Financial Forecasting for Long-Term Sustainability

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1 Financial Forecasting for Long-Term Sustainability GFOA Annual Conference & Membership Meeting September 12, 2012 Presenters: Matt Bunting, Mike Sobul & Ernie Strawser Public Finance Resources, Inc. Serving the Public s Financial Leaders

2 Today s Economic Environment Property Values Stagnant to Declining Per-Capita Income Flat Unemployment Still High Key Areas of Inflation Energy, Food and Health Care Today s economy makes planning essential. 2

3 Multi-Year Financial Forecasting Does your financial plan address Economic Uncertainty? Sustainability? Priorities and Goals? Your governmental entity is perfectly aligned to get the results you are getting. 3

4 Single Year Financial Planning 4

5 Multi-Year Financial Planning 5

6 PRACTICAL APPLICATION EXAMPLES 6

7 Change in Customer Demographics 2,800 Granville School Enrollment 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1, / / / / / / / / / /2010 7

8 Change in Customer Demographics 1.5 Indexed Number of Pupils and Teachers 2000/2001 School Year= Pupils Teachers / / / / / / / / / /2010 8

9 Change in Customer Demographics 2800 Granville School Enrollment

10 Change in Customer Demographics 1.5 Indexed Number of Pupils and Teachers 2000/2001 Schoolyear= Pupils Teachers

11 Cash Reserves Now what? $10,000,000 $5,000,000 $- 8,314,680 4,921, ,781 $(5,000,000) (5,469,439) $(10,000,000) $(15,000,000) (12,078,998) Fiscal Years 11

12 Cash Reserves - Sustainable? $10,000,000 $5,000,000 $- 8,314,680 4,921, ,781 $(5,000,000) (5,469,439) $(10,000,000) $(15,000,000) (12,078,998) Fiscal Years 12

13 Cash Reserves Sustainable? No. $10,000,000 $5,000,000 $- 8,314,680 4,921, ,781 $(5,000,000) (5,469,439) $(10,000,000) $(15,000,000) (12,078,998) Fiscal Years 13

14 Reversing the Trend? Looking Ahead, modeling the trends forward Expenditures exceed revenue 14

15 Revenue vs. Expenditures 15

16 After Operating Margin 16

17 Cash Reserves $10,000,000 $5,000,000 $0 (356,304) ($5,000,000) ($10,000,000) ($15,000,000) Fiscal Years 17

18 HOW TO GET STARTED -- A LOCAL GOVERNMENT EXAMPLE 18

19 Components to Consider Significant Revenue & Expenditure Categories Analysis Historical Variances, Uncertainty Cash Flow Communication and Financial Statements Informing policy makers, constituents and stakeholders External market agencies 19

20 Significant Revenue Source? 20

21 Sales Tax - Historical Comparisons 21

22 Sales Tax & Year-Over-Year Trends 22

23 Sales Tax Forecast Basis 23

24 The More You Knew -- The More You Will Know 24

25 The More You Knew -- The More You. Will Know 25

26 The More You Knew -- The More You Will Know 26

27 Goals & Priorities 27

28 Local Government Example Earlier and Better Sense of Next Year s Challenges Operating Margin Order of Magnitude Goals and Priorities Understanding of Revenue and Expenditure Categories One time money 28

29 Financial Forecasting Benefits Consistency for record keeping and tracking Record last year s variables Grows a sense of overall historical/projected financial perspective Versus department by department Modeling priorities over time Employee FTE tracking, wages and benefit costs Keeping in mind demographics 29

30 Financial Forecasting Benefits Better planning and design for local government decisions Help avoid allegations and embarrassment of lack of planning. Sustainable operations 30

Employee Bios Debra Kelbaugh, Chief Operations Officer of Public Finance Resources, provides direct services to clients, and oversees the day-to-day operations of PFR.

Debra holds her Masters of Business Administration from Ohio University, and her Bachelors of Science in Business Administration from The Ohio State University.

He has over 20 years of experience serving as school district treasurer, including 15 plus years of developing financial forecasting tools, and providing instruction and training opportunities

Stacy works with clients to analyze trends and review local economic data to help determine a long-term operating strategy for the organization.

Ernie Strawser, Consultant, provides direct services to our public finance clients.

31 Employee Bios Debra Kelbaugh, Chief Operations Officer of Public Finance Resources, provides direct services to clients, and oversees the day-to-day operations of PFR. She brings with her operational experience from both the public and private sectors, including a school district and multiple corporations in the financial services industry. Debra holds her Masters of Business Administration from Ohio University, and her Bachelors of Science in Business Administration from The Ohio State University. Stacy Overly, Consultant, provides direct financial services to clients. He has over 20 years of experience serving as school district treasurer, including 15 plus years of developing financial forecasting tools, and providing instruction and training opportunities attended and used by over two hundred of Ohio s public school treasurers. Stacy works with clients to analyze trends and review local economic data to help determine a long-term operating strategy for the organization. He holds his Masters of Business Administration and his Bachelors of Business Administration in Finance from Ohio University. Ernie Strawser, Consultant, provides direct services to our public finance clients. He has over 30 years of public finance experience as a CFO, consultant, and developer and instructor of financial forecasting techniques and tools which have been used by over two hundred Ohio school district CFOs. Ernie works with clients to facilitate their understanding of local financial results, trends, and strategies. He holds both a Masters of Science in Administration from Central Michigan University and a Bachelor of Science in Finance from Ohio University. Matt Bunting, Consultant, has over 25 years of experience in the public finance sector. This includes 15 plus years as a school district treasurer, and 11 years with the Auditor of State where he led financial, legal compliance, and Federal single audits of government entities. Matt has served as interim school treasurer several times, as well as worked with Ernie and Stacy to test their forecasting software and instruct at their yearly seminars. He holds an Associates Degree in Accounting from Hocking College, and is a Certified Government Financial Manager. Mike Sobul, Consultant, brings 30 years of experience in public finance and tax analysis. Currently a school district treasurer, Mike spent nearly 25 years with the Ohio Department of Taxation where he led revenue forecasting efforts and provided analysis, training, and fiscal services to schools and local governments. Mike holds a Masters Degree in Public Policy from the University of Michigan and a Bachelors Degree in Economics and Political Science from Wittenberg University. Public Finance Resources, Inc. Serving the Public s Financial Leaders 31

32 Presenters Matt Bunting Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH Phone: Cell: Mike Sobul Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH Phone: Cell: Ernie Strawser Consultant Public Finance Resources, Inc. PO Box 1822 Columbus, OH Phone: Cell: Matt Bunting, Consultant Stacy Overly, Consultant Mike Sobul, Consultant Ernie Strawser, Consultant Debra Kelbaugh, COO 32

Financial Forecasting for Long-Term Sustainability

Financial Forecasting for Long-Term Sustainability 2014 Annual Ohio Township Association Conference February 14, 2014 Presenters: Mike Sobul & Matt Bunting Public Finance Resources, Inc. Serving the Public