1/30/ Institute of School Business Management CASH MANAGEMENT. Why do a Cash Flow Forecast? What is Cash Management?

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1 What is Cash Management? Why do a Cash Flow Forecast? 2014 Institute of School Business Management o Controlling receipts and disbursements of cash o Good fiscal management (Best Practice) o Fulfill responsibility to CASH MANAGEMENT Presenter: Carole Loehr PFM Asset Management LLC February 25, 2014 o Pay the bills on time o Recognize the need to borrow o Maximize amount available for interest earnings o o o School Board keeps them informed Taxpayers maximizes interest income and minimizes borrowing Students maximizes educational opportunities 2 3 1

2 Why do a Cash Flow Forecast? Ideal Cash Flow Deficit Cash Flow o To plan Ideal Cash Flow Deficit Cash Flow Forecast o For shortages/borrowing o For investment portfolio optimization o Account analysis Dollars $ Receipts Disbursements Dollars $ Receipts Disbursements Deficit Surplus Time Time Page 5 Page

3 Benefits of a Cash Flow Forecast Benefits of a Cash Flow Forecast Benefits of a Cash Flow Forecast o Establish and maintain an adequate liquidity level o Provide that all expenditures are properly funded o Identify near-term cash short falls o Maximize investment income o Extend length (duration) of investments o Realize benefits of longer term investments of Core Balances in normal yield curve environment o Identify all material expenditures o Project cash flow timing and amount o Avoid over-funding of expenditures o Utilize JIT (Just-in-Time) funding of expenditures o How much? and when? o Clarify short-term borrowings

4 Benefits of a Cash Flow Forecast Cash Flow Forecast Methodology Cash Flow Forecast Methodology o Identify macro fiscal trends o Administrative tool o Provide continuity and safeguards through changes in staff o Two forecasting methods o Historical analysis o If the district is relatively stable (finances, enrollment) o If historical data is reliable and in a consistent format o Two forecasting methods o Projection based o Is district growing/declining? o Have there been material changes to educational programs? o Any new outsourcing? Could it effect bill timing? o Payroll cycle change? o Revenue stream change?

5 Goals of a Cash Flow Forecast Required Data for a Cash Flow Forecast o Be conservative o Keep cash flow materials updated o Be aware of your school board investment policy o Have written assumptions o Liquid balance o % increase for estimates o Historical monthly receipts and disbursements o Historical cash flow borrowing o Current budget o Payroll schedule o Board meeting schedule o Bond and interest payment schedules o Capital expenditure schedules o School calendar o Current investment schedule o Which funds should be included? o General (Transportation, Capital Service) o Food Service o Community Service o Debt o Funds usually kept separate o Building o Student Activity

6 The accuracy of any cash flow forecast is dependent upon the accuracy of the input data used in the spreadsheet. o All bank accounts o All current investments noting maturity dates o Receipts o State o IDEAS o Federal through the State o Other Finance Department o County o Tax Settlements o School Tax Report o Levy Certification o Receipts o Other o Federal o Food Services o Gate Receipts o Community Services o Donations o Debt o Aid Anticipation Certificates o Interest

7 County Property Tax General State Aid (GSA) State Cetegoricals and Grants Federal Aid Miscellaneous Year-Over-Year Growth Rates Year-Over-Year Growth Rates Year-Over-Year Growth Rates Year-Over-Year Growth Rates Year-Over-Year Growth Rates Aid Aid County Property Tax General State (GSA) State Cetegoricals and Grants Federal Miscellaneous Date Payment Date Payment Date Payment Date Payment Date Payment 10/22/2013 $1,000,000 7/12/2013 $254,340 9/28/2013 $470,000 7/31/2013 $162,585 7/16/2013 $500 11/22/2013 $1,500,000 7/23/2013 $254,340 12/28/2013 $470,000 8/31/2013 $162,585 8/15/2013 $6,000 1/31/2014 $500,000 8/13/2013 $254,340 3/29/2014 $470,000 9/28/2013 $162,585 9/17/2013 $7,000 5/31/2014 $2,000,000 8/22/2013 $254,340 6/28/2014 $470,000 10/31/2013 $162,585 10/15/2013 $12,000 9/12/2013 $254,340 11/30/2013 $162,585 11/15/2013 $9,000 9/24/2013 $254,340 12/31/2013 $162,585 12/17/2013 $6,000 10/12/2013 $254,340 1/31/2014 $162,585 1/16/2014 $7,000 10/22/ /12/2013 $254,340 $254,340 2/28/2014 3/29/2014 $162,585 $162,585 2/15/2014 3/15/2014 $6,000 $5,000 11/22/2013 $254,340 4/30/2014 $162,585 4/16/2014 $4,000 12/12/2013 $254,340 5/31/2014 $162,585 5/15/2014 $3,000 12/24/2013 $254,340 6/28/2014 $162,585 6/15/2014 $1,000 1/14/2014 $254,340 1/22/2014 $254,340 2/12/2014 $254,340 2/22/2014 $254,340 3/12/2014 $254,340 3/22/2014 $254,340 4/12/2014 $254,340 4/22/2014 $254,340 5/13/2014 $254,340 5/22/2014 $254,340 6/12/2014 6/24/2014 $254,340 $254,340 TOTAL 5,000, TOTAL 6,104, TOTAL 1,880, TOTAL 1,951, TOTAL 66, /30/14 Receipts Schedule o Disbursements Payroll o Disbursements RECEIPTS o Pay dates o 12 months of net or gross payroll history o Extraordinary payroll Accounts Payable o Debt o Aid Anticipation Certificates o Bonds Other o Capital Projects

