5/4/16. Outcomes. How to create a transparent, collaborative, data-driven community process for long-range financial planning

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1 How to create a transparent, collaborative, data-driven community process for long-range financial planning May 5, 2016 Patricia Magnuson, Executive Director of Finance and Operations Kelly Benusa, Director of Business Services Mike Hueller, Coordinator of Accounting/Payroll Cindy Brown, Coordinator of Accounting/Payroll Anne Ramsey, Coordinator of Purchasing and Warehouse Outcomes Understand the collaborative process used to develop the LRFP framework Learn about budget tool development and the specific purpose of each Learn how to engage stakeholders in financial planning 1

2 100 Free or reduced lunch eligibility by site 80 Percent Not eligible Eligible for free or reduced lunch 100 Racial composition by site Percent Amer Ind Hispanic Asian Black White 2

3 } Review historical approach to budgeting } Research finance and budgeting practices } Establish guiding principles } Develop long-range financial planning model & framework } Design long-range financial forecasting model 3

4 } Program-based budgeting system } Traditional incremental budgeting process } Strategic plan budgeting } Integrated budgeting approach Mission/ Strategic Plan Legal Process Resources Communication Our model and framework is centered on accomplishment of our system's mission and strategic plan. Our work will comply with legal requirements and School Board policies. We will use a data-driven, collaborative decisionmaking process. Our model and framework will guide the distribution of resources in priority order, based on data, research and strategic priorities. Our work will be communicated to our school community. Mission Staff responsibilities LRFP guiding principles CIP Budget Organizational Complement School Board direction Strategic priorities Forecast Budget targets Feedback 4

5 } Long-range financial forecast model } Continuous improvement plan } Program Efficiency Abandonment and Redirection (PEAR) Narrative modeled after Montgomery County Public Schools Revised Budget 2016 Projected 2017 Projected 2018 Projected 2019 Projected 2020 $221,164,868 $222,583,101 $225,904,142 $228,694,954 $229,144,026 Revenues with tactics Expenditures with tactics 218,785, ,990, ,126, ,728, ,917,407 Tactics related to revenue Revenue assumption basic formula increase of 2.0% for FY2017 (Known) and 1% basic formula increase for FY2018 and FY2020 2,211,649 1,123,974 1,143,475 Tactics related to expenditures All-day kindergarten and grade span change two year expense only (Known) (255,372) Strategic priorities additional needs 1,500,000 Enrollment alignment adjustment (Known) $0 1,044, , ,636 Other - reduce trend to 3.25% (1,093,930) (1,137,957) (1,179,415) (1,218,879) Synergy training one year expense only (Known) (150,000) Operational reductions (5,000,000) Targeted class size needs 450,318 Baseline operating balance (post tactic) Fund Balance (beginning of year) 54,732,264 57,111,216 54,314,561 45,459,663 30,378,803 Fund Balance (end of year) 57,111,216 54,314,561 45,459,663 30,378,803 13,206,141 Change in fund balance $2,378,952 ($2,796,655) ($8,854,898) ($15,080,859) ($17,172,663) Fund Balance Target Fund Balance as a % of Budgeted/Projected 26.10% 23.86% 19.27% 12.46% 5.34% Expenditure 5% of Budgeted/Projected Expenditures Minimum $10,939,296 $11,379,570 $11,794,151 $12,188,791 $12,373,008 Projected Revenue Assumption (FY FY2020) 0.00% Projected Expenditure Assumption (FY FY2020) 3.75% } Department Continuous Improvement Plans (CIPs) Major Function Key Essential Services Key Performance Indicators Goals based on Plan, Do, Study, Act based on Baldrige Model 5

