Evaluation and Analysis of the City of Weslaco's Municipal Budget, 2014-2015 Graduate Research for Public Budgeting and Finance: Master of Public Affairs-Administration, The University of Texas Rio Grande Valley (UTRGV) Rev. 1.0

1. GOVERNMENT FINANCE OFFICERS ASSOCIATION
(GFOA) BUDGET ANALYSIS
Evaluation & Analysis of the City of Weslaco’s Municipal Budget, 2014-2015
E. Rey Garcia, MPA Candidate
The University of Texas Rio Grande Valley (UTRGV)
PAFF 6304: Public Budgeting & Finance
Fall 2015, Module One
Dr. Aziza Zemrani
Revision 1.0

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Public Budgeting & Finance
Government Finance Officers Association (GFOA) Budget Analysis
Evaluation & Analysis of the City of Weslaco’s Municipal Budget, 2014-2015
**********
E. Rey Garcia, MPA Candidate
The University of Texas Rio Grande Valley (UTRGV)
College of Liberal Arts
Master of Public Affairs-Administration
PAFF 6304: Public Budgeting & Finance
Fall 2015, Module One
Dr. Aziza Zemrani
September 29, 2015
Rev. 1.0 November 23, 2015
About the Cover:

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Table of Contents
I. Introduction 6
About the City of Weslaco 6
Executive Summary 7
Financial Reporting 7
II. The Analysis: Budget Ratings and Evaluation Methodology 8
Policy Document - (Category 1) 8
Financial Plan - (Category 2) 9
Operations Guide - (Category 3) 9
Communications Devices - (Category 4) 10
Score 10
III.Budget Structure 10
Theory in Budgeting 11
Public Participation/Accountability 11
The Executive Budget Model 12
Types of Budgeting 13
Zero-Based Budgeting 13
Program Budgeting 13
Management of Objectives (MBO) 13
Performance Budgeting 13
IV.Conclusion/Recommendations 14
V. References 17

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Public Budgeting & Finance
Government Finance Officers Association (GFOA) Budget Analysis
Evaluation & Analysis of the City of Weslaco’s Municipal Budget, 2014-2015
E. Rey Garcia, MPA Candidate
September 29, 2015/ Rev. 1.0 November 23, 2015
I. Introduction
What is a budget? According to Lee, Public Budgeting Systems, 9th
Edition (2014), “a budget is a
document or a collection of documents that refers to the financial condition and future plans of an
organization (family, corporation, government), including information on revenues, expenditures,
activities, and purposes or goals.”
About The City of Weslaco
Weslaco is a city with a population of approximately 37,000 and is centrally located in the mid-
Rio Grande Valley, making it a great place for travel, lodging, dining, shopping, education,
medical needs, and economic development. It is home to three nature centers, Estero Llano
Grande (World Birding Center), Frontera Audubon, and the Valley Nature Center. The Mid-
Valley Airport, caters to private planes and business travelers. The South Texas College division
provides higher education within reach of mid-Valley residents. Knapp Medical Center, a Level
III Trauma hospital, providing medical services to residents of the mid-Valley. Shopping is just
minutes away from the Rio Grande Valley Premium Outlets. The City of Weslaco has
experienced a boost of economic growth and it is noticeable with the high-ratings from the budget
auditors, Standard & Poor’s and Moody’s as reported in the city’s Comprehensive Annual
Financial Report (CAFR).

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Executive Summary
Traditionally, the budget development of the City of Weslaco is responsibility of the City
Administrator and the Finance Director, who work with all of the Department Heads to research
and propose the upcoming fiscal year’s expenditures. This is done by gathering data research,
involving historical empirical findings from the previous budgets. Once the City Administrator,
Finance Director and Department Heads have come to a consensus, the budget is then ready for
the submission and justification process, in which all allocated expenditures must be accounted
for in the form of receipts, proposed applications, expenditures, and any relevant financial
reports, vendor-supplier quotes and estimates and contracts. This is done in the form of public
budget meetings and budget workshops. Once all budget information has been justified and
accounted for, the budget is ready for execution, where it is taken to the Mayor and City Council
for review and approval. Once the budget passes with a majority vote, it is signed by the Mayor
and becomes a binding legal document.
Financial Reporting
The GFOA has established the Certificate of Achievement for Excellence in Financial Reporting
Program (CAFR Program) in 1945 to encourage and assist state and local governments to go
beyond the minimum requirements of generally accepted accounting principles to prepare
comprehensive annual financial reports that evidence the spirit of transparency and full disclosure
and then to recognize individual governments that succeed in achieving that goal. The goal of the
program is to ensure that users of their financial statements have the information they need.
Reports submitted to the CAFR program are reviewed by selected members of the GFOA
professional staff and the GFOA Special Review Committee (SRC), which comprises individuals
with expertise in public sector financial reporting and includes financial statement preparers,
independent auditors, academics, and other finance professionals.

