Transcript Communicating Bad News

B U D G E T E X P L O R E R v. 5. 0
Multiyear Financial Forecasting Software for K-12 School Agencies
CCSESA Session III
AB 1200 Fiscal Oversight
Using Budget Explorer
Presented by:
Anthony Bridges, CFE, Deputy Executive Officer
Marisa Ploog, CPA, Fiscal Intervention Specialist
AB 1200 Using Budget Explorer
Intervention Starts with the COE
Looks like another “immunity challenge” lies ahead in 2012-13
AB 1200
INTERVENTION STARTS WITH THE COE
 Intervention is progressive and needs technical tools
− The type of fiscal intervention should be tailored to the
severity of the district’s financial problems
− An adverse interim report or disapproved budget requires
the COE to determine the level of corrective action
 Remember, the COE goal is to assist a district in resolving its
financial problem at the lowest level of outside intervention
MULTI YEAR FINANCIAL PROJECTION
From 1994 through 2000, no state emergency loans
What has changed?
 SACS Requirements – minimal
− Simple spreadsheets
− COE requested districts to demonstrate basis for SACS
certifications
 Continued State Budget reductions & cash deferrals
CASH FLOW PROJECTIONS
Historical Practice
 Accounting exercise – no deferrals
 Just another form requirement
 Spread budget balances evenly over remaining months
Present Circumstance
 COE provides fiscal intervention to local school districts –
Cash shortfall = COE loan or State Intervention Trigger
WHEN LACK OF CASH TRIGGERS A CRISIS
 Cash shortfall requires State Loan, referred to in Ed Code
as Emergency Appropriation
 Urgency Bill, sponsored by local representatives to the
State Legislature
 Requires two thirds vote of each house of the Legislature
 Requires Governor’s signature
 Process may take from 4-6 months
State Intervention Process
AB 1200 FISCAL OVERSIGHT
STATE LOANS
 Of the 8 districts and community colleges that have received
state loans, 6 were certified qualified or positive at the interim
immediately preceding the need for a state loan.
 In comparison to other districts with state loans, King City
bears an increased burden in financing and repayment of its
state loan since it is not held harmless from the costs
associated with financing and the loan carries a significantly
higher interest rate.
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WHAT HAPPENS IF A DISTRICT GETS INTO
FINANCIAL TROUBLE?
 Intervention by the county office of education
 The role of FCMAT
 Responsibilities of a fiscal advisor
 Responsibilities of a trustee
 Responsibilities of a state administrator
 Superintendent & Board get voted off the island
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WHY DISTRICTS FAIL— COMMON ERRORS
• Lack of a position control system
• Overly aggressive estimates of enrollment and ADA
• Failure to consider loss of enrollment to new or expanding charter
schools
• Poor or nonexistent charter school oversight
• Loss of control of staffing costs—total compensation
• Poor agreements made in collective bargaining
• Rescinding layoff notices too early
WHY DISTRICTS FAIL—COMMON ERRORS, CONT.
• Not monitoring encroachment in restricted funds
• Chronic, unplanned deficit spending
• Underestimating the amount of “real” cuts to balance the budget
current plus two years
• MYFP errors or lack of detailed assumptions
• Not treating federal revenues as one-time
• Not restoring expenditures for one-time furlough days/salary
reductions in subsequent fiscal years
• Use of one-time money for ongoing expenditures
WHY DISTRICTS FAIL—COMMON ERRORS, CONT.
• Not responding to state funding reductions quickly enough or
generally being too slow in decision making
• Ineffective in cost containment for special education programs
• Miscalculating debt service capacity of developer fees and RDA
and having the general fund pick up the difference
• Not using proper modeling for dealing with cash deferrals—
dividing by 12 is not a good strategy
• Incorrect or nonexistent cash flow projections
• Board/staff dysfunction
• No Cash
WHAT IS “FINANCIALLY TROUBLED?”
 A financially troubled district:
− May have a history of deficit spending
− May have qualified or negative interim reports
− May have its budget disapproved by the County Office of Education
(COEs)
− May not be able to conform to multiyear projection standards
− May not have enough cash to meet its obligations
− Probably has poor oversight and monitoring of its finances
− May have all of the above!
