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Proposed city purchasing policy would update current practices

WILLMAR -- The Willmar Finance Committee began discussion Monday of changes to the city's purchasing policy, including the removal of a current rule stating all capital improvement project purchases over $10,000 be brought back for committee and ...

WILLMAR - The Willmar Finance Committee began discussion Monday of changes to the city’s purchasing policy, including the removal of a current rule stating all capital improvement project purchases over $10,000 be brought back for committee and City Council approval, even though they were already approved in the budget.
“You work hard to put out a capital improvement program and then we have this redundant process it goes through. I would like some clarity on it,” City Administrator Larry Kruse said.
According to Tribune archives, the Willmar City Council in 2013 adopted a policy that required expenditures over $10,000 in the vehicle and equipment replacement program and the capital improvement program be presented to the appropriate committee and then to the full City Council for approval prior to the money being spent.
Steve Okins, finance director, presented the Finance Committee with a first draft Monday of an updated city purchasing policy. He was directed by Kruse to develop a written policy.
“There is conglomerate of a number of items. This policy is solidifying some past practice rules. It was time to get this updated,” Okins said.
Kruse requested the new policy so that he and the rest of the city staff would better be able to follow city rules when it comes to purchasing.
“We really need to understand what we’re doing. Putting it down in black and white,” Kruse said.
The purchasing policy would also update past city practices regarding purchase limits for the city administrator regarding budgeted and unbudgeted purchases. Currently the city has a $20,000 limit. The new policy would increase it to $25,000, which is state statute.
Most of the purchasing limits and bidding processes in the new policy follow closely with state statute, Okins said.
Department directors would be able to approve purchases up to $5,000.
All payments and purchases over $25,000 would need to be pre-approved by the City Council, unless the total project was already approved by the council.
Other items that do not require council approval - that do exceed otherwise authorized limits but are budgeted - include payroll, employee expense reimbursement, insurance premiums, routine operations such as supplies and cleaning services, items previously approved by the council and emergency payments or other payments to avoid late fees or interest charges.
There were concerns regarding the purchase of unbudgeted items without council approval or at least knowledge. The purchases would only be approved if there is money in the budget to pay for them, Okins said. This could happen if another item or project cost less than budgeted.
In theory there really should be very few unbudgeted purchases because the majority of needed purchases or projects should have been put in the capital improvement program, Okins said.
“We’re not trying to hide anything here, but move it along,” Kruse said.
However, the council members on the committee were still unsure about it.
“My only concern is the unbudgeted stuff. I still have some angst there,” Councilman Denis Anderson said.
“One of my issues with this is how would the council know what is going on with the budgeting process,” Councilman Tim Johnson said.
There was discussion about lowering the amount the city administrator could authorize regarding unbudgeted purchases without council approval or requiring reports to the council about purchases being made.
“The level isn’t as important to me as the reporting to the council is,” Councilman Shawn Muske said.
Another addition to city policy would be purchase orders, which are currently not city policy. For purchases under $5,000, purchase orders are not required. However, for purchases from $5,000 to $25,000 they would be.
“This would tighten up the purchasing,” Kruse said.
The policy also lays out the competitive bidding process, coding invoices and selecting new vendors.
City staff will take the ideas and changes brought up by the committee and update the draft policy. It will be brought back at the next committee meeting.

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