"Developing an Operating Budget"

Transcription

1 "Developing an Operating Budget" Wednesday, March 3, 2010, 2:00 PM - 3:30 PM PT This special one and a half hour CSMFO interactive webinar will help you and your team: Clarify purposes of an operating budget what it is, what it is not Create key elements you need in the budget development process Address basic budget preparation items common steps, problems and issues, and ways to tell your financial story Jay Goldstone, Chief Operating Officer for the City of San Diego, received such rave reviews for his presentation on this topic that the Career Development Committee asked him to lead this special expanded webinar. Target audience: finance professionals and their teams; also an excellent opportunity to involve budget leads from other departments Want to earn CPE credit for the webinar? See details at the end of this Agenda. 1. Register in advance for the webinar: There is no charge for participating in the webinars, but each requires advance registration. *** Advance registration required for this no-charge webinar: 2. Pick your audio option: a. dial (646) [callers' PIN 7592#] to participate. (Dialing in enables you to ask questions verbally during the webinar discussions. If you dial in, please do not put the call on hold, especially if you have music or a message that plays and will disrupt other callers.) You will pay whatever your regular telephone carrier charges are for this call. OR b. access live audio via the web [powered by Granicus]--As an alternative to the dialin number, you can now listen to live audio at the "Live Audio and Archives" tab of 3. Ask questions: If you prefer, you may submit questions anonymously via to csmfo@donmaruska.com either in advance or via the webinar during the panel discussion. As moderator for the session, Don Maruska will pose the ed questions. After a panel conference call occurs, a digital recording will be available at the "Live Audio & Archives" tab of the Coaching Corner.

2 Post-Call Group Discussions Many agencies are organizing groups to listen to the calls (live or recorded) and discuss the topics among themselves after the calls. Some are summarizing their discussions and distributing them to managers throughout their organizations. Use the CSMFO Coaching Program as an effective way to enhance professional development in your agency. Here are some discussion starters for this session: 1. How can we build better engagement in our agency s budget process? 2. Where can we enhance our budget process to address the challenges that we face? 3. What techniques will help us address potential problems and issues? 4. How can we communicate our budget issues more effectively? MORE RESOURCES--See the "Coaching Corner" at for valuable resources to boost your career. Enjoy the resources and support to thrive in local government. Don Maruska, Master Certified Coach Director, CSMFO Coaching Programs See "Coaching Corner" at Jay Goldstone is the City's Chief Operating Officer. As Chief Operating Officer he oversees the City's daily operations, and implements Mayoral and Council initiatives and policies. Prior to this appointment, Goldstone served as the City's first Chief Financial Officer. Goldstone has had a successful thirty-year career in municipal finance, and came to San Diego from the City of Pasadena where he served as the Director of Finance. He holds an MBA from the University of Santa Clara, a Masters of Public Administration from Arizona State University, and a Bachelors of Science from the University of Minnesota.

3 STATE OF CALIFORNIA - STATE AND CONSUMER SERVICES AGENCY CALIFORNIA BOARD OF ACCOUNTANCY 2000 EVERGREEN STREET, SUITE 250 SACRAMENTO, CA TELEPHONE: (916) FACSIMILE: (916) WEB ADDRESS: ARNOLD SCHWARZENEGGER, Governor SPECIAL MESSAGE ABOUT GROUP INTERNET-BASED PROGRAM (WEBCAST) CONTINUING EDUCATION COURSES Effective August 1, 2007, the California Board of Accountancy s (Board) continuing education provider requirements have been modified to include specific criteria for Group Internet-Based Program (webcast) courses. Revisions to Section 88 define webcast courses as: Programs that enable a licensee to participate from a computer in an interactive course presented by a live instructor at a distant location. Revisions to Section 88.1 indicate that to qualify as acceptable continuing education, the provider of a webcast course must be in compliance with the following: (1) Require and monitor attendance throughout the program by using attendance-monitoring devices such as polling, questions, or surveys. The program shall include a minimum of two monitoring events each half-hour; at least one of which occurs at an irregular interval. (2) Have a live instructor while the program is being presented and a feature allowing participants to send questions/comments directly to the instructor and receive answers during the program. (3) Retain for a period of six years a record of attendance that accurately assigns the appropriate number of participation hours for participants. (4) Retain for a period of six years written educational goals and specific learning objectives, as well as a syllabus, which provides a general outline, instructional objectives and a summary of topics for the course. A copy of the educational goals, learning objectives, and course syllabus shall be made available to the Board upon request. (5) Issue a certificate of completion to each licensee upon satisfactory completion of the course. Satisfactory completion shall at a minimum require responding to at least 75 percent of the monitoring events described in Section 88.1(b)(1). Retain records of licensees receiving certificates of completion for a period of six years. The amount of credit shall be displayed on the certificate of completion and shall be calculated in accordance with Section (6) Have a written policy to address rescheduling and the granting of partial credit in the event of a technology failure, and make that policy available to the Board upon request. Revised Section 88.2 states how credit shall be calculated for webcast courses. It indicates that a program must be at least one 50-minute class hour in length to be acceptable continuing education. For a program that is longer than one 50-minute class hour, credit shall be granted for additional 25-minute segments (one-half of a 50-minute class hour). NOTE: Some webcast courses are pre-recorded and made available for viewing at a future date. Viewing a recorded webcast course does NOT qualify for continuing education credit under the webcast category. More information about the Board s continuing education requirements is available in the CPA Licensee Handbook under the Renewal Information Section and in Sections of the Board s Regulations. Should you have questions, please renewalinfo@cba.ca.gov or telephone (916) /14/07