6 } Business Services Example } Provide leadership on emerging and existing financial opportunities } Ensure compliance for responsible areas pertaining to federal state and local laws and guidelines } Provide customer service to internal and external customers in order to meet and exceed their needs based on best practices } Sustain and ensure the operational processes supporting data integrity } Provide governance to the system of management and controls exercised in the stewardship of financial resources } Design and deliver work processes to increase efficiencies and enhance workforce capacity } Utilize performance measures and indicators to identify operational, budgetary, and financial opportunities } Business Services Example } Major Function - Business Services functions are designed to plan, develop, secure, and effectively manage fiscal resources in compliance with internal and external accountability requirements, which encompass accounting, accounts payable, payroll, purchasing, and warehouse, to support the education of all students. Business Services Example FY 2013 FY 2014 FY 2015 Percentage of invoices successfully processed 99.1% 99.0% 99.4% Percentage of payroll checks iniaally processed correctly 99.97% 99.96% 99.96% Percentage of W-2s completed accurately by January 31 st 98.98% 99.98% 99.34% Moody s Investors Service has assigned an underlying raang to the district s general obligaaon bonds Received a clean audit of its FY 2015 finances. The independent auditor said the school district has excellent financial record keeping and reliable financial data. Osseo School District was awarded the AssociaAon of School Business Officials InternaAonal s CerAficate of Excellence in Financial ReporAng. Aa1 Aa1 Aa1 Yes Yes Yes Yes Yes Yes Budget summary goal within 2% of amended budget 1.95% 1.31% 1.32% 6

7 } PLAN: Identify the gap and the approach } DO: Develop and Implement Action Plan } STUDY: Analysis of data after implementing specific steps in the action plan. } ACT: Standardize the improvement and establish future plans. } Program, Efficiency, Abandonment, and Redirection (PEAR) proposals: Instructions Narrative Worksheet LRFP Analysis } Describes budget proposal } Identifies productivity improvements } Assess impact } Requires consultation and planning across departments } Considers legal requirements and board policies 7

8 FY 2017 FY 2017 I (Instructional) or Proposed Proposed PEAR Impacted N (Non-Instructional) FY 2016 Equivalent FTE Budget Reference Object Budget Bargaining Division Dept. - insert code from key below Proposed Proposal FTE FY 2016 Budget change change Number Impact of Proposal Code Code Unit Affected From FY 2016 Budget TBD TBD 4 Add supplies Worksheets $19,957 BA-01 insert answer from PEAR Narrative #4 TBD TBD ESP Class 2 From FY 2016 Budget TBD TBD 6 Eliminate ESP 1 FTE Worksheets (1.00) ($19,957) BA-02 insert answer from PEAR Narrative #4 TBD TBD ESP Class 2 TOTAL (1.00) $0 I (Instructional) or N (Non-Instructional) Key Code Description I - Instructional support and 1 staff 2 N - administration N - Athletics/co-curriculars/ 3 activities N - purchased services and 4 supplies 5 N - staff development 6 N - support 7 N - transportation } Develop essential services } Define metrics to measure effectiveness } Review and adjust annually } Initial reaction You want me to do what?! 8

9 } Commitment to process } Lack of understanding } Fear of loss } Time required Ø Secure superintendent and board Ø Include all management Ø Inform and influence Ø Be prepared Ø Collaboration Ø Inclusion Ø Communication Ø Repetition 9

10 Ø Seek feedback Ø Debrief Ø Demonstrate benefits Ø Instruct and educate budget managers Ø Provide a single contact Ø Create a workgroup Ø Adhere to timeline Ø Comprehensive understanding Ø Data driven decisions = better results Ø Increased trust 10

11 Ø Demographic data Ø Revenue comparisons and assump?ons Ø Expenditures trend Ø An?cipated adjustments for next 2 fiscal years Ø Fund balance policy Ø Fund balance health 11