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II. The Analysis: Budget Ratings and Evaluation Methodology
The City of Weslaco’s budget ratings and evaluation are based on the following methodology and
grading criteria illustrated in Table 1: Rating and Evaluation.
Grade Description
A-, A, or A+ Excellent (4.0)
B-, B, or B+ Average to Above
Average (3.0)
C-, C, or C+ Below Average (2.0)
F Failed (1.0)
Table 1: Rating and Evaluation
Note: The scores are based on the judging and eligibility requirements, as noted in the award
methodology of the Government Finance Officers Association (GFOA).
1) Policy Document - (Category 1)
The policy document prepared by the city’s Finance-Purchasing Department, it is one of
many policies used by the city to govern the overall organization. The policy document is
policy, adopted by the Mayor and City Council outlining the organization’s spending
practices.
To contact the Finance Department or the Finance Director, Ms. Mary Barrera go to:
http://www.weslacotx.gov/Finance.html or by calling 956.968.3181.
Score: B- / Average / 3.0 - The city has no policy document available online. In order to see
such a document, one must either be an employee of the city or obtain a City Records
Request Form and submit it to the Office of the City Secretary, Ms. Elizabeth Walker and
wait until it is approved and ready for pick-up at City Hall. This shows a lack of transparency
and therefore creates a lack of trust from the community.

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2) Financial Plan - (Category 2)
The City of Weslaco’s financial plan is not available to the public. After reaching out to the
administration, it was evident that neither the administration, Mayor and City Council ever
enacted a financial plan that conveys to the departments, staff, bureaus, and all offices
involved, and especially to the Finance Department, the importance of such a plan. A
financial plan must have a comparison-contrast of previous fund spending, including the
previous year’s General Fund spending and the proposed spending for the upcoming year.
The city is still recovering from the re-organization of 2010, where the elimination of mid-
management was necessary in order to avoid bankruptcy, with a General Fund balance of
($-34,000).
To contact the Finance Department or the Finance Director, Ms. Mary Barrera go to:
http://www.weslacotx.gov/Finance.html or by calling 956.968.3181.
Score: F / Failed / 1.0 – The city has no financial plan available, and despite the
reorganization of 2010, no financial plan has be adopted by the Mayor and City Council. The
score given to the city was based on the compliancy requirements of the GFOA. Furthermore,
there is a lack transparency by not making a financial plan available to the public via the
Internet, website or social media.
3) Operations Guide - (Category 3)
An operations user manual is a guide for city employees on the step-by-step process on how
to operate the agency’s financial and budget reporting system. The city uses Incode, by Tyler
Technologies, a software product-suite that provides local governments with the ability to
execute day-to-day business functions with efficiency and ease. It provides the integration of
financial management, personnel and HR management, and citizen services, tax, court and
public safety software packages, (http://www.tylertech.com/solutions-products/incode-
product-suite).

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Score: C / Below Average / 2.0 – The city lacks compliance program requirements of the
GFOA. In order to obtain a copy of the operations guide, one must either be an employee of
the city or obtain a City Records Request Form and submit it to the Office of the City
Secretary, Ms. Elizabeth Walker and wait until it is approved and ready for pick-up at City
Hall. This shows a lack of transparency and therefore creates a lack of trust from the
community.
4) Communications Devices - (Category 4)
Methods used by the city to communicate budget information to the public. The city’s
Information Technology Department manages the information systems technology that
allows the flow of information services to the public from the city’s main data servers
through a secure encrypted network to computers, laptops, tablets and other smart devices.
Score: B+ / Above Average / 3.0 – The city is compliant with program requirements of the
GFOA. The Information Technology Department provides a level of transparency by the use
of the city’s portal website, mobile web, and social media network.
5) Score: The overall score given to the City of Weslaco’s Municipal Budget from 2014-15 is a
C- or Below Average, based on the total points divided by categories: (9.0/4 = 2.25).
III. Budget Structure
The City of Weslaco’s Municipal Budget for year(s) 2014-2015 is evaluated and analyzed using
both literature and empirical findings. It addresses the city’s theory of budgeting, public
participation and staff accountability, the type of budget model adopted by the city, and the types
of budgeting practices the city uses to justify expenses, itemize costs, manage goals, and show the
relationships between the funds provided to the public and the outcome of these services.

