Department of Neighborhood Empowerment
Newsletter

May 28, 2004

SUBJECT: INFORMATION BULLETIN 2004-02.
Realignment of Neighborhood Council Funding Program to City's Fiscal Year
and Improvement to Quarterly Accounting Process

This policy (1) explains the process through which your Neighborhood Council’s funding year is being “realigned” to match the City’s fiscal year (July 1 – June 30); (2) explains improvements that will expedite the quarterly audit process and it make it easier to get your money; and (3) explains check request deadlines.

Background

The City budget for fiscal year 2004-05 did not change the Neighborhood Council Funding Program. Neighborhood Councils will continue to receive up to $50,000 during upcoming fiscal year. But there will be a change in the accounting process used for the program.

Although the City’s current fiscal year ends on June 30, 2004, we know that Neighborhood Councils may need to purchase goods and services that will be purchased with current year funds, but delivered after June 30. Therefore, Neighborhood Councils may encumber (set aside) current year funds to ensure funding is available to pay for goods or services delivered after June 30. Information Bulletin 04-001 Procedure to Encumber Funds for Special Projects has already been sent to you, and it is posted on our Web site under Funding Program>Information Bulletins at: http://www.lacity.org/done/newsflash_b/donenewsflash_b93919727_05142004.pdf

Important Check Request Processing Deadline

At the end of each fiscal year, the City’s accountants are required to “close the books” and comply with governmental and general accounting regulations. As a result, there is a mandatory deadline that all City departments must adhere to regarding financial transactions. The Department of Neighborhood Empowerment must receive all requests for vendor payments and City-issued checks NO LATER THAN 5:00 P.M., WEDNESDAY, JUNE 16, 2004.

Check requests that arrive after June 16, 2004 will be processed after July 1, 2004. This temporary “freeze” on issuing checks happens every year, and affects all City departments. Neighborhood Councils will still be able to use their VISA Commercial Prepaid Card without any interruption through June 30, 2004. It is only the check-to-vendor process that pauses at the end of each fiscal year.

Alignment of the Neighborhood Council Funding Program to the City’s Fiscal Year

Neighborhood Councils are regarded as city entities. On July 1, 2004, the distribution and accounting of funds in the Neighborhood Council Funding Program will become aligned to the City’s fiscal year cycle (July 1 – June 30). On this date, Neighborhood Councils will enter their "first" funding quarter for City accounting purposes. One benefit of this conversion is that it will be much easier for other departments and those who make policies to better understand the needs of the Neighborhood Councils because all entities will share the same fiscal calendar. Another benefit is that it will be easier for Neighborhood Councils to share their best practices with each other. June 30, 2004 is the last day of the current City fiscal year. On that day, any funds remaining in the accounts of the Neighborhood Councils enrolled in the Funding Program will be returned (“revert”) to the General Fund of the City -- the main “storage bin” for City funds.

The next day, the new fiscal year begins. All Neighborhood Councils will be eligible to receive $50,000 during the 12 months of the City’s 2004-05 fiscal year. In reality, nothing has changed for the Neighborhood Councils except that on July 1, 2004 they will be eligible to receive their next funding installment, which will be considered their “first quarter installment” for City accounting purposes.

Most Neighborhood Councils prefer to request $12,500 quarterly because it helps them with their financial planning. As usual, any requests above the $12,500 quarterly installment may be approved by the General Manager of the Department of Neighborhood Empowerment.

A chart that describes this process, can be found shortly on our Web site at www.lacityneighborhoods.com in the Funding>Information Bulletins section.

How to Apply For First Quarter Funding for Fiscal Year 2004-05

Because all unspent and unencumbered funds from fiscal year 2003-04 will revert to the City on June 30, 2004, Neighborhood Councils will want to request first quarter funds for the fiscal year beginning July 1, 2004 by submitting the following standard documents:

A complete Request for Neighborhood Council Funding Form (checking and Visa funds)

A revised budget that includes the first quarter of the new 2004-05 fiscal year, July 1 – September 30, 2004

Documentation supporting the budget as a publicly-approved document

In order to ensure that checking account and VISA Commercial Prepaid Card funding is in place on July 1, 2004, it is in the interest of the Neighborhood Council to submit these forms as soon as possible.

Submitting Outstanding Fiscal Year 2003-04 Merchant Receipts for Auditing

Because the fiscal year ends on June 30, 2004, a final accounting will need to occur for fiscal year 2003-04 expenditures. By July 31, 2004, all Neighborhood Councils must submit all outstanding merchant receipts to the Department for audit. Failure to submit receipts will delay “closing the books,” and will delay release of second quarter funds for 2004-05.

Improvement to the Audit Process – Establishment of a “Grace Period”

The Department has tried to provide Neighborhood Councils with timely access to funds while also seeking reasonable cooperation from the Neighborhood Councils in preparing for the audits that are a required part of the Funding Program.

We recognize that some Neighborhood Councils need to receive funds without having an audit interrupt their process. We also know that the receipt packages delivered by some Neighborhood Councils are missing documents. Therefore, the Department has added a new feature, a "grace period", that will allow funding to continue while we work with the Neighborhood Council treasurer on the audit. Together, we can help fulfill our promise that you will have access to the funds you need when you need them.

As a reminder, here is how the basic funding access and audit processes work. The Neighborhood Council enrolls in the program and requests funding for one quarter.

The Department does the mechanical part of establishing the access.

At the end of the quarter, the Neighborhood Council delivers all receipts and supporting documentation to the Department for accounting and auditing. The Neighborhood Council should also deliver their next request for funding at the same time.

The Department arranges for release of the next funding installment, while also performing the required audit of the previous funding installment.

The Neighborhood Council and the Department work together to ensure a timely completion of the audit; misplaced receipts are located, any added details supplied, etc.

After the audit has been completed, and the Neighborhood Council and the Department agree on the results of that audit, the audit is filed.

For rapid access to funds, Neighborhood Councils should:

Submit all receipts and expenditure documents for review as soon as possible, with all receipts dated no later than the previous three-month quarter. Try to avoid sending receipts at the last minute, because this means that the accounting will take longer to complete.

Submit the next funding request and the audit materials from the last installment at least two weeks before the end of the current funding quarter.

If you have any questions, please contact Kevin McNeely at (213) 485-1810, or via email at kmcneely@mailbox.lacity.org.

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Greg Nelson

866 / LA HELPS
213 / 485-1360
213 / 485-4608 fax
done@mailbox.lacity.org email
www.lacityneighborhoods.com website