How to Handle Budget Variations

Transcription

1 How to Handle Budget Variations Carrie Sekelsky Executive Director of Finance Montrose Community Schools 1 Communication!!! Number one key to dealing with variances Builds Trust Makes you the expert Allows for feedback Honest conversations Open to new ideas and perspectives 2 1

2 3 Know your audience Superintendent Board of Education Administration Teachers and other school employees Negotiating units Community Members 4 2

3 Superintendent #1 Relationship NO SURPRISES!!! Make sure you have an open line of communication at all times Understand the direction the Superintendent is taking the district Speak at their comfort level Provide clear, concise back-up documentation to build credibility Don t be a chicken little Provide solutions 5 Board of Education Very important relationship that requires special handling Make sure to inform Super about any board communications Confidence is important to gain respect and trust of the board ACCURACY quickest way to build trust Provide just enough information that creates transparency but not confusion Answer any questions as quickly as possible 6 3

4 Administrators Other members of your team Work with them Listen to their goals Help them to determine what is a want and what is a need Respect them as the experts of their building/area Gain that mutual respect Don t make unnecessary changes to procedures already in place Communicate budgets and processes so that leaders can lead 7 Teachers and other school employees - negotiating units Explain the budget in easy to understand terms and use pictures/visuals Be prepared to show how little variances will affect budget and the bottom line Be as transparent as possible and include negotiators when making changes that affect their bargaining units As much as possible Ask them for their input How to save dollars in the budget Suggestions 8 4

5 Community Members Include the community when making large decisions Closing a building Discontinuing a program Re-aligning grades in buildings Transportation changes Surveys Board Meetings Newspaper Articles Penned by the Super or by the Business Manager Remember: Perception is REALITY 9 Small Group Exercise #1 As the business manager, you ve increased the fund balance from 5% to 27% over the past four years. The district has had a 4 year wage freeze for all staff. Enrollment has been level for the past 4 years, however, neighboring districts have a 2% decline in enrollment The incoming kindergarten class is expected to be smaller than previous years. And preschools are seeing lower enrollment also. Your budget for this year is projected to have a 3% deficit which would leave the district at 24% fund balance next July 1. You and the Superintendent are meeting with the unions to begin negotiations. How would you prepare for that meeting? What key points do you provide to the union? 10 5

6 Communication There will be changes in budget Initial very conservative budget Revised slightly conservative but striving for a more accurate picture Final should be very accurate Revenues between 2-4% Expenditures between 5-7% Communicate variances as they become known Provide different scenarios Be as informative as possible KISS 11 Before the budget presentation. Revenues, expenditures and grants, oh my! Assumptions Use clear process Look at trends If large deviation from prior year, have explanation Cite data that is being used in assumptions Provide examples of items that you feel will change before the year is over Enrollment: +/- 10% Foundation Allowance: +/- 10% Staffing Costs: +/- 10% 12 6

7 How to communicate changes Immediately Give stakeholders the information as soon as possible Allow time to make adjustments Flexibility Brainstorm to create new ideas on how to deal with change Provide Solutions when presenting a negative change Don t be a Debbie Downer Be innovative TRANSPARENCY IS TRUST 13 GRANTS! One of the largest areas of change in a budget Grants are not finalized before initial budget is due New grants are added throughout the year Monitor the grant process Application Acceptance Budget Spending Documentation Compliance 14 7

8 Payroll & Benefits Another large area of the budget that can have variances Salaries Create a clear process between HR and Business Office Update spreadsheets that feed budget immediately when changes occur Make sure you also update FICA and Retirement accounts when salary accounts are adjusted Health Insurance Are you paying for the right plan Monthly checks that employees are being billed correctly Could changing vendors decrease billing Great variance to talk about with negotiating units 15 Department Budgets Meet with Department Heads At least quarterly Determine their wants and needs How does that effect budget overall Zero-based approach works great with departments Hold them accountable Let them create a plan that is inline with the district and Superintendent s objectives Empower them to make decisions that affect their departments 16 8