4 CSMFO Coaching Program March 3, 2010 Jay M. Goldstone Chief Operating Officer, San Diego

5 Purposes of a Budget What it is What it is not Budget Development Process The Building Blocks Budget Guide Getting Started Self Assessment Basic Budget Preparation Common steps Problems or Issues? What s your financial story CSMFO Coaching Program 2

6 Spending Plan/Financial Planning Document Includes appropriations for all city funds Major revenues/expenditures and sources/uses Changes in fund balances Capital projects including operating impact Debt Policy Document Reflects community priorities and Council policies Citywide and organizational units formal and informal financial and programmatic policies and goals, both short term and long term CSMFO Coaching Program 3

7 Operations Guide Activities, services, or functions Results and outcomes Personnel count and changes Communications Device Issues, trends, choices Budgetary process, monitoring and adjustment Public Information and Outreach Tool Your Business Plan/Road Map CSMFO Coaching Program 4

8 CAFR Cash versus accrual base Reflection on the past versus the future Static Document Requires constant monitoring Amended as needed A Once a Year Exercise CSMFO Coaching Program 5

9 Policy Review & Planning Strategic/General Plans Long Range Financial Plan Capital Improvement Plan Revenue/Costing Estimates Citywide revenues and costs Program revenues & costs Department requests for new/expanded services Budget Adoption City Manager s/mayor s Budget Recommendations City Council Budget Workshops Public Hearing Budget Implementation and Maintenance Lock into General Ledger Interim budget reviews CSMFO Coaching Program 6

10 Responsibilities Departments Finance Critical Timelines Adoption Hearings/Community Meetings Iterations of Numbers Other Issues Kickoff Meeting Staff Training Work Backwards Adoption Date CSMFO Coaching Program 7

11 Who needs to be involved? What are the goals/direction from top? What do you know that others would benefit from? What has worked in the past More importantly what has failed? What opportunities and challenges lie ahead? CSMFO Coaching Program 8

12 Your budget process skills Great tactician is NOT enough Presentation Skills Speaking & Listening Responses Decision making Anticipator? Know your stuff? History, State/local fiscal relationships, etc. CSMFO Coaching Program 9

13 source: californiacityfinance.com 10

14 Budget preparation, monitoring and correction is solely the responsibility of the Finance Department? Strongly Agree Agree Disagree Strongly Disagree CSMFO Coaching Program 11

15 Budgeting Options Zero Based Budget Program Budget Line Item Budget Policy Consistency Systems Consistency Budget Monitoring Fund/Budget Analysis Budget Office Comptroller Operating Departments CSMFO Coaching Program 12

16 Guidelines/Limitations Special Taxes, State Law Organizational Needs Internal Service Funds Rate structure and allocation Adequate long term resources Cost Allocation Getting full $ back to GF Reserves in place Horizon Challenges e.g. tax sunsets CSMFO Coaching Program 13

