Long Range Strategic Forecasting Linking your CIP to your Financial Plan

Transcription

1 Long Range Strategic Forecasting Linking your CIP to your Financial Plan Julie Ciesla, Assistant Chief Financial Officer, Peoria County David Torres, Senior Product Manager, Forecast5 Analytics September 17, 2017

2 Financial Projections Communications Tool

3 Breaking Down a Multi-Year Projection Historical Performance (Prior Years) Budgetary Level Accuracy (Current Year, Years 1 & 2) Early Warning (Year 3) Directional (Years 4 & 5) Measurement of performance Informs future assumptions Executable budget template Rev./Exp. variables known Inflection point for change decisions Decision/Analysis Bands Evaluate overall financial trend How the math will play out

4 What about the long-term plans? Next 5 10 Years Budgetary Level Accuracy (Current Year, Years 1 & 2) Early Warning (Year 3) Directional (Years 4 & 5) Long Term (Years 6+) Capital Planning Strategic Forecasting for Advocacy Best Educated Estimates for Key Revenue/Expenses; Funding Considerations Decision Band Approach Establish Ranges for What if scenarios Organizational Vision Statement/Position Where we want to go Financial Gap Analysis We need $ to support the visionary level of programming and services; Communication Tool for Stakeholders; potential infrastructure/staffing requirements

5 What is a Capital Improvement Plan ( aka CIP ) Multi year plan which identifies capital projects to be funded per year within a designated number of years Meaningful instrument for planning and decisionmaking Includes funding amounts anticipated to be expended in each year of the long term projection period Provides financial options to implement plan Aligns capital investments with a government s strategic goals and initiatives

6 The CIP should be able to highlight and describe. The capital assets you currently own and their condition The estimated cost to build, maintain, and operate your capital assets Your financial capacity to pay for capital needs Your prioritized capital needs with descriptions of how you derived these priorities How your capital needs address community needs How you can effectively manage the programming and implementation of your capital needs

7 What are the benefits of maintaining a CIP? Advancement of strategic goals and initiatives Fiscal sustainability Preservation of existing infrastructure (deferred maintenance) Long term planning to align need with available resources Strengthens government s link between the operating budget and capital budget and the multi year projection Education and community awareness (collaboration opportunities)

8 CIP Planning Cycle. Capital Needs Assessment/Evaluation Implementation Project Identification Prioritization/ Programming Fiscal/Financial Outlook

9 CIP Structure and Policy Establish goals and objectives Define organizational approach Define roles and responsibilities of key stakeholders Comprehensive look at available resources and investment priorities Establish program and financial policies Financial rules regarding eligible capital expenditures Programmatic policies

10 CIP Project Identification Developing a list of priorities is critical to a successful capital plan. Agreed upon evaluation criteria should be used to help evaluate projects. Example: Development Council Evaluation Criteria 1. Completes a project (or a meaningful project phase) 2. Leverages non city funding 3. Implements a multi departmental major plan (or plan component) 4. Facilitates partnerships with regional or local jurisdictions 5. Addresses a one time structure need to meet minimum level of service

11 CIP Prioritization/Programming There are several levels of prioritization that occur within a capital plan: 1. Programmatic (department level) 2. Financial (financial parameters) 3. Executive Level (balancing of broader community objectives) 4. Prioritization could be informed by asset condition, legal mandates, economic development, public input, etc. 5. Programming 6. Plan is adopted as part of the annual budget 7. Plan is refreshed each year as part of the annual budget cycle

12 CIP Capital Needs Assessment/Evaluation Capital asset inventory and condition analysis. Periodically measure condition of assets to inform strategic and proactive capital planning. Assess capital standards Analyze cost to build and maintain Adjust capital plan and funding