 In short, a district that cannot meet state standards on its own
 There is no “hidden immunity idol” for those who fail to plan
MULTI YEAR AND CASH FLOW PROJECTIONS
Using Budget Explorer
 MYFP/cash flow are significant technical tools
 MYFP is a significant communications tool
 Assumption details are critical when it comes to
MYFP Most accurate in the base year, least accurate
in the last year (year 3 generally)
 The SSC Dartboard keeps us consistent statewide
 Preparing a MYFP or cash flow may feel like an
“immunity challenge”
FINANCIAL PROJECTIONS– TODAYS NECESSITY
Multi-Year Financial Projections Using Budget Explorer
 BE provides for detailed analysis
 New focus on resource/program demands today AND
tomorrow
 Identify and document MYFP shortfalls early on to provide
greater response time
 Provides a path for COE’s & Districts to build “Alliances” to
strategize and prevent being voted off the island
 Teaching moments
FORCASTING – TODAYS NECESSITY
Using Budget Explorer
Cash Flow Projections
 Districts may not qualify for TRANS or have other funds
 Know the districts monthly payroll requirements
 Know the possible encroachment demands of restricted
resources
 Communicate-Communicate-Communicate – meet with your
districts
MAXIMIZING BE PERFORMANCE
 Supports any internet browser including:
− Google Chrome, Firefox, Safari, Internet Explorer
 New Server Hardware, Virtual Server Environment
 Optimized software
BE MODEL MANAGEMENT
 Creating a new model
− Import SACS file
• Detail limited to SACS roll up
• Locally defined resources must be established and redistributed
− Import from financial system
• Requires coordination with COE & technology services
• Greater detail – all resources – detailed object codes
 Copying an existing model
− Retails detail & rules
− Updates may be needed
ADDING NEW PROJECTIONS
SHARE PROJECTION
Building Alliances with your Districts
 Select projection (mouse over and click)
 Click
button
 On the projection sharing
screen select User and
click button
for Read-only group
or Read-write group
NAVIGATION TREE
• Summary– Unrestricted – Restricted
• Import from SACS file roll up
-Add resources for locally defined
-Deleting resources with no activity
TAB 1.) HOME – Projection Adjustments
 General projections settings listed on mouse over
 Home page Statistics section contains links to projection
adjustments
− Upload base values
− Change projection title
− Change number of years
to forecast
− Enable/disable audit logging
TAB 1.) HOME – Audit Log
 Audit log is enabled by default
 Use report page to revise audit log for the
projection
TAB 2.) RULES
• Rules drive assumptions
• Rules never affect the “base
year” (Budget Import)
• Based on SSC Dartboard
• Rules can be modified for
specific resources or objects
• Hovering mouse over rule
icon
TAB 3.) ENR/ADA/STAFFING
•
Extra care here can make
a big difference in the
MYFP
•
Has a direct affect on
projected:
ADA population
Revenue Limit sources
•
Prefill from CBEDS
•
Projection methods
Cohort progression
Kindergarten
TAB 4.) SALARY FORECASTER
• Allows for greater detail in
future costs
• Managed by resource
• Only salaries in object
1100
Base revenue limit per
ADA imports from
SACS form RL
ADA data imports from
Enrollment and ADA
screens
TAB 7.) AUTO BAL
 Used to balance resources with negative ending fund
balances in MYFP
 Make all adjustments first! (including indirects)
 This step is usually done last when completing MYFP
 Two approaches:
−
Reduce 4s, 5s, 6s (but you can change the sequence)
−
Contribution from unrestricted (SpEd, RRM &
Transportation)
TAB 6.) CASH FLOW
 Matches budget data in the resource summary
 Multiyear cash flow projection
 Established projection schedules
 Cash deferrals schedules are updated
 Revenue by resource detail or aggregate
 Expenditures always aggregate
 No required entry order
 FCMAT cash flow tutorial
CASH FLOW ACTUALS - Upload
 Actuals can be uploaded from file using
button
 CSV file format can be found on the Upload cash flow
actuals window under sample file link
 Select action for objects
and import mode
CASH FLOW CREATION
If you did not enter your
balance sheet information
when you initially created
your model start by
selecting “create
projection” and enter
them.
You can also enter them
directly on the cash flow
screen.
ADDING ADDITIONAL ASSET & LIABILITY
ACCOUNTS
Clicking the icons in the asset or liability
GL section will provide you with additional
common object code selections
CHECKING YOUR BALANCES
Checking your balances:
+ Beginning cash
+ Budgeted revenue
- Budgeted expenditures
+ General ledger asset balances
- General ledger liability balances
= Projected Ending Fund Balance
ACCESSING THE CASH FLOW PROJECTION
DETAIL REVENUE TRANSACTIONS
 Revenue data is stored by individual resource and object
 Access and enter revenue
transaction detail by clicking on the
object code series
PROJECTION DISTRIBUTION SCHEDULES
 BE automatically includes the updated deferral schedules
 Revenue receipt schedules established by funding
source/resource
 Expenditure disbursement schedules established for each
major object code range
 Established schedules can be viewed by selecting the
tab on the cash flow
TAB 8.) TOOLS
 Disclosure of Collective Bargaining Template
 Fiscal Health Risk Analysis Report
TAB 9.) REPORTS
EDIT VALUES REPORT GENERATED
From resource screen this option
provides you with detail across
all resources for a particular
object code. Good for balancing
detail such as 8980, 8990, and
7310.
May require further drill down to
access……..
PLANNING BEYOND NEXT YEAR
DEVELOPING THE MYFP
 Other Fund Analysis
 Future Salary Agreements
 Future Program Needs
− Technology maintenance
− Opening/closing a school
− New textbooks
BUDGET EXPLORER FOR CHARTER SCHOOLS
 983 Charter Schools year to date
 Approximately 100 charters schools approved
annually
 FCMAT is in the software development process
 Anticipated release in August\September 2012
 Includes calculations for the General Purpose
Apportionment and Block Grants
 Software using “Wizard” approach with
questions to populate data
BUDGET EXPLORER FOR CHARTER SCHOOLS