9 Monitor Create a Negative Report Allows you to monitor accounts that are over budget at a glance Do not allow any POs to be entered that exceed budget balance Allow for transfer from other accounts Review payroll distribution report and compare to the salary spreadsheet Catch employees coded wrong in software Create a spreadsheet to compare utilities month over month Was able to catch a water issue in a building by doing this Assign to AP 17 Create your Budget Bible FINAL BUDGET REVISED BUDGET ACTUAL ACTUAL CURRENT TAXES-MNTRSE TWP. 464, , , , CURRENT TAXES-MNTRSE CITY 152, , , , CURRENT TAXES-FLUSHING TWP 43, , , , CURRENT TAXES-MAPLEGROVE 4, , , , FINAL BUDGET REVISED BUDGET ACTUAL ACTUAL IDEA/YEAR 2 (28,416.00) 28, , , CONTRACTED PARA/LRE/IDEA/EL 27, , INDIRECT COST/IDEA

10 Keeping track of Legislation and other important changes Monitor bills that are being introduced in the House or Senate Subscribe to MASB Be an active member in MSBO Website has a lot of valuable information Be an active member with your regional MSBO group too Lots of great presentations and chance to talk about best practices with other local school districts Listen to Off the Record with Tim Skubick video.wkar.org Keep others informed about potential ramifications of legislative changes Encourage others to contact Legislators if changes would have a negative impact Board and Community members voices are heard 19 What about the things that are out of your control? 20 10

11 Small Group Exercise #2 You ve just presented the final budget last week. Today you find out that the district has to repay a tax overpayment that the County made over the past few years. ($100,000) You knew that they had been overpaying but decided to recognize it as income when it was received instead of accruing it on the Balance Sheet. The payment will come out of the current budget. How do you communicate this variance? 21 A variance has been identified now what? Identify the variance Provide context related to the issue Explain what has been done in the past If applicable Identify options This is a must! Provide solutions Develop a recommendation with supporting rationale Outline why you think this is the best route/decision 22 11

12 Transparency Be an open book Be able to explain your process If someone has a question or wants to see a budget, be prepared to share that with them Being secretive or evasive creates ill-will and makes others feel like you are hiding something or that you don t know Erodes the relationship you are trying to build 23 Communication Should flow accurately and smoothly from your office What do we know What we don t know What we did What we re doing What s next - timeline Manage expectations 24 12

13 Variances aren t always negative Don t forget to toot your horn when you are able to save money due to a new cost-saving initiative. New vendor New lease program Any other examples of cost savings??? If you had budgeted for a new program and based on timing or other circumstances it isn t going to happen before the end of the fiscal year, communicate that to the board At the initial where it should be introduced During the revision or final when you know for sure what will or won t be implemented 25 Small Group Exercise #3 You presented a cost savings initiative to the board last school year They adopted the idea based on your recommendations After implementing the idea, you realized that the cost savings will not be as generous as originally anticipated What do you do? 26 13

14 You are the EXPERT!!! It is up to you to know the financial data of your district Enrollment Foundation Allowance Revenues VARIANCES Cost of Staff Cost of Benefits Grants Any others??? Build Confidence In yourself And in Stakeholders 27 Understanding the variances. Analyze At year end, variances between budgeted and actual revenues and expenditures should be analyzed and explained. In-depth and systematic analysis of variances may uncover opportunities for savings

15 Budget vs. actual spending. Do any areas consistently have a positive or negative variance? Can the budget be reduced to take out positive variances? Are there cost control strategies that can be focused on areas that consistently overspend? Budget vs. prior year budget. Have any expenditure budgets increased noticeably without a good reason? When building next budget, are you removing one-year fluctuations? Actual vs. prior year actuals. Are there any areas that are particularly volatile? Should you build in a replacement/maintenance plan? Spread costs over several years 29 Exercise strong budgeting leadership. Create a framework for making decisions Set goals Provide structure Help others involved in process to overcome any obstacles Frame the budget as something to vote for. Even when cutting back, accentuate the positives Improve budget controls. Clear explanations Review programs Make sure meet district goals 30 15

16 Reflection Everything we do is an opportunity to learn Evaluate your budgeting process and select an area that you can improve upon Continue to communicate with stakeholders Knowledge is key and should be shared We don t know everything so find a Business Manager Buddy that can be your go to person Always be truthful it will earn you so much credibility 31 Questions??? Carrie Sekelsky, CFO Executive Director of Finance Montrose Community Schools csekelsky@montroseschools.org (810)