17 Funds in a deficit position? Could be temporary (primarily grant funds) due to the reimbursement nature of the revenue source. Two types of deficits: Negative Fund Balance the fund has expended all available resources (fund is out of money) Structural Deficit ongoing annual expenditures exceed the ongoing revenues CSMFO Coaching Program 14

18 Is economic base for the city changing? General Plans, incentives, industries on decline, rapid growth or bust? Public support distrust and apathy (minority vs. majority) Political change Turnover in Council, Mayor and staff Lack of budget direction or long term strategy Community s core values Know them? Acting accordingly? CSMFO Coaching Program 15

19 Salary Base Pay Incentives/Premiums Benefits Health/Dental/Life/LTD Worker Compensation Retirement/Pension Others Often forgotten Terminal Pay Retiree Costs (OPEB s) Have you checked my MOU for salary and benefits expected next year? Hey don t forget my MOU is different because of my work schedule, bi-lingual skills and longevity! CSMFO Coaching Program 16

20 Estimating Same Staffing Levels Retirements, Reorganizations, etc. Using Top Step Salary, or? And associated costs Trends of Benefit Costs Workers Comp Injury Time PERS Investment Trends? Health Care Cafeteria Plan Limits or? Vacancies? CSMFO Coaching Program 17

21 Status Quo CPI Adjustment or? Across the board or? Who decides Amount and method? CSMFO Coaching Program 18

22 Development of the Five Year Outlook Presenting Outlook to Council/Community Labor Negotiations Develop/Issue Budget Instructions Internal Service Departments/Rates Departmental Budget Submissions Mayoral/Chief Operating Officer Review Develop Recommendations CSMFO Coaching Program 19

23 Submit Budget to Council Commence Budget Hearings Solicit Community Input/Reactions Council Develop Recommendations Budget Adopted by Council and Returned to Mayor Mayor Veto Period Council Override Period Prepare Appropriation Ordinance CSMFO Coaching Program 20

24 Building the Operating Budget: Still done from account code level up Allows multiple levels of reporting Line item budgeting old school Data should be summarized Trends useful Consistency matters Tell YOUR story Can compare to other agencies CSMFO Coaching Program 21

25 bring budget story to life. CSMFO Coaching Program 22

26 City Budget by Fund FY 2009 Annual Budget FY 2009 Revised Budget FY 2010 Proposed Budget General Fund $1,192,608,391 $1,156,037,357 $1,146,118,656 Non General Fund $1,347,877,661 $1,346,893,193 $1,379,236,548 Capital Improvements Program $586,959,599 $586,959,599 $480,704,755 Total $3,127,445,651 $3,089,890,149 $3,006,059,959 CSMFO Coaching Program 23

27 Fund Type FY 2010 Proposed Budget % Change from FY 2009 Revised Budget General Fund $ 1,146,118, % Debt Service and Tax Funds $ 15,101, % Special Revenue Funds $ 276,251, % Enterprise Funds $ 900,670, % Internal Service Funds $ 147,593, % Capital Improvement Program $ 480,704, % Other Funds $ 39,619, % TOTAL $ 3,006,059, % CSMFO Coaching Program 24

28 CSMFO Coaching Program 25

29 General Fund Expenditures $1.15B (in millions) CSMFO Coaching Program 26

30 Fund Type FY 2009 Annual Budget FY 2009 Revised Budget FY 2010 Proposed Budget 1 General Fund 7, , , Non General Fund 3, , , TOTAL 10, , , Includes the elimination of FTE positions as part of the Fiscal Year 2009 Revised Budget approved by City Council. CSMFO Coaching Program 27

31 Fiscal Year Positions FY 2007 Annual Budget (38.00) FY 2008 Annual Budget (629.71) FY 2009 Annual Budget (57.82) FY 2010 Proposed Budget 1 (149.27) Total (874.80) CSMFO Coaching Program 28

32 Staffing of long planned library and park & recreation facilities scheduled to open in FY 2010: Logan Heights Library Park and Recreation facilities: Ocean Air Recreation Center and Park Naval Training Center Liberty Station (Phase II) Alice Birney Elementary School Joint Use Roosevelt Middle School Joint Use Hilltop Community Park (Phase III) Full year staffing and operational support for facilities that opened in FY 2009: Mira Mesa Hourglass Community Park Field House La Mirada Elementary School Joint Use CSMFO Coaching Program 29