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1) Theory in budgeting – In public administration, budgeting consists of two kinds of theories,
descriptive and normative. Descriptive is based on observation or participation. Normative
is based on advice and narrow observations and is based on values rather than observations.
The City of Weslaco’s budget consists of the following funds: The General Fund, which
refers to the expenditures and revenues associated with the delivery of services such as
property taxes, income taxes, charges & fees, and state shared taxes. The Debt Service Fund,
a reserve established to service the Library, Police, Fire, and Code Enforcement. The
Economic Incentives Fund, this fund is used by the city to provide assistance to the Weslaco
Economic Development Corp. as a tool providing tax incentives and innovative solutions for
businesses expanding in or relocating to Weslaco. The Internal Services Fund, is used to
report on capital expenditures for equipment that provides services to other funds,
departments, or agencies. The Water Fund, an Enterprise Fund that stablishes a separate
accounting and financial reporting mechanism for municipal services, such as Public Utilities,
for which a fee is charged in exchange for goods or services. The Solid Waste Fund, the
Wastewater Fund and the Airport Fund, are all Enterprise Funds of the city. The
Hotel/Motel Fund, is tax collected from hotel/motel rates and is used for tourism and the
promotion of Weslaco. The Capital Projects Fund, is used for multi-million dollar projects,
such as buildings and roads.
The City of Weslaco’s budget is based on the Normative Theory. The budget has line item
controls in which the individual financial statement items are grouped by cost centers or
departments. The planning of the budget includes a work-plan, which is drafted by each
assigned department to itemize the department’s overall operations costs, equipment, staff
salaries, vendor and supplier contracts, travel expenses, conferences and training, etc.
2) Public Participation/Accountability – The participation of the community is evident in the
City of Weslaco’s city council meetings and budget workshops. By completing a Public
Forum or a request to speak form, prior to the regular meeting, citizens can address the city

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council directly during public comments of the regular council meeting. During regular
meetings, the council cannot respond to the citizens, they can only listen. Budget workshops
are less-formal “round-table style” meetings where staff, city council, vendors and suppliers,
media, and the public discuss the budget in greater detail, allowing a two-way communication
between the staff and the community. The city promotes accountability by encouraging
public comments and participation, and earns both trust and credibility from the community.
3) The Executive Budget Model – This model involves a three-step budget process
development, submission, and approval. Literature review suggests that the success of the
normative theory has been underestimated. Reform has been widely adopted and accepted by
the people. The Executive Budget Model was adopted by the federal government and most
states and nearly all local governments with populations of 10,000 or more.
Other forms of adoption are keeping the Enterprise Funds separate, setting rates for public
enterprises so as not to make a profit, and using the modified accrual-basis of accounting,
an accounting method used by government agencies that combines accrual-basis accounting
with cash-basis accounting, recognizing revenues when they become available and
measurable and expenditures when liabilities are incurred. Available funds are divided into
separate entities within the organization to ensure that the money is being spent where it was
intended.
The City of Weslaco uses the Executive Budget Model as a basis for establishing the yearly
budget. The city’s budget process follow the model in the form of three phases: (1) budget
development, in which department heads and senior staff draft recommendations to the City
Administrator and the Finance Director, (2) submission and justification, which includes
historical data, receipts, expenditures, proposed appropriations, and any relevant financial
reports and vendor and supplier estimates and contracts, and the (3) execution of the budget,
where the Mayor and City Council vote and adopt the budget into a binding legal document.

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4) Types of Budgeting – The City of Weslaco has adopted the following types of budgeting to
justify expenses, to itemize costs, to manage attainable goals, and show the relationships
between the funds provided to the public and the outcome of these services.
a. Zero-Based Budgeting – A form of budgeting in which all expenses must be
justified for each new period.
b. Program Budgeting – A form of budgeting developed by U.S. president Lyndon
Johnson, a budgeting system, contrary to conventional budgets, describes and gives
the detailed costs of every activity and program that is to be carried out in a budget.
c. Management of Objectives (MBO) – According to Peter Drucker, MBO is “a
systematic and organized approach that allows management to focus on achievable
goals and to attain the best possible results from available resources.”
d. Performance Budgeting – Investopedia defines performance budgeting as “a budget
that reflects the input of resources and the output of services for each unit of an
organization. This type of budget is commonly used by the government to show the
link between the funds provided to the public and the outcome of these services.”

