high-level summary to a detailed view. This
information is updated weekly as accounts payable is processed. The City publishes monthly
vendor payments in the Telegraph Herald. The same information is available on the Finance
DepartmenYs website for the current and past months.
It is the Finance DepartmenYs goal to provide meaningful and timely financial data to satisfy
the need for sound fiscal policy and full disclosure. Council review and approval of payments
adds another layer of fiscal control.
ACTION:
I am recommending that beginning in July of 2018, the Council begin approving accounts
payable payments before the checks are issued. I am also recommending that Council give
authorization to the Finance Director to issue checks prior to City Council approval for
payment of the following items:
1 . Bonds and principal representing bonded indebtedness of the City, when said
bonds and principal are due and presented for payment. All interest on bonded
indebtedness of the City when the same is due and coupons are presented for
payment, or when the contracted bond registrar requests payment.
2. All other scheduled debt service principal and interest payments approved by
previous council action.
3. All sales tax due to the State of lowa.
4. All utility bills for water, electricity, gas, telecommunications, etc.
5. All medical, dental, disability and life insurance premiums and medical claims
from insurance provider.
6. All annual premiums for the City's property, liability, and pollution policies.
7. Salaries and wages of officers and employees at the rates authorized by City
Council.
8. Payment of federal and state withholding taxes, social security, Medicare,
retirement fund, MFPRSI and IPERS contributions, and unemployment taxes as
required.
9. Contractual payments for items approved by previous Council actions.
10. Reimbursements to employees for budgeted purchases (e.g. travel costs).
11 . Deposit refunds under facility rental contracts.
12. Utility overpayment refunds.
13.To take advantage of early payment discounts.
A listing of the checks issued under the exceptions above will be provided to Council for
review post issuance.
Attached is a resolution Approving Prepayment of Claims that will give Finance the authority
to issue checks without prior council approval. In the case of Library and Airport, expenses
must be approved by their respective boards and/or commissions, prior issuance of checks.
Thank you for your consideration.
cc: Tami Lansing, Assistant Finance Director
Crenna Brumwell, City Attorney
RESOLUTION 142-18
A RESOLUTION APPROVING PREPAYMENT OF CLAIMS
WHEREAS, the City of Dubuque is committed to making timely payment of amounts
due to avoid service interruptions and penalties or late fees which would become due
if payments are not timely made; now therefore.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF DUBUQUE, IOWA,
that the Finance Director be and is hereby authorized to issue checks in payment of
the following expenditures prior to City Council approval:
1. Bonds and principal representing bonded indebtedness of the City, when
said bonds and principal are due and presented for payment.
2. All interest on bonded indebtedness of the City when the same is due
and coupons are presented for payment, or when the contracted bond
Registrar requests payment.
3. All sales tax due the State of Iowa.
4. All utility bills for water, electricity, gas, telecommunications, etc.
5. All medical, dental, disability and life insurance premiums and medical
claims from insurance provider.
6. All annual premiums for the City's property, liability, and pollution policies.
7. Salaries and wages of officers and employees at the rates authorized by
City Council.
8. Payment of federal and state withholding taxes, social security,
medicare, retirement fund and IPERS contributions, and unemployment
taxes as required.
9. Contractual payments for items approved by previous Council actions.
10. Reimbursements to employees for budgeted purchases (ie: travel costs).
11. Deposit refunds under facility rental contracts.
12. Utility overpayment refunds.
13. To take advantage of early payment discounts.
Passed and approved this7th day of May 2018.
ATTEST:
Kegin S. Firnstahl, City Clerk
oy-D. Buol, Mayor