33 No Salary Increases Increased Pension Contribution by Employees Increased Healthcare Contribution by Employees Elimination of Mandatory SPSP Employer Match Fewer Paid Holidays Mandatory Furloughs New Pension Factors for POA Members *the provisions above are contained in some, but not necessarily all labor agreements CSMFO Coaching Program 30

34 FY 2010 Proposed Budget: $399.3 million FY 2010 Budgeted growth rate: 1.0 percent Economic Factors: Median Home Price decreased 31.5% from Feb 08 to Jan 09 Residential Permits decreased 39.6% from Feb 08 to Jan 09 CSMFO Coaching Program 31

35 FY 2010 Proposed Budget: $210.1 million FY 2010 Budgeted growth rate: 2.8 percent Economic Factors: Per Capita Income Growth slowed to less than 3.0 percent as of Feb 09 Average Consumer Savings Rate has risen to 5.0 percent CSMFO Coaching Program 32

36 FY 2010 Proposed Budget : $78.3 million (General Fund)* FY 2010 Budgeted growth rate: 2.0 percent Economic Assumptions: Room Demand is anticipated to drop by 8.1% during calendar year 2009 Hotel Occupancy Rate is anticipated to drop from 69.5% to 61.9% (Source: ConVis) CSMFO Coaching Program 33

37 FY 2010 Proposed Budget: $73.7 million FY 2010 Budgeted growth rate (SDGE): 2.8 percent FY 2010 Budgeted growth rate (Cable): 4.3 percent Includes Refuse Hauler Fee increases of $1.7M and Facilities Franchise fee of $2.6M CSMFO Coaching Program 34

38 Major General Fund Revenues Major General Fund Revenue Projections (in millions) FY 2006 Actuals FY 2007 Actuals FY 2008 Actuals FY 2009 Year End Projection FY 2010 Proposed Budget Property Tax $ $ $ $ $ Sales Tax $ $ $ $ $ Transient Occupancy Tax $ 72.1 $ 80.7 $ 83.7 $ 80.0 $ 78.3 Franchises $ 60.1 $ 64.5 $ 64.6 $ 66.8 $ 73.7 * Motor Vehicle License Fees $ 8.8 $ 8.1 $ 5.8 $ 3.9 $ 3.9 Property Transfer Tax $ 11.7 $ 9.3 $ 7.0 $ 5.9 $ 6.0 Safety Sales Tax $ 6.3 $ 7.9 $ 7.7 $ 7.3 $ 7.1 TOTAL $ $ $ $ $ * FY 2010 Proposed Budget includes refuse hauler fee increases of $1.7 million and Facilities Franchise fees of $2.6 million. CSMFO Coaching Program 35

39 Major General Fund Revenue Percent Change Major General Fund Revenues FY 2007 Actuals FY 2008 Actuals FY 2009 Annual Budget over FY 2008 Actuals FY 2009 Revised Budget over FY 2008 Actuals FY 2009 Year End Projection over FY 2008 Actuals FY 2010 Proposed Budget over FY 2009 Year End Projection Property Tax 12.1% 6.4% 7.0% 3.2% 2.9% 1.0% Sales Tax 4.4% 1.1% 2.5% 5.1% 5.1% 2.8% Transient Occupancy Tax 11.9% 3.8% 8.2% 1.8% 4.5% 2.0% Franchises 7.2% 0.2% 7.6% 5.6% 3.5% 3.2% Motor Vehicle License Fees 8.1% 27.9% 17.7% 3.2% 33.7% 0.7% Property Transfer Tax 20.5% 24.7% 27.0% 8.0% 15.9% 0.0% Safety Sales Tax 26.7% 2.9% 5.2% 4.1% 5.7% 3.0% TOTAL 8.6% 3.2% 4.6% 0.3% 0.7% 0.4% CSMFO Coaching Program 36

40 Plan early and involve others Seek change Focus is not Finance Dept Community/Council set priorities $ follow Operating Budget Get your message out Use big # s and trends Raise the red flags Be bold, take charge, and tell your story CSMFO Coaching Program 37

41 What steps can you take to improve your budget process? What works? What doesn t work? CSMFO Coaching Program 38

42 Questions? CSMFO Coaching Program 39

43 Developing an Operating Budget Webinar March 3, 2010 Poll Results (113 locations participating)