HomeMy WebLinkAbout99-16 - 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
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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
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"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
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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.
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