13 CIP Capital Needs Assessment/Evaluation In assessing capital outlay considerations, members of the administration team work with City/Village staff to establish and prioritize the capital needs of their respective buildings into a multi year plan. Several planning sources are utilized including approved life safety amendments, maintenance and replacement schedules, technology plan, vehicle replacement schedule, and multi year financial projection. Capital Outlay Item Life Cycle Capital Outlay Item Life Cycle Asphalt & Concrete Annual, as needed Large Buses (72 Passenger) 11 Years Asbestos Abatement Annual, as needed Cafeteria Dish Machines 15 Years Carpet Annual, as needed Gym Divider Curtains 15 Years Doors & Hardware Annual, as needed Scoreboards 15 Years HVAC Equipment Annual, as needed Tennis Court Replacement 15 Years Wood Floor Refinishing Annual, as needed Track Replacement 15 Years Auditorium Drape Fireproofing 3 Years Tractor/Loaders 15 Years Technology Plan 5 Years Auditorium Seating 20+ Years Tennis Court Repair 5 Years Backstops, Baseball & Softball 20+ Years Track Repair 5 Years Bleachers & Grandstands 20+ Years Musical instruments 5-7 Years Dimmer Racks 20+ Years Pool Painting 5-7 Years Dump Trucks 20+ Years Security Cameras 5-7 Years Elevator Rebuilding 20+ Years Small Buses (27 Passenger) 7-8 Years Emergency Generators 20+ Years Drivers Education cars 8 Years Gym Floor Replacement 20+ Years Pick Up Trucks 8 Years Key Systems 20+ Years Auditorium Drape Replacement 10 Years P.E. & Pool Locker Replacemen20+ Years Band/Choral uniforms 10 Years Roof Replacement 20+ Years Dump Truck Body 10 Years Tuck pointing & Caulking 20+ Years Vans 10 Years Underground Storage Tanks 20+ Years

14 CIP Project Identification Develop scope/budget for new projects Project Management Plans 1. Detailed project budget and implementation plan 2. Consistency and accuracy 3. Regulatory and environmental considerations 4. Contingencies 5. Program level and project level 6. Phasing or scaling opportunities

15 CIP Financial Projection Link Multi Year Financing; Municipal Bonds; General Obligation Bonds; Revenue Bonds; Certificate of Participation (COP); Pay As You Go; General Tax Revenue (annual budget); Other Dedicated Revenue Streams Grants Federal, state, or local grants Development of multi year financial forecast identifying income and expenditures in future years for capital projects Debt capacity (assets with a substantial useful life (10+ years) operating expenditures, reserves, and debt service should also be taken into consideration FUND PROJECT DESCRIPTION General Fund 10 YEAR CAPITAL IMPROVEMENT PLAN SUMMARY BY FUND Building Improvements $ 10,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ Computers 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Office Furniture & Equipment 5,000 5,000 5,000 5,000 Machinery and Equipment 17,500 17,500 17,500 17,500 Other 1 Other 2 Other 3 Other 4 Other 5 Total General Fund $ 42,500 $ 52,500 $ 40,000 $ 52,500 $ 40,000 $ 52,500 $ 40,000 $ Water and Sewer Fund Office Furniture & Equipment $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ 2,500 $ Machinery and Equipment 50,000 50,000 50,000 50,000 50,000 50,000 50,000 Vehicles 100, , , , , , , Rt 59 Watermain Improvement 1,000, , ,000 25,000 25,000 25,000 25,000 Naperville Rd Watermain Improvement 1,000, , ,000 25,000 25,000 25,000 25,000 Rt 30 Expansion 3,000, , ,000 50,000 50,000 50,000 50,000 Main St. Des Plaines to Lockport North Wastewater Trtmnt Plnt Ext Other 1 Other 2 Other 3 Other 4 Other 5 Total Water and Sewer Fund $ 5,152,500 $ 1,252,500 $ 752,500 $ 252,500 $ 252,500 $ 252,500 $ 252,500 $ 2

16 CIP Everything Counts in your General Ledger Your General Ledger can be a rich source of data for financial analytics Track your CIP! Analytic tools can help transform your G/L detail with database functionality for sorting, summarizing, and analyzing your financial data. Enabling users to look at their financial data from different angles, searching for outliers, identifying trends, and forecasting accurate and forward looking assumptions is invaluable. It provides a control mechanism for the accountability of revenues, expenditures, and the relative impact on balances. Every aspect of your account matters! G/L acct. code: (Fund, Function, Object, Detail Object, Location, Program, etc ) Financial Projections Source Data

17 CIP Facility Planning Facility Planning. Decision-making criteria: Safety, health, and security needs affecting stakeholders and/or employees. Applicable legal mandates shall be met and maintained. Space (capacity) is functional.

18 Decision Making Process 1. Strategic, Operational and Financial (Planning) defining the problem, collecting necessary information, developing options, devising a plan, Executing, and following up. Decision making 2. Implement plans 3. Executing operational activities (Managing) 4. Data collection and performance feedback 5. Performance analysis: Plans versus actual results (Evaluating and Controlling) 6. Adjust Plans

19 360 View: Benefit - Stakeholders National/State/Other City/Village Trustees Mayor Village Manager Cost Supporting Svs. Finance Director/ CFO 360 View Staffing Policy/Legal Timing Exercise to broaden the view of impact and analysis

20 Questions/Answers Julie Ciesla, Assistant Chief Financial Officer, Peoria County David Torres, Senior Product Manager, Forecast5 Analytics September 17, 2017