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HomeMy WebLinkAbout09 TRAVEL & EXPENSE 10-06-03AGENDA REPORT Agenda l~m Reviewe~ City Manager Finance Dimc~r MEETING DATE: October 6, 2003 TO: FROM: SUBJECT: William A. Huston, City Manager Ronald A. Nault, Finance Director Travel and Expense Guidelines SUMMARY: Staff has completed an extensive review of the Travel and Expense Policy that was adopted by the City Council in 1993. We are recommending changes to the policy that will maintain compliance with existing IRS regulations, meet the needs of staff when they travel, and provide an efficient means of administration. RECOMMENDATION: That the City Council adopt the attached Travel and Expense Guidelines and authorize the City Manager to make less than substantive changes that may be required from time to time. FISCAL IMPACT: None. DISCUSSION: There have been many operational changes since the existing Travel and Expense policy was first adopted in 1993. We have reviewed current IRS regulations for business expenses, compared policies from other agencies, and have made functional and administrative changes in our policy. The most significant is the change from an overly structured meal by meal reimbursement plan to an accountable expense reimbursement plan that complies with the current IRS rules for business expenses as detailed in Publication 535. The rules allow a fixed amount "per diem" for meals and incidental expenses (M&IE) on a State by State and City by City basis. The current maximum M&IE rate for California is $46.00 per day, this is slightly less than our old policy of $50.00. Employees will still be required to substantiate the expense by reporting the time, place and business purpose, but they will have more flexibility in how they may use their meal money. We have also reduced the miles requirement for an overnight stay from one hundred to fifty miles and/or a two-hour commute. We have found that traffic has increased in all parts of Southern California and employees who are asked to attend meetings or training programs cannot travel for a reasonable period and arrive at the venue on time. The remaining changes were to identify responsible parties, compensation for travel time, accounting for expenses, and a new Travel RequestJReconciliation Form. The revised "Travel and Expense Guidelines" is in conformance with IRS regulations, should be easier to administer, and will expedite the processing of requests and reconciliations. It also makes clear several ambiguities that were present in the previous policy. Staff has reviewed the new guidelines with the City's Audit Committee, incorporated minor changes they recommended and have brought the revised guidelines to the City Council for approval. Attachment RAN:TravelS, nd ExpenseGuidelinesStaffReport,doc CITY OF TUSTIN TRAVEL AND EXPENSE GUIDELINES The City of Tustin encourages attendance at conferences, seminars and meetings to enhance employees' and officials' understanding of their duties and responsibilities. These guidelines establish the basic policies and procedures for travel on City business and as set forth constitute an accountable expense reimbursement plan. Everyone who travels on City business, or supervises someone who travels, is responsible for knowing and following these guidelines. These guidelines are organized into the following sections: General standards Planning an official trip Completing the Travel Request/Reconciliation form Making the trip Incurring non-travel expenses Accounting for expenses GENERAL STANDARDS City employees and officials will be reimbursed for approved and necessary expenses incurred while traveling to conduct City business. Necessary expenses can include transportation, lodging, meals, parking, tips and other expenses such as fax, mail, e-mail, etc., approved by the Department Head. These guidelines are not intended to address every situation, exception or contingency that may arise in the course of City travel. Accordingly, the basic standard that should always prevail is to exercise good judgment in the use and stewardship of the City's resources. Specific questions not covered here may be directed to the Finance Director. PLANNING AN OFFICIAL TRIP Method of travel When planning the transportation portion of a trip, the employee must consider all aspects of cost to the City, such as: daily expenses, overtime and lost work time, as well as actual transportation costs. In general, common carriers are the preferred mode of transportation. Page 1 of 5 Whenever practical, City owned vehicles shall be used for travel. If a City vehicle is not available, or if there is another reason why the employee should drive his/her personal car, the City shall reimburse the employee with either the cost of the most appropriate means of transportation or the actual mileage involved in the travel, whichever is the lesser of the two. The reimbursed mileage rate is the Standard Federal Mileage Rate set by the Internal Revenue Service at the time of the travel. To drive a privately owned vehicle on City business the employee must: Possess a valid California driver's license. Carry liability insurance, as required by the State of California. Realize that any damage to the employee's personal vehicle and/or service or repair occurring on the trip will be the employee's responsibility, as these costs are included in the City's per mile cost reimbursement. If local transportation is needed at the destination, the use of public transit such as buses, streetcars, taxis and subways is appropriate when safe and practical. The employee will be reimbursed for these expenses. Receipts are required and no per diem is allowed. If a car rental is required, the employee may request reimbursement upon return. Compensated Time Compensation for time spent for travel, training and conference attendance shall be in conformance with the Fair Labor Standards Act (FLSA) and the U.S. Department of Labor (DOL) CFR, Title 29, Chapter V, Part 785 (Hours Worked), Subpart C. Lodging Lodging is allowed when approved by the Department Head for attendance at conferences, seminars or meetings that are in excess of 50 miles or two hours of travel time from the employee's normal domicile. Reasonable lodging expense will be paid at actual cost (including applicable fees, taxes and parking) for as many nights as necessary. The accommodations used should be economical but practical. In general, the employee should select the most reasonably priced