Committee backs ordinance to simplify Carmel budget transfers, give controller authority over chart of accounts and tighten encumbrance practice

The Finance, Utilities, Rules and Rules Committee on Feb. 3 voted to recommend to the full Carmel Common Council an amended ordinance (D-27-41-24) that simplifies the city’s budget transfer limits, assigns responsibility for the chart of accounts to the controller, and narrows the circumstances under which departments may carry encumbrances from one year to the next.

Zach, the city controller, told the committee the ordinance replaces a two-step transfer process that had allowed departments effectively to move up to $50,000 per year by splitting transfers across days. "What I've cut out here is the $25,000 piece," Zach said, explaining the draft now allows single transfers of up to $50,000 without requiring two transactions. He said the change reflects current state law practice while removing a work-around that had become "a little gimmicky."

The ordinance as amended would also shift responsibility for adopting and changing the city's chart of accounts and budget forms from the council to the controller, with a requirement that the controller submit any changes to the council at the following council meeting. City Attorney Benjamin Lake recommended adding a preamble making clear the change does not limit the council’s existing rights; the committee inserted language that council "may direct the controller to make changes to the chart of accounts." Counselors on the committee asked that the controller report changes promptly and that the annual report be timed to the council calendar.

On encumbrances, Zach said current city code potentially allowed departments to carry forward unspent dollars that were not tied to a written contract or vendor — a practice he said should end. Under the amended ordinance, only normal encumbrances tied to purchase orders or contractual obligations would be rolled to the next year; departments would submit encumbrance lists through the controller’s office so the controller can compile and deliver a single reconciliation to council.

Committee members questioned whether there were legitimate past reasons to carry uncontracted encumbrances; several said they were unaware of recent instances. Counselor Green asked whether disputed open invoices were handled under the proposed process. Zach described the controller’s existing reconciliation process between an older purchasing database and the accounting system and said the office now asks departments to justify why funds should remain encumbered for the next year (for example, incomplete one-time projects or pending final invoices).

The committee voted to adopt the attorney’s suggested preamble language as an amendment and then voted to forward the ordinance to the full council with a positive recommendation. The amendment was seconded by Councilor Worrell; the motion to recommend to council was seconded by Councilor Worrell and recorded as supported by the committee.

The controller and several councilors also discussed implementation details: timing for the controller’s annual submission of chart-of-accounts changes (the committee inserted a requirement to submit any changes at the following council meeting), how the controller will compile encumbrance lists, and the plan to pair ongoing monthly variance targets with the new reporting. Zach said he will send the redlined ordinance and an updated reconciliation report to council prior to the council meeting where the ordinance is considered.

Ending: The ordinance will appear on the Common Council docket for consideration; the committee provided a positive recommendation after the agreed amendments. No final council vote occurred in the committee meeting.