Transcript Gary Perdew St. Lucie County Fire District  What is Budgeting?           Importance Public vs Private Policies Budget Cycle Language Revenues Fund Balance Expenditures Reports & Monitoring Tips.

Gary Perdew
St. Lucie County Fire District

What is Budgeting?










Importance
Public vs Private
Policies
Budget Cycle
Language
Revenues
Fund Balance
Expenditures
Reports & Monitoring
Tips

The process of allocating resources to fund
operations and projects.

Resources
 Ad Valorem Tax revenue
 Other Taxes (Communications Services, Gas…)
 Revenue Sharing Proceeds
 Charges for Service
 Impact Fees
 Grant Revenue
 Debt Proceeds
 Interest revenue

Operations and Projects
 Personnel
 Rent, Lease, Mortgage
 Utilities
 Expendables
 Equipment
 Improvements
The budget controls every monetary aspect of the
organization.
 In order to spend or obligate resources:

 The item must be a budgeted expenditure.
 Various levels of review before being placed into the budget.
 Internal transfers and, if necessary, Budget Amendments
should be in place.
 The item must be an approved expenditure.
 Various levels of control
 There must be enough cash-on-hand to cover the
expenditure.

Stringent controls are necessary because we are dealing
with Public Funds….Accountability.

Private sector:
Free to act in their own interest even if they clash
with the interests of the community.
 Not concerned with the economic health of the
community or other businesses.
 Market-based. If it is profitable they will strive to
remain an on-going concern otherwise they are free
to close the doors.
 Accountable only to shareholders.
 Not compelled to budget in the sunshine.


Public sector:





Receives mandate from the citizens. Must consider
their interests and promote business activity.
Depends on finding agreement among decisionmakers on what is important.
Law requires that budgeting decisions be open to the
public and media.
Incorporates extensive financial and budgetary
controls to prevent mismanagement and fraud.
Accountable to citizens for efficiency and
effectiveness.

A Policy Document.




Long-term financial policies.
Non-financial policies and goals.
Short-term initiatives that guide budget
development.
A comprehensive budget message.

Financial Policies
Revenue
 Reserve
 Investment
 Debt
 Financial Reporting….etc..
 Grants
 Capital Assets
 Internal Controls


Budget Policies
Inflationary Factors
 Requests (Equipment, Personnel, Extraordinary
Items)
 Internal Transfers and Amendments
 Millage Rate
 “All Funds”
 Staffing
 Health Insurance
 Contingencies…etc.


A Financial Plan



Includes all funds.
Basis of budgeting.
Summary of all major revenues, expenditures as well
as other sources of financing.
 Describe major sources of revenue, assumptions for
estimates and trends.



Summary of prior year actual, current year budget
and actual (or estimate), and proposed budget.
Projected changes in fund balances.
Description and disclosure of capital expenditures.

An Operations Guide




Activities, services and functions carried out by the
organization.
Objective measures of progress toward
accomplishing the organizational mission.
Organizational chart.
Summary of prior, current and budgeted personnel.

A Communications Device
Explanation of the effect other planning processes
have upon the budget and budget process.
 Description of the process for preparing, reviewing,
adopting and amending the budget.
 Charts and graphs where appropriate and a
narrative interpretation if the message is not selfevident.
 Statistical data.
 Formatted so that the average reader can navigate
the document and understand the content.

IDEA
FINAL
APPROVAL
REQUEST
PUBLIC
HEARINGS
PRELIMINARY
BUDGET
LEGISLATIVE
WORKSHOP
REVIEW
TENTATIVE
BUDGET

Preparation.
Budget instructions, calendar and letter from chief
administrator.
 Departments & Divisions develop requested budget.

 Justify certain expenditures and explain significant variances.
 Keep funds separate.





Established budget review process.
OMB/Finance estimates revenue and fund balances.
Revenue, fund balance and expenditures put together.
Balancing act continues throughout the process.
Which comes first, Millage Rate or the Budget?

Preparation (Calendar)
When do you start?
 How long does it take to Balance?
 Schedule the Revenue work also.
 When does the Certified Value arrive?
 Council Workshops
 Public Hearings
 Are there Citizen Committees?


Preparation (Budget Workshop)



Know what the rules are to prepare the budget.
Review existing policies.
Set Goals.
 Financial
 Programs
 Rates, Fees



If you present challenges – offer solutions.
Use Long Range Financial Models.
You want to conclude the workshop with consensus
and direction.