accommodations available consistent with the purpose and goals of the travel. When making lodging reservations, be sure to ask if a "government rate" is available. Some cities exempt travelers on government business from the local transient occupancy tax (TOT). This can be as high as 12-15% savings on lodging costs depending on the local TOT rate. Page 2 of 5 COMPLETING THE TRAVEL REQUEST/RECONCILIATION FORM Prior to travel, employees must prepare a Travel Request/Reconciliation form and attach a copy of the flyer or brochure announcing the event, as well as any other appropriate supporting documentation. All requests must be approved by a Department Head and, to obtain either direct vendor payments or a cash advance, should be submitted to the Finance Department at least ~vo weeks prior to travel. Requests for payments to vendors and/or cash in advance There are three ways to pay for travel expenses: "direct vendor payment", "cash advance", and "employee reimbursement". Direct vendor payments are made by the City to an organization to pay for specific costs related to a trip. These are usually registration fees, lodging, and airfare and can be paid through Accounts Payable. Cash advances are lump sum payments made to the employee prior to the event to cover expenses as they arise on the trip. The third method of payment occurs when the employee elects to pay for all travel related expenses first, and is reimbursed upon completion of the travel. Upon return from the event, the employee must account for all expenses incurred, and return any unused portion of an advance. The employee will be reimbursed the difference if the actual, authorized expenses incurred exceed the amount advanced. The completed Travel Request/Reconciliation form is to be submitted to the Finance Department, itemizing all expenses associated with the event, and approved by the Department Head. All required receipts must be attached. The Travel Request/Reconciliation form is due to the Finance Department within 10 working days of the employee's return. If it is not received in the Finance Department within 30 days, the advance must be considered "unsubstantiated". At that point, the amount of the travel advance will be deducted from the employee's next paycheck. MAKING THE TRIP Keeping records for all reimbursable expenses As discussed below under "Accounting for Expenses", you must maintain a detailed record of all reimbursable expenses incurred during your travel: meals, transportation, lodging, baggage handling, parking fees, registration fees, telephone, and any other reasonable and necessary expenses. Page 3 of 5 Meal allowances Employees will receive a daily allowance ("per diem") for meals and incidental expenses (M&IE) relating to business travel. The per diem limit will be updated periodically in accordance with changes to IRS Publication 1542, Per Diem Rates (for travel within the continental United States). The current allowable per diem rate for M&IE is $46.00. Using the Per Diem rate allows for less paperwork for both the employee and the City (since receipts are not required), as well as provides for the employee to eat well while traveling on City business. · Per Diem does not include meals eaten prior to or after the trip. During partial days of travel, per diem reimbursement shall be reduced for such items. If meals are provided as part of a program or while in transit (meals served on a plane, for example), the following amounts are to be used to reduce the daily allowance. Breakfast - $10 Lunch - $12 Dinner-S24 Meal expenses incurred while conducting routine daily work assignments will not be considered reimbursable (e.g., employee evaluations, project discussions, etc.) The City will not reimburse for the cost of any alcoholic beverages. INCURRING NON-TRAVEL EXPENSES AdditionalExpenses Miscellaneous expenses related to the conference, seminar or meeting that are not specifically covered in other sections may be reimbursed. Examples of such items include parking fees, fax, mail and e-mail charges. Receipts are required - these items are reimbursed as separate expenses and no per diem amount is allowed. ACCOUNTING FOR EXPENSES An "Accountable Expense Reimbursement Plan" must meet the following requirements in order to be considered a tax-exempt payment to the employee by the Internal Revenue Service. · The employee must substantiate the expense incurred. · The employee must refund any reimbursement in excess of substantiated expenses. · The reimbursement must have a business connection. Page 4 of 5 If the above requirements are not met, the payment to the employee becomes taxable as wages and is reported as such on their W-2. If an employee has lost a receipt for a travel-related item, a notation is required. The notation must include the following: Include all receipt information such as place of business, amount, date, description of item. · The employee must initial it. · The Department Head must initial it. Department heads approving expense reports are responsible for ensuring that: · All expenses are reasonable, necessary, and consistent with these guidelines. · Required receipts are attached. · The final disposition is correct (e.g., balance due employee, balance due City). · Any amounts due to the City are reimbursed. · Final accounting of all expenses is submitted to Finance. ATTACHMENT Files&Forms:TravelAndExpenseGuidelines,doc Page 5 of 5 TRAVEL REQUEST / RECONCILIATION FORM DATE: TO: Finance TRAVEL REQUESTED FOR: REASON FOR TRAVEL: LOCATION: FROM: DEPARTMENT: DATES: Estimated Expenses: Registration fees: Transportation: Lodging: Meals: (not to exceed current per diem) Other: (explain) Total: Actual Expenses Incurred: Registration fees: Transportation: Lodging: Meals: (not to exceed current per diem) Other: (explain) Total: RECONCII~IATION Amount Requested to be Advanced to Employee Budgeted in Account Numbers (01 000 1260) TOTAL EXPENSES Less Amount Paid Directly by City Less Amount Advanced To Employee Balance Due City / Employee (Credit) / Debit Account Numbers Employee Signature Date Employee Signature Date APPROVALS: Department Head Date Department Head Date Retain a copy of Request Form for your records. Submit to Finance with Reconciliation completed within ten working days after you have returned to work from the travel. Amounts due the City should be attached to form. Amounts due the employee will be paid the next available warrant run. Thank you. Files&Forms:TravelRequestAndReconciliationForm.doc