FUNDING OF EMPLOYEE EVENTS

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Michelle Short, CPA Senior Accountant City of San Juan Capistrano A City I worked for in the past had an Employee Recognition Program as part of the budget so it was all above board. Michelle Bannigan City of San Juan Capistrano We budget a conservative $5,000 for employee relations and use that to fund: a summer BBQ, a Halloween party, and an ice cream social. This budget is in the City Manager s Department Budget and the City Manager s staff organizes/pays for these events. Rebekka G. Hosken Budget Officer I don t know the legal side but in our city there is a big value on optics and how this would look in the newspaper. We have two City-sanctioned events for staff, a summer picnic and a holiday party in December. These two items are budgeted for and approved by Council. They are clearly spelled out in the budget document and are in no way hidden. All other events for staff are not budgeted and are paid for by a personal contribution from Department Heads/managers or by a collection of funds from staff. For example, in my department, the five managers chip in to cover the cost of a department holiday party for staff members (which is held over a regular lunch hour). Not sure it helps but that s what we do. We are pretty conservative on this count. ISAAC MORENO CITY OF SELMA We do not and I believe the attorney is correct. If any type of employee event is held, donates are gather from the employee or outside of City staff. For example, the for the birthday club, employee that participate contribute a dollar amount and one person handles the funds. There is no expenditures run through the City or paid for by the City. Colleen M. R. Trask, Finance Director McKinleyville Community Services District We created something called the "Employee Fund." It is a voluntary deduction of $2 from every full-time employee's payroll, that shows as a small liability ("Due To the Employee Fund") in the General Ledger. We use it for birthdays, a portion of the Xmas party, sympathy cards, the annual crab feed and other events. A committee of the employees approves the expenditures. This way the District cannot be accused of gifting or otherwise misusing public funds, since the employees are using their own money. THEA VASSALLO Central Contra Costa Sanitary District A few ideas for you. We are a special district with 285 FTEs.

We have a 501c nonprofit set up for our EAO Employee Activities Organization There s a committee that does fund raisers during the year to raise monies for the holiday party. Bake, seasonal See s candy, book sale etc. Food donated by staff and then sold for $5. Contributions for the holiday party come from the District s attorney s, and bargaining units, and the management group also contribute toward this event. The organization use to get scrap metal revenues but those now go to the District and a position paper is done annually to cut a check from the District to the EAO in the amount of $4000 to go toward the holiday luncheon arranged by the EAO Committee. We also have voluntary payroll deduction contributions (tax write off since nonprofit). Employees can designate a $ amount. We have an annual Employee Appreciation BBQ event which is planned and budgeted by HR. Employee service awards luncheon is also budgeted and arranged by HR annually. BBQ s done by the field crews, the meat is paid for by the Division managers. Sarah E. Waller-Bullock Director of Finance City of La Mesa All of our employee events for the City of La Mesa, including the annual employee appreciation lunch and retirement events, are paid for by either Senior Management staff (in the case of the employee lunch) and attendees (in the case of retirement events). Birthday celebrations, department Xmas parties, and BBQ/potlucks are all paid for by employees. No public funds (other than staff time for planning) are used to pay for these events. Tina Rivera Chief Financial Officer United Water Conservation District We have addressed this very issue in my current and past Finance Director life. What I ve learned is that these celebrations must have been identified as having a public benefit in order to spend public funds. The way we ve made that public benefit correlation is by adopting an employee recognition policy. I ve attached a copy in case you re interested in seeing. This has been adopted by the Council or Board and legitimizes the use of public funds. Please let me know if I can be of any further assistance or if you need the policy in Word version. (Email provided ) if you want the Word Version, Tina Rivera tinar@unitedwater.org Policy 18) Employee Recognition.pdf Joan Michaels Aguilar Deputy City Manager Administrative Services City of Dixon We have a line item in our budget called Employee Event dollar amount varies year to year, sometimes $1500 and this year $3000. Usually a catered lunch, one thought for this year was renting the IN n Out truck and including families and having later in the ay. Any raffle prizes are typically donated by City Manager and department heads.

Donna Coonan Financial Services Manager City of Palos Verdes Estates I currently work for a small agency and often times City will purchase food for a meeting, working lunch etc. We have an annual Employee Recognition Dinner each year which is quite nice. Employees can bring a guest and all elected officials attend. There is dinner and wine and employees who reach various milestones anniversary dates with the City will receive a nice gift. My previous agency was a large transit agency and the policies were very different. There was a strict no food policy at meetings. The holiday party was either a pot luck or scheduled at a restaurant but each employee paid for their own meal.