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IV. Conclusion/Recommendations
The City of Weslaco should strive for the prestigious award issued by the Government Finance
Officers Association, the Certificate of Achievement for Excellence in Financial Reporting
Program (CAFR Program). This award is given to government that go beyond the minimum
requirements of generally accepted accounting principles to prepare comprehensive annual
financial reports, are transparent and fully disclose all financial activity.
The Judging Process - Each CAFR is reviewed using a checklist designed to determine:
 Compliance with generally accepted accounting principles (GAAP),
 Compliance with program policy as established by the GFOA’s Special Review
Executive Committee and the GFOA Executive Board.
 Reviews are performed by GFOA staff and members of the GFOA’s Special Review
Committee, which is composed of individuals from government, the public accounting
profession, and academe who possess specialized expertise in governmental financial
reporting, typically as a result of either preparing or auditing a CAFR that has received
the Certificate of Achievement.
 Reviewers are never selected from the same state as the CAFR being reviewed or from
the same firm that performed the independent audit.
The Certificate is awarded only if a consensus among reviewers is established and that a CAFR
substantially complies with both GAAP and program policy. A failure to comply with any
checklist item marked by an asterisk (*) is considered, of itself, sufficient evidence to justify a
determination that a CAFR has failed to substantially comply with both GAAP and program
policy.

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Eligibility Requirements - The following criteria must be met in order to be eligible for the award.
 Type of Report. The report submitted to the program must be the published (either in electronic
or hard copy format) comprehensive annual financial report (CAFR) of a state or local
governmental entity, which includes special-purpose entities such as public employee retirement
systems, public colleges and universities, government investment pools, stand-alone business-
type activities, and school districts. Component units and departments are eligible to submit their
CAFR, provided that they meet certain requirements described below.
 Scope. To qualify as comprehensive, the CAFR must include all funds and component units of
the entity, in accordance with generally accepted accounting principles.
 Separate component unit reports. A component unit that publishes a CAFR is eligible to
submit its report to the program for review, provided that it includes all of the component unit’s
own funds and (sub) component units.
 Separate departmental reports. A department of a government that publishes a CAFR is
eligible to submit its report to the program for review, provided that the department is composed
of one or more separate funds type(s) used in the government’s report.
 Audit requirements. The financial section of the CAFR must include an independent auditor’s
report on the fair presentation of the financial statements.
 Responses to prior year comments. If the government participated in the program in the
preceding year, its submission package must include written responses to all of the prior year’s
comments and suggestions for improvement.
 Demonstration of legal compliance. If the CAFR references a separately issued budgetary
report to demonstrate budgetary compliance at the legal level of control, it must submit one copy
of that report as part of its submission package.

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 Submission Deadline. All appropriate items must be postmarked or e-mailed to the Government
Finance Officers Association (GFOA) no later than six months after the government's fiscal year
end.
 In-house Reviews of Ineligible Reports. Occasionally, a government that submits a CAFR that
is deemed ineligible will desire to have staff perform an in-house only review of their report.
For more details and information on the awards offered by GFOA and the eligibility requirements,
refer to:
 Award Program Participant Information: http://www.gfoa.org/coa
 Award Program Requirements Information: http://gfoa.org/certificate-achievement-excellence-
financial-reporting-cafr-program

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V. References
Christensen, M. (2012, July 12). An Overview, The Executive Budget Process. Retrieved
September 28, 2015, from https://www.fas.org/sgp/crs/misc/R42633.pdf
Drucker, P. (n.d.). MANAGEMENT by OBJECTIVES (MBO), An Executive Summary.
Retrieved September 28, 2015, from
http://www.1000ventures.com/business_guide/mgmt_mbo_main.html
Incode Empowers Local Government, Tyler Technologies, Inc. (n.d.). Retrieved
September 28, 2015, from http://www.tylertech.com/solutions-products/incode-product-
suite
Government Finance Officers Association (GFOA). (n.d.). Retrieved September 28, 2015, from
http://www.gfoa.org/
Lee, R., Johnson, R., & Joyce, P. (2012). Introduction - What is a budget? In Public
Budgeting Systems (9th ed.). Jones & Bartlett Learning
Modified Accrual Accounting Definition | Investopedia. (2009, April 5). Retrieved September 28,
2015, from http://www.investopedia.com/terms/m/modified-accrual-accounting.asp
Performance Budget Definition | Investopedia. (2010, February 28). Retrieved September 28,
2015, from http://www.investopedia.com/terms/p/performance-budget.asp
The City of Weslaco Municipal Budget 2014-2015. (2014, September 12). Retrieved September
28, 2015, from http://www.weslacotx.gov/fin/ADOPTED BUDGET As of 9-12-14.pdf