Department of Neighborhood Empowerment
Newsletter

May 14, 2004

SUBJECT: INFORMATION BULLETIN NO. 04-001
Neighborhood Council Funding Program & Support Services
RE: PROCEDURE TO ENCUMBER FUNDS FOR SPECIAL PROJECTS

The purpose of this Information Bulletin is to inform Neighborhood Council members of the process for encumbering funds prior to the Wednesday, June 16, 2004 deadline. We recognize the Neighborhood Councils may wish to expend their current fiscal year funds on approved, budgeted projects that cannot be completed before the fiscal year ends on June 30, 2004. This Information Bulletin describes the process of encumbering (reserving) funds to ensure a project can go forward.

Background

Not all Neighborhood Councils have spent $50,000 during the last 12 months. Some Neighborhood Councils have made plans for improvement projects that take time to complete. These projects have been included in the official Neighborhood Council budget and are considered part of the $50,000 in the current program period. But some of the projects might not be finished by June 30, 2004 even though money has been reserved in the Neighborhood Council budget covering that time period.

Some Neighborhood Councils have asked: How do you keep money you have available now, and avoid using the “new” allocation of $50,000 that will be available for 2004-05, for projects or other items budgeted earlier?

The way to save these funds is by “encumbering” them through a process that involves both the Neighborhood Council and the city accountants. To encumber funds means that you are reserving a specific amount of money, for a specific purpose, and with a specific date or time period when the money will be used. Encumbered funds are not normally returned to the City’s General Fund at the end of the fiscal year on June 30.

Encumbering funds is a multiple-step process that involves the City’s main computerized accounting application, known as FMIS (Financial Management Information System). Working together we can make the encumbering process straightforward and productive.

An Allowable Project

Note the limit of six months for Neighborhood Councils to use funds that are encumbered in one fiscal year for use in the next fiscal year. In other words, projects that are planned in advance, with the related funds reserved (encumbered) by Wednesday, June 16, 2004, must be completed by December 31, 2004. After that time, if the reserved funds still have not been used, the funds may revert to the City’s General Fund during the standard city mid-year budget adjustment process.

How a Neighborhood Council Can Encumber Funds

Step 1 – The Neighborhood Council’s Budget

Make sure the approved budget includes the expenditure – the cost, vendor, and projected delivery date. If the budget does not include the expenditure, the budget should be revised in a public meeting and then submitted to the Neighborhood Council’s Project Coordinator and the Funding Program.

Step 2 – Submitting the “Request to Encumber Funds” Form

Neighborhood Councils wanting to encumber funds should complete the “Request to Encumber Funds” form and submit it to their Project Coordinators and the Department of Neighborhood Empowerment no later than Wednesday, June 16, 2004. A copy of the form is attached to this message. Like the other forms used to request funding, the “Request to Encumber Funds” form needs to be signed by both the Neighborhood Council Treasurer and a second authorized person. The “Request To Encumber Funds” form will also be on our Web site soon. Initially, you will be able to find it on the home page in the News Flashes area. Later, it will be stored in the Funding section. Once there, click on Funding Info Bulletins or Forms and Documents.

Be sure to include the following information when completing the “Request to Encumber Funds” form:

	Dollar amount to be encumbered – how much you need “reserved.” (Note: You must indicate the amount of funds to be reserved from your checking account and any amount to be transferred from your prepaid card.)
	Purpose for the encumbrance – what you plan to spend the money on.
	Expected date of use of the funds – when the project will begin and end (the encumbered money must be used by December 31, 2004).

Step 3 – Processing the Request to Encumber Funds

Funding Program staff will encumber the amount of money in question so that checks may be issued at the appropriate future date.

Step 4 – Coordinating with the City Controller

We will present the encumbrance requests we receive from Neighborhood Councils as supporting documents when we ask the City Controller to allow the approved amounts to stay in the Neighborhood Council accounts, in addition to the amounts approved for fiscal year 2004-05.

Step 5 – Submitting Project Invoices

As your project proceeds towards completion and invoices are ready for submission to the Funding Program, it will be important for you to clearly identify the name of your project on the invoice so that payment will be from your encumbered funds.

Our Goal of Assisting the Neighborhood Councils

We do not expect that many Neighborhood Councils will request that the Department of Neighborhood Empowerment reserve funds in this manner. But we are offering the encumbrance process as another tool to help Neighborhood Councils have the money they need, when they need it.

The Department of Neighborhood Empowerment remains committed to assisting Neighborhood Councils with their expenditure priorities and to improving the funding process whenever possible.

Should any questions arise regarding the contents of this information bulletin, please contact Kevin McNeely at (213) 485-1810, or via email at kmcneely@mailbox.lacity.org. Also, note that we have created a special e-mail address that all of the funding program staff use. This will help ensure that even if someone is not in the office, someone else on the team will receive your message. It is ncfunding@mailbox.lacity.org.

GN:KM

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Greg Nelson

Department of Neighborhood Empowerment
340 E. 2nd Street
Los Angeles, CA 90012

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