Tying FYF to Operations
- 1. Tying Your Forecast to Operations BY Chris Mohr President K-12 Business Consulting, Inc. SE Chapter of OASBO
- 2. What’s Your Budget Process? Buy operations I mean the budget We all have a process or should have a process It shouldn’t be just about complying with R.C 5705.36 It doesn’t have to be lofty or ornate It needs to be something you can commit to Make sense to you, the administration and BOE Makes sense so you can help BOE and administration make educated and informed choices Promotes effective communication to various groups Whether you have this written down or not most if not all of your processes do certain elements of these Do you feel your BOE or administration are confused about the forecast, appropriation resolution, tax budget, monthly report, and year end report and how they relate?
- 3. Our Process Ties Forecast to Budget/ (Operations) Start With October 2011 FYF12 for FY13 Tax Budget is Just FYF Reiterated Budget Training March 2012 Five Year Forecast Updated May 2012 Create Budget Document for FY13 Appropriation/Budget Document FY13 Approved June 2012 Year End Report Reviewed FY12 ended Monthly Reports for New FY13 Start Over October 2012 FYF13 for FY14
- 4. SCSD Budget Process In Documents Aug 12 July11 July 12 July12 Ju 11 May 12 Mar 12 Oct 11 Start
- 5. Five Year Forecast Is The Main Document BOE’s and administration can get the FYF is the main document make sure everything ties back to it If they understand then communication gets easier and people will begin to understand mystery of school funding If people feel they understand what your talking about your stature and value increase…no one trusts a mystic! Most months during the year my forecast presentation is one word…”solvent”! I am not joking! So the key to tying forecast to operations is 4 digit Receipt Codes for revenues and 3 digit Object Coding for expenses since lines on the forecast tie to these coding levels Consistency in coding FYF to Budget is key
- 6. Tying Forecast to Operations Some common problems - Revenues • Coding PUPP to Line 1.01 or 1.02…who cares? Be consistent! • Medicaid reimbursements posted to “restricted state funds” • R&H Posted incorrectly to Gen Fund (i.e. not to 002, 003 , 034) • TPP fixed rate and sum same as above • PILOTs “other Income 1880” • Non School District TIF’s paid by County Auditor 1111 or 1112 tax collections • HB264 or TAN revenue post to either 002 or leave in 001 just be consistent I have seen AOS accept both • Emergency levies fund 016 but almost all districts post in 001 • Post casino revenue to 3190 I see colleagues spending inordinate time determining revenue that is immaterial. Use time wisely! Tie forecast revenues to Amended Certificate
- 7. Tying Forecast to Operations First you should tie FYF to Gen Fund Budget it is logical and if you are dead-on only encumbrances will be the difference in cash flow. This I feel is a best practice! Focus your time on where you spend 80% of your money Suggestions to consider that can help sort out variances and get you to your base wages paid this will help make your wage estimates more accurate: Wages – Use a 132 and 162 object for termination benefits Wages – Use a 116 and 142 object to track substitutes Wages – Use a 117 and 147 for supplemental contracts Wages - Use a 144 for over time Wages- budgeting Ed Jobs in FYF twice & 27 pay issue Fringe Benefits- Know your FB’s by % of wages for major categories Retirement, Insurance, BWC/UC and Medicare
- 8. Tying Forecast to Operations Fringe Benefits – some issues I see Retirements typically 14.5% to 15.4% - surcharge and SERS 1/6 and pick-up…never just 14%. Insurance know your plan year, medical trend, only include BOE’s share of increase typically 18% to 24% of wages Watch Unemployment Comp if RIF’d staff we are direct reimbursement payer's Medicare not entirely 1.45% of wages by close typically 1.25% to 1.3% Some expenditure coding and estimating problems County BOE coded entirely to 400 objects or 800 objects UC coded to 859 instead of 281/282 BWC coded to 859 or 491 (in a pool) instead of 261/262 Using FY12 utility costs to project FY13…record mild winter FY12….that could be a problem FY13-17
- 9. Track Your Cash Flow Do monthly cash flow projecting tied to your FYF ( and budget) This should be basis of monthly financial report Will give you critical information on need to borrow during the year Help BOE and administration understand difference between finance report and cost study… All of the data we talked about so far generates cash flows in and out…when the money is all gone the fun will stop! Cash is king! Monitoring cashflow is one of the most important things we do. Your historic cash flow is a rich source of this information especially if you are consistent in coding and paying bills! SM1 yields analysis of ending cash that is vital to planning your investable funds and duration. Yes interest rates are low and will likely remain low through CY2015 still need to provide proper management of money
- 10. Getting Buy In on Your Budget and Operating Process Finance committee and one on one meetings Invest in the buy in and communication Other Budget Topics of Interest Balanced budget policy/ending cash balance Contingency balance Benchmarking district operations Capital planning /No New Millage Bond Issues Thank you for your attention!