Approval.
Typically the governing authority is presented with
a recommended budget for review.
 Board gives staff direction.
 Staff prepares the tentative budget for Board
approval.

 Taxing authority provides TRIM information to the
Property Appraiser based on the tentative budget.

After two public hearings the final budget is
approved by resolution or ordinance

Implementation.

Major source of revenue does not begin flowing in
until November.
 Might have to delay major purchases or projects.

Must have an approved policy detailing the process
of adjusting the budget.
 Budget Amendment.
 Line-to-line transfer.

Monitoring.
 Revenues.
 Expenditures – negative balances and internal transfers.

Accountability
24/7
 Everything we do is in the “Sunshine” and subject to
public scrutiny.
 Independent Auditors look at the books.

 We report their findings at a public meeting and post
them on the website.

In public budgeting and finance, “Transparency” is
more than just a buzzword.
PREPARATION
APPROVAL
IMPLEMENTATION
ACCOUNTABILITY
IMPLEMENTATION

Capital Budget
Major capital purchases. $750 to $Millions.
 Separate CIP funds may be designated for this.

 Impact Fees, Gas Tax Revenue, Debt Proceeds.

Capital Outlay:
Purchase of fixed assets such as vehicles or capital
improvements that extend the life of an asset.
 Must have a useful life of at least one year.
 Must cost at least $750 although some entities elect more.


Contingency:
An amount set aside just in case.
 It is not expected to be spent.


Fiscal Year:


Full Time Equivalent (FTE)



The Budget Year, normally October 1st thru
September 30th (Except for the State)
40 / 80 / 2080 Hours/2496 for Firefighters
A part-time employee working 24 hours per week
= 24/40 = .60 FTE
Funds:


Cash on hand
A separate reporting unit (General, Special,…)

Operating Expenses:


Personnel Services:


A group of accounts covering everything from
Professional Services through Depreciation.
A group of accounts that include Salary, FICA, Social
Security and other Benefits. OPEB was just added.
Transfer:

(Internal) Shifting of funds within a department budget.
 Usually done to cover deficits
 Has no effect on the budget
 Avoid transferring between classes of expenses

Transfer (Continued)

An Interfund Transfer is a budgeted transfer from
one fund into another.
 Used for actions such as:
 To place funds into a Debt Service Fund
 Transferring matching funds for a grant
 To collect Indirect Costs
 Artificially inflates the budget

Truth In Millage (TRIM):

This document explains how your entity can remain
in compliance with TRIM requirements.
 How you receive the taxable property valuations from







the Property Appraiser.
Tentative and Final Budget.
Proposed/Tentative/Final Millage Rates.
The forms you must complete and return.
Required advertising and verbiage.
Public Hearings.
Resolutions or Ordinances.
Time lines for accomplishing all required tasks.

Uniform Accounting System Manual:



Published by State of Florida, Department of
Financial Services, Bureau of Local Government.
Everything you need to know about Fund Class,
Balance Sheet, Revenue and Expenditure Accounts.
www.myfloridacfo.com/aadir/localgov/
 At bottom of page select correct UAS Manual


OMB normally budgets revenues using the
Local Government Financial Information
Handbook produced by the state Office of
Economic and Demographic Research
http://edr.state.fl.us/content/localgovernment/reports & input from some
departments
Look at historical trends.

Know your community.



Be aware of any new sources of revenue.




Monitor Building Permits.
Follow the real estate activity in your area.
New surtaxes.
New programs that generate revenue.
Change in Charges For Service schedule.
Are you within the guidelines of your
legislative body?

Budget conservatively.


Simple Weighted Average over the past five years
should keep you out of trouble.
Using values of: 15, 20, 25, 30, 35


Average is 25 (Too Low)
Average % increase is 23.7%
 1.237 X 35 = 43.3 (Might be too high)

Using weights of .02, .03, .05, .10, & .80
 Weighted Average is 33.1 (Conservative but a number
you can live with.
Taxable Value
$10,150,791
Per $1,000
$ 10,150.79
Times Millage Rate
Total Revenue
3.94
$
TRIM Factor
Budgeted Revenue
39,994
95.%
$
37,994



Begin looking at this early in the process.
Run a Trial Balance Report and calculate
current Cash On Hand for each Fund.
Estimate revenues you expect to receive for the
remainder of the budget year.

