From time to time, especially toward the end of the year, you should carefully review your spending to see if it might exceed appropriations. If so, here are your options (aside from stopping the spending!)
ADDITIONAL APPROPRIATION
An additional appropriation is a net increase in appropriations in a department or fund. EVEN IF A DEPARTMENT OR FUND INCREASE IS OFFSET BY DECREASES IN OTHER DEPARTMENTS OR FUNDS, IT IS STILL AN ADDITIONAL APPROPRIATION, NOT A “TRANSFER.”
The additional appropriation must be advertised in a public notice at least ten days prior to a public hearing. At the public hearing, or afterward, the fiscal body may approve the additional appropriation.
If it is approved, it must be reported to the Indiana Department Of Local Government Finance. They will review the paperwork, mainly to assure there will be enough cash available to cover the additional spending. If not, they should notify you within 15 days. Usually, cities require two meetings to process any ordinance, including an additional appropriation.
Because of the time needed to advertise, conform to fiscal body meeting dates, and obtain State approval, you should not wait until December to seek an additional appropriation. AS A PRACTICAL MATTER, YOU SHOULD SUBMIT ANY REQUEST BEFORE THE END OF OCTOBER, AT THE LATEST. The earlier the better!
TRANSFER
A “transfer” is defined by the Indiana Code as an increase in one or more major line items that is offset by decreases WITHIN THE SAME DEPARTMENT.
For example, if a department wishes to increase Personal Services and decrease Supplies by the same amount, it would be a transfer. A transfer requires approval of the fiscal body, but no advertisement, no public hearing, and no review by the Indiana Department Of Local Government Finance.
What is meant by “major line item”? Usually, they are designated as follows:
100 Personal Services
200 Supplies
300 Other Services And Charges (or, Contractual Obligations)
400 Capital Outlays
Don’t forget. If there is an overall increase in a department or fund, even if it is offset by a decrease in another department or fund, it is an ADDITIONAL APPROPRIATION, not a TRANSFER.
OTHER, MINOR SHIFTS
If the change is simply a shift between detailed line items within a major category, then there is no statutory requirement to treat it as a formal transfer.
For example, if there is a need for an increase in appropriations for maintenance supplies that can be offset by a decrease in office supplies, within the same department, there is no statutory requirement to obtain approval from the fiscal body.
However, local rules or customs may nevertheless require these changes to be reported to the executive, to the fiscal body, or to the fiscal officer for local review and approval.
SALARY ORDINANCE
Strictly speaking, the salary ordinance has nothing to do with appropriations, but it is worthwhile to look at both as you review year-end expenditures. Amounts in the salary ordinance cannot be exceeded, even if enough appropriations are available, and vice versa.
*******