Linda Leaver Director of Finance City of Crescent City We recently updated our Use of Public Resources policy and determined the City cannot provide funds for employee events. The employees can (voluntarily) contribute if they want to have those kinds of events, but the City can't. This even includes things like a coffee machine for the break room. COPY OF CITY OF CRESCENT CITY USE OF PUBLIC FUNDS POLICY City funds are to be expended for legitimate public purposes only and not for private personal gain 1. All funds received by the City are considered public funds and should only be used when there is a substantial benefit to the City. The best test to use when determining whether an expense is appropriate is called the public scrutiny test. The test is simple and merely asks whether the taxpaying public would view the expenditure as necessary to support the City s mission. Authorized Expenses Expenses incurred in connection with the following types of activities generally constitute authorized expenses for employees and City Council, as long as the other requirements of their respective policies are met and when there is appropriate budget available 2 : 1. Official Travel (see the City Travel Policy for guidelines on what is deemed travel status ) 2. Registration (for educational seminars, workshops, and conferences) 3. Meals as entertainment (only when the main purpose of the combined business and meal is the active conduct of business; business is actually conducted during the meal period; and there is more than a general expectation of deriving income or some other specific business benefit at some future time) 3 4. Meals provided for the convenience of the employer (meals provided on premises during working hours so that an employee will be available for emergency calls during the meal period) 4 5. Transportation expenses for local business travel 6. Length-of-Service recognition (An award qualifies as a length-of-service award if the employee does not receive this award during their first five years of employment and did not receive 1 State law prohibits personal use of public resources. See, e.g., Cal. Gov t Code 8314 (making it unlawful for local officials to use public resources for personal or campaign purposes). 2 Local agencies that have authority to reimburse employees and City Council Members for expenses incurred in the performance of their official duties just adopt, in a public meeting, written expense policies that specify the types of occurrences which will be reimbursable. See Cal. Gov t Code 53232.2(b). The policy may also specify rates or default to IRS rates. See Cal. Gov t Code 53232.2(c) 3 See IRS Fringe Benefit Guide Office of Federal, State, and Local Governments (2014) pg.46 (authorizing meals that can be directly tied to conducting business) 4 See IRS Fringe Benefit Guide Office of Federal, State, and Local Governments (2014) pg.43 (authorizing meals provided on the employer s business premises and for the convenience of the employer );

another length of service award during the same year or in any of the prior 4 years. A traditional retirement award, however, is an exception to the 5-year rule) 5 Examples of Appropriate and Inappropriate Use of Public Monies This section identifies specific practices and procedures to be followed by all City employees and public officials when using public funds. The following list is intended to provide examples and may not be all inclusive. Food and Refreshments A. Alcohol: The purchase of alcohol is never an acceptable use of public funds. B. Meetings and Conferences: Meals and snacks are normally a personal expense. Any meal or snack paid for with public funds must be a reasonable price and an integral part of employment duties. Meals and snacks can be paid for with public funds if the meeting is a breakfast, lunch, or dinner meeting where attendance during meal time(s) is a requirement of an employee s job duties. The number of City employees and public officials in attendance for this meeting where food is provided must be noted on the receipt. All food receipts must be itemized this includes catered meals. C. Coffee and Beverages: Coffee and other beverages are normally a personal expense. A voluntary collection can be made from those who desire to have coffee and other beverages on City premises. Except for meetings and conferences (Item B) and public areas (Item F), coffee and beverages shall not be purchased with public funds. D. Employee Break Room Supplies: Public funds should not be used to stock supplies such as plastic ware and paper products in employee break rooms. A voluntary collection can be made from those who desire to have such supplies. E. Individual Receptions: Receptions for individual employees should never be paid from public funds. This includes retirement dinners, staff meals, welcome aboard receptions, and similar gatherings where food and/or refreshments may be served. Voluntary collections can be taken from those attending such gatherings. F. Public Areas: In some cases, a building or part of a building is routinely open to the public for conducting City business, such as a Town Hall Meeting or Chamber Mixer. Having refreshments of nominal value available to members of the public are considered acceptable under these circumstances. Gifts G. Employee Gifts: Expenditures of public funds for gifts, or gift cards to employees and public officials are not authorized. This includes gifts purchased for employee birthdays or other personal occasions. Voluntary collections from staff would be an acceptable way of purchasing employee gifts. H. Tokens/Clothing: The purchase of tokens of appreciation, or personal clothing (e.g., coffee mugs, pens, tote bags, T-shirts/apparel, etc.) is not authorized. 5 See IRS Pub. 15-B (2016) pg.7; Pub. 535(2015) Chapter 2, pg.7; and IRS Fringe Benefit Guide Office of Federal, State, and Local Governments (2014) pg. 68.

Awards and Recognition I. Length-of-Service Awards: At times, awards are appropriate for presentation to City employees and public officials in recognition of their length of service. City awards must meet the following criteria: Must be given for length of service Cannot be disguised as wages Must be awarded as part of a meaningful presentation Must be an item of tangible personal property (cannot be cash, cash equivalent, vacations, meals, lodging, theater or sporting event tickets, stocks, bonds) J. External Awards and Recognition: At times, awards are appropriate for presentation to people or organizations external to City staff. External awards shall be determined by the City Council and the City Manager in advance. Break Room Equipment K. Equipment: Microwaves, refrigerators, coffee pots, toaster ovens and other similar equipment items may be procured with public funds for use in public reception areas and employee break rooms. Otherwise, these items must be purchased with personal funds. In all instances, all fire and OSHA safety restrictions must be observed. Equipment items purchased with City funds are not authorized for use in individual offices. Holiday Parties, Decorations and Cards L. Holiday Decorations: Office holiday decorations shall not be purchased with public funds. Citywide holiday decorations (e.g., street lights, tree lighting, etc.) are considered an appropriate expense and shall be budgeted accordingly. M. Holiday Cards: Holiday cards shall not be purchased with public funds. N. Holiday Parties: Staff holiday parties and meals are a personal expense. Voluntary collections may be taken to fund holiday events. Public funds shall not be used for holiday parties.