Page 350 - Budget Book FY2020-2021

Financial and Budget Policies and Procedures

The City of McAllen’s policies and procedures have been developed to provide a sound financial
management foundation upon which decisions shall be made that result in the effective
management of its resources and provide reasonable assurance as to its long-term financial stability.

Budget Policies
Annual Budget
An annual budget shall be prepared in accordance with State law, applicable Charter requirements,
as well as meet the reporting requirements of the Government Finance Officer Association’s
Distinguished Budget Presentation Award Program.

Designated Budget Officer
The City Manager, designated as the City’s Budget Officer, is primarily responsible for the
development of the annual budget to be submitted to the City Commission for approval and
adoption. A Budget Committee, which includes the Assistant City Managers, the Budget Director,
and the Finance Director serve in an advisory capacity to the City Manager. The McAllen Public
Utility (MPU) General Manager is primarily responsible for the development of the MPU annual
budget that is submitted to the McAllen Public Utility Board of Trustees for approval and adoption,
which is then incorporated into the City-wide budget for City Commission approval. The Director
of Finance for Utilities assists in its preparation.

Funds Included in the Annual Budget
The budget shall include all of the City’s governmental, with the exception of the Miscellaneous
Grants Fund and all proprietary funds as well.

Balanced Budget Required
The City Manager, acting in the capacity of Budget Officer, is required to submit a balanced budget.
A balanced budget is one in which total financial resources available, including prior year’s ending
financial resources plus projected resources, are equal to or greater than the budgeted
expenditures/expenses. The City will avoid budgetary practices that raise the level of current
expenditures/expenses to the point that future years’ operations are placed in jeopardy.

Basis of Accounting
The Comprehensive Annal Financial Report (CAFR) shows the status of the City’s finances on a
basis of Generally Accepted Accounting Principles (GAAP). In most cases, this conforms to the way
the City prepares its budget. The basis of budgeting (e.g., modified accrual, cash, accrual) should be
identified for each category of funds represented (governmental, proprietary, and fiduciary). The
term “basis of accounting” is used to describe the timing of recognition, that is, when the effects of
the transactions or events are to be recognized. For example, governmental funds are required to
use the modified accrual basis of accounting in GAAP financial statements whereas the cash basis
of accounting or the “cash plus encumbrances” basis of accounting may be used in those same funds
for budgetary purposes.

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