12 Revised Budget 2016 Projected 2017 Projected 2018 Projected 2019 Projected 2020 $221,164,868 $222,583,101 $225,904,142 $228,694,954 $229,144,026 Revenues with tactics Expenditures with tactics 218,785, ,990, ,126, ,728, ,917,407 Tactics related to revenue Revenue assumption basic formula increase of 2.0% for FY2017 (Known) and 1% basic formula increase for FY2018 and FY2020 2,211,649 1,123,974 1,143,475 Tactics related to expenditures All-day kindergarten and grade span change two year expense only (Known) (255,372) Strategic priorities additional needs 1,500,000 Enrollment alignment adjustment (Known) $0 1,044, , ,636 Other - reduce trend to 3.25% (1,093,930) (1,137,957) (1,179,415) (1,218,879) Synergy training one year expense only (Known) (150,000) Operational reductions (5,000,000) Targeted class size needs 450,318 Baseline operating balance (post tactic) Fund Balance (beginning of year) 54,732,264 57,111,216 54,314,561 45,459,663 30,378,803 Fund Balance (end of year) 57,111,216 54,314,561 45,459,663 30,378,803 13,206,141 Change in fund balance $2,378,952 ($2,796,655) ($8,854,898) ($15,080,859) ($17,172,663) Fund Balance Target Fund Balance as a % of Budgeted/Projected 26.10% 23.86% 19.27% 12.46% 5.34% Expenditure 5% of Budgeted/Projected Expenditures Minimum $10,939,296 $11,379,570 $11,794,151 $12,188,791 $12,373,008 Projected Revenue Assumption (FY FY2020) 0.00% Projected Expenditure Assumption (FY FY2020) 3.75% 12

13 General Operating/Transportation Budget Division of Leadership, Teaching and Learning (DLTL) Departments FY 2016 Budget $135,296,577 63% of total General Operating/Transportation budget $215,802,477 FY 2016 Adjustment ($154,000) of General Operating/Transportation total net $0 adjustment Adjustment detail is listed in each department's budget summary under change from prior year section. DLTLOperations and Sites DLTL Operations is responsible for developing, implementing, managing, and evaluating operational and management support systems for elementary and secondary sites and system level efforts. Curriculum Instruction and Educational Standards (CIES) CIES provides staff development in the areas of curriculum, instruction, and assessment; leads program improvement processes to align curriculum, instruction, and assessment; and ensures high quality instruction that leads to increased student learning and equitable FY 2016 Budget FY 2016 Budget FY 2016 Budget $84,376,616 FY 2016 Budget % of General Operating/Transportation Budget 39.10% % of General Operating/Transportation Budget Per Pupil Cost $3, Per Pupil Cost Full Time Equivalent (FTE) 1, Full Time Equivalent (FTE) $6,043, % $ Change From Prior Year -Redeploy 21.3 FTE classroom teachers to align with enrollment -Transferred salary budget capacity of $1,065,212 for FY 2016 to DLTL Operations and Sites -Reassign ($540,000) for grade span project -Allocation and attrition based on 51.5 retirees for FY Add 5.13 FTE classroom teachers for middle school 8 period schedule -Add $391,468 from PEAR OP-01 large site support -Add 4.27 FTE elementary ESP positions -Add 1 FTE AdministrativeEducational Support Professional (AESP) position at each high school -Reduce staff development/travel Change From Prior Year -Add $13,332 from PEAR OP-01 large site support -Transferred salary budget capacity of $1,065,212 for FY 2016 to DLTL Operations and Sites } FY 2014 Reducing budget capacity } FY 2015 Enhancing budget capacity } FY 2016 Redeploying budget capacity } FY 2017 Enhancing budget capacity Use of the LRFP framework results in budget decisions that support strategic priorities Final approval of budgets Strategic priorities Complete budgets and monitor legislation Mission Continuous improvement plan, Program Efficiency, Abandonment and Redirection planning Approve budget adjustments and levy Feedback & board budget planning 13

14 } Outcomes for budget adjustments Align with mission and strategic plan Involve stakeholders Maintain required fund balance } Budget adjustment proposal Identify legally required and mandated essential services and programs Formal analysis Base quality education provided Board policies considered Program Efficiency Abandonment and Redirection (PEAR) process utilized Staff and citizen input solicited and considered Patricia Magnuson magnusonp@district279.org Kelly Benusa benusak@district279.org Mike Hueller huellerm@district279.org Cindy Brown browncindy@district279.org Anne Ramsey ramseya@district279.org 14