Are there any unusual or seasonal receipts that you
should account for?
 Tax deed sales
 Excess fees from Constitutional Officers
 Cyclical revenue (Tourism or part time residents)

Estimate monthly expenditures and project out
to the end of the fiscal year.

Are there any unusual or seasonal expenditures you
should consider?
 Debt Service payments
 Balloon Payments

Look at your encumbrances and estimate the ones
that will be cleared before the end of the fiscal year.
 The Purchasing Department should help you with this.

Do this on a monthly basis and adjust your tentative
budget as necessary.



CAUTION CAUTION CAUTION
There is never a guarantee that you will have
excess fund balance to carry forward or what
the amount will be.
If you use this in your budget do not use it to
fund on-going operational or personnel
expenses.

Appropriate uses include:
 Contingency reserves
 One-time purchases (Vehicles or Equipment)
 Renovations or remodeling


Set a date after which requisitions will not be
accepted unless approved at the highest level.
If your system allows it, do not adjust the
budget when you roll the encumbrances.


It will throw your budget out of balance.
Budget a “Reserved For Encumbrances” line item.
 Line items will indicate encumbered funds.
 Transfer amounts from “Reserved For Encumbrances”
into the appropriate encumbered line item.
 The budget will remain balanced.


Current level of service versus an expanding or
contracting level?
Personnel Services require close scrutiny and
coordination with the HR Department.



Fewest lines in the budget but greatest impact.
OMB usually calculates and inputs into the budget.
Requests for new positions usually require
additional justification, costing out of the salary,
benefits, uniforms, equipment and vehicle cost.

Is there a change to the Pay Scale?









COLA
Step Increase
Merit Increase
Longevity
Is there a change in the employer paid portion of the
Health Insurance premiums.
Is there a change in the Worker’s Compensation rate?
If you have a retirement plan is there a change in the
actuarially determined contribution rate?
If OMB inputs the information each department should
check their personnel budget to verify the accuracy.
Authorized versus Assigned

Calculate the total cost of the new position and
place it into a line item titled “New Position”.

It will be reflected in the tentative budget but if not
approved you delete the one line item versus having
to adjust the line items for Salary, Fica, Medicare/
Medicaid, Retirement or Health Insurance.

Operating Expenditures




Departments and Divisions either submit their
request or input the information directly.
Use trends to estimate your needs.
Do your Budget Preparation Instructions include a
policy for anticipated inflation?
Some entities require a justification for certain
operating expenditures.




Furniture and Fixtures
Travel
Dues and Memberships
Training and Education

Capital Outlay



Items costing $750 or greater. Some entities
increased the threshold to $1,000 before the item is
placed on the Fixed Asset Inventory.
Usually requires additional justification or an
additional form to accompany the budget.
Request submitted by the Departments and
Divisions.

Administrative Fee/Indirect Cost

A fee charged to certain departments - normally
enterprise funds – for support services.








Executive
Administration
Accounting and Auditing
Legal Services
Purchasing
Facilities and Maintenance
Building space
Revenue is generally recognized in the General Fund
with the offsetting expense in the other funds.


The charges should be reasonable and quantifiable.
Fees should be based on a formula such as:
 Number of personnel assigned versus total personnel
 Square footage occupied versus total square footage
 Fund budget versus total budget
 Number of requisitions versus total requisitions
 Number of vehicles versus total like vehicles

Budget Detail Report




FTE Report



Tracks actual compared to budgeted FTE’s
Guard against over staffing and look for savings
Summarized Financial Statements


Shows every budgeted line item.
Budgeted, Actual, Encumbered and amount remaining.
Request entire budget, a specific fund or a department.
Allows tracking of the overall performance of a fund.
Enterprise Program Reports

Tracks the performance of programs that generate their own
revenue.

Contact person responsible for that budget.


You have to get them involved otherwise you are
enabling.
Options:
Transfer (Line-to-Line)
 Was it due to an unanticipated expense? Move
funds from contingency reserves. May require
Board approval.
 Ignoring the deficit is not an option.


Capital Improvement Plan


Capital Improvement Budget



5-Year schedule
Year 1 of the Capital Improvement Plan
Typically large and costly projects and often
requiring financing.
Consider and budget the impact to the
Operating Budget (add’l cost or savings).




Left over budgeted funds
Postponing a budgeted project
Making use of ‘found’ money
Un-budgeted Emergency item