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Home My WebLink About99-16 - Res. Amending Res. 17-10 Interfund Loan Policy and Procedures Resolution # Amending Resolution # 1740 Mason County Interfund Loan Policy and Procedures WHEREAS Mason County recognizes that it is fiscally responsible to define policy and procedures for the use and approval of Interfund Loans and, WHEREAS the State Auditor ' s Office has set out guidelines within the Washington State Bars Manual and Mason County has a debt policy approving Interfund Loans as an acceptable option when meeting the minimum acceptable procedures for making and accounting for interfund loans, WHEREAS the Mason County Finance Committee met on November 28t". 2016 and approved the updated Mason County Interfund Loan and Policy and Procedures as set out in "Exhibit A" . NOW THEREFORE, BE IT RESOLVED that the Board of County Commissioners upon recommendation of the Mason County Finance Committee hereby approve the Mason County Interfund Loan Policy and Procedures as set out in "Exhibit A" . Approved this a0 day of Dec e ,, , � �� , 2016 . Mason County Board of Commissioners 4t�� U TERRI JEF Y , Chair RANDY NEATHERLIN , Commissioner TIM SHELDON , Commissioner Attest : EL A REWR Olerk of the Board Approved as to form : ,L TIM WHITE-HEAD , Chief Deputy Prosecuting Attorney Approved by Approved by ELISABETH (LISA) FRAZIER, Treasurer 7JIFE SILVA, B idk6t Manager Resolution Interfund Loan Policy and Procedures V2. docHALisa3\Lisa\finanee documents\finance documentsTinance Committee\DEBT POLICIES\Resolution Interfund Loan Policy and Procedures V2.doc 8 . Should elected officials/department heads choose to request the transfer of payments between funds to facilitate the payment of Interfund loan(s) . Such transfers are required to follow the proper procedures and forms as set out and approved by the Mason County Auditor ' s Office and the Mason County Treasurer ' s Office . Approved this 281h day of November, 2016 , Mason County Finance Committee Elisabeth Frazier, Treasurer, Chair Absent Karen Herr, Auditor, Secretary Terri Jeffreys, o o nissioner Updated 2016 Interfund Loan Policy and Procedures .docH :\Lisa3\Lisa\finance documentsTinance documentsTinance Committee\Updated 2016 Interfund Loan Policy and Procedures .doe "Exhibit A" Mason County Interfund Loan Policy and Procedures November 2016 The Washington State Budget Accounting and Reporting System (BARS ) and the Mason County Debt Policy the Mason County Finance Committee recommends the following as policy and procedures for approval of Interfund loans . The BARS Manual does not attempt to determine which moneys of a municipality may or may not be available for interfund lending, since the special character of some moneys involves commitments and restrictions which would require individual consideration. Generally however, is permissible to make interfund loans of those municipal moneys which are clearly inactive or in excess of anticipated cash needs throughout the duration of the loan and legally available for investment . The appropriate elected official and/or department head in charge of such funds shall be consulted for determination of the availability of the funds for an Interfund loan. The appropriate elected official (s)/department head (s) of each fund so identified shall be required to sign off approval of the Interfund loan agreement . Pursuant to the adopted County Debt Policy all interfund loan resolutions and repayment schedule will be reviewed by the Mason County Finance Committee and signed by the County Treasurer to ensure that the appropriate reimbursable language is included, the correct fund and BARS numbers are used and the appropriate debt repayment schedule has been developed . Once the Interfund loan resolution and repayment schedules have been submitted and approved by the Mason County Board of Commissioners , a copy shall be distributed to the Mason County Budget Director for inclusion to the appropriate budgets . Budget adjustments necessary in the current year should be made to the County Financial System within 10 business days of the resolution approval . The minimum acceptable procedures for making and accounting for interfund loans are as follows : 1 . The legislative body of a municipality must, by ordinance or resolution, approve all interfund loans , indicating the lending fund, borrowing fund and provide in the authorization a planned schedule of repayment of the loan principal as well as setting a reasonable rate of interest (based on the external rate available to the municipality) to be paid to the lending fund . The planned Updated 2016 Interfund Loan Policy and Procedures .docH:\Lisa3Tisa\flnance documents\fmance documentsTinance Committee\Updated 2016 Interfund Loan Policy and Procedures .doc schedule of repayment should specify the due date(s) of the payments(s) needed to repay the principal and interest on the loan, 2 . Interest should be charged in all cases , unless . a . The borrowing fund has no other source of revenue other than the lending fund ; or b . The borrowing fund is normally funded by the lending fund . c . The interest shall be calculated pursuant to the Bank Method : "The annual interest rate will be computed on a 365/360 basis ; that is , by applying the ratio of the annual interest rate over a year of 360 days , multiplied by the outstanding principal balance, multiplied by the actual number of days the principal is outstanding. (Wautier, 2009) 3 . The following guidelines should be used in establishing the rate of interest : a. Not lower than the "opportunity cost" if the funds were otherwise invested, such as the Local Government Investment Pool rate, Certificate of Deposit rate, US Treasury rate or short term bond yields for the same term . b . Not higher than the external rate available to the county. 4 . The borrowing fund must anticipate sufficient revenues to be in a position over the period of the loan to make the specified principal and interest payments as required in the authorizing ordinance or resolution . 5 . The term of the loan may continue over a period of more than one year, but must be "temporary" in the sense that no permanent diversion of the lending fund results from the failure to repay by the borrowing fund . A loan that continues longer than three years will be scrutinized for a permanent diversion of moneys . (Note : these restrictions and limitations do not apply to those funds which are legally permitted to support one another through appropriations , transfers , advances , etc . ) 6 . Pursuant to RCW 36 . 29 . 010(6) (7) , the county treasurer shall maintain financial records reflecting receipts and disbursement by fund and shall account for and pay all bonded indebtedness for the county . . . . . . . . Therefore, the Mason County Treasurer ' s Office will be the responsible party for maintaining the records for the receipt of, disbursement of and payment of all Interfund loans . The County Treasurer and/or designated staff will have authority to access all county funds for the purposes of transacting Interfund loan related transactions within the County Financial System . 7 . Appropriate accounting records should continue to be maintained by each department to reflect the balances of loans in every fund affected by such transactions . Documentation in the form of the warrant number or fund transfer and the date the loan payment was made, shall be provided within 5 business days of the payment to the Mason County Treasurer and Mason County Auditor ' s Finance Department to facilitate auditing and annual reporting requirements as required by statute. Updated 2016 Interfund Loan Policy and Procedures .docH :\Lisa3\Lisa\finance documentsTmance documentsTinance Connnittee\Updated 2016 Interfund Loan Policy and Procedures .doc