8 I Payroll Year-Over-Year Growth Rates Accounts Payable Year-Over-Year Growth Rates P & - Debt Service Year-Over-Year Growth Rates I Payroll Debt Accounts Payable P & - Service Date Payment Date Payment Date Payment 7/13/2013 $500,000 7/20/2013 $1,676,346 11/30/2013 $1,250,000 7/27/2013 $500,000 8/16/2013 $1,676,346 5/31/2014 $250,000 8/10/2013 $500,000 9/14/2013 $676,346 8/24/2013 $500,000 9/28/2013 $1,000,000 9/3/2013 $800,000 10/12/2013 $676,346 9/7/2013 $1,600,000 10/26/2013 $1,000,000 9/21/2013 $1,600,000 11/9/2013 $1,676,346 10/5/2013 $1,600,000 12/14/2013 $1,676,346 10/19/2013 $1,600,000 1/18/2014 $1,676,346 11/2/2013 $1,600,000 2/8/2014 $676,346 11/12/2013 $1,600,000 2/22/2014 $1,000,000 11/16/2013 $1,600,000 3/8/2014 $676,346 11/30/2013 $1,600,000 3/22/2014 $1,000,000 12/14/2013 $1,600,000 4/19/2014 $1,676,346 12/28/2013 $1,600,000 5/3/2014 $676,346 1/11/2014 $1,600,000 5/24/2014 $1,000,000 1/25/2014 $1,600,000 6/7/2014 $676,346 2/8/2014 $1,600,000 6/21/2014 $1,000,000 2/22/2014 $1,600,000 3/8/2014 $1,600,000 3/22/2014 $1,600,000 4/5/2014 $1,600,000 4/19/2014 $1,600,000 5/3/2014 $1,600,000 5/17/2014 $1,600,000 5/31/2014 $4,555,000 6/14/2014 6/28/2014 $525,000 $550,000 TOTAL 40,430, TOTAL 20,116, TOTAL 1,500, /30/14 Disbursement Schedule Cash Flow Forecast Assumptions Cash Flow Forecast Procedure DISBURSEMENTS o Payroll timing and amount (any variations) o Accounts Payable timing o Minimum liquidity level o Revenue receipts o Non-recurring receipts and disbursements o Budgets (current and future years) o Assumptions unique to each district o Estimate cash receipts o Estimate cash disbursements o Record investment activity o Redemption of outstanding investments o Purchase of future investments

9 Date County Property Tax Receipts Disbursements Investments Payable Debt Service Existing Maturities & Coupons Proposed Portfolio Cashflows Total Liquid (Non- Invested) Balance w/ Investments 7/1/ ,000, /2/ ,000, /3/ ,000, /4/ ,000, /5/ ,000, /6/ ,000, /7/ ,000, /8/ ,000, /9/ ,000, /10/ ,000, /11/ ,000, /12/ , , ,158, /13/ , , ,158, /14/ ,158, /15/ ,158, /16/ ,159, /17/ ,159, /18/ ,159, /19/ ,159, /20/2013 1,676, ,500, ,982, /21/2013 9,982, /22/2013 9,982, /23/ , , ,237, /24/ ,237, /25/ ,237, /26/ , ,399, /27/ , , ,299, /28/ ,299, /29/ ,299, /30/ ,299, /31/ , ,461, Total 266, , , ,000, ,676, ,400, ,461, /30/14 Cash Flow Schedule Cash Flow Forecast Summary Contact Information Cash Flow Schedule General State Accounts Aid (GSA) Other Payroll o a quality cash flow forecast will o Project timing and amount of receipts and disbursements o Maximize investment earnings o Identify cash flow shortages o Establish and maintain comfortable liquidity o Identify fiscal trends o Provide administrative efficiency o Provide continuity in the business office o Be a communication tool Carole Loehr Senior Managing Consultant PFM Asset Management LLC Phone: Fax: loehrc@pfm.com