Presented by:

Anthony Bridges, CFE, Deputy Executive OfficerMarisa Ploog, CPA, Fiscal Intervention Specialist

CCSESA Session IIIAB 1200 Fiscal Oversight

Using Budget Explorer

B U D G E T   E X P L O R E R   v. 5. 0Multiyear Financial Forecasting Software for K-12 School Agencies

AB 1200 Using Budget ExplorerIntervention Starts with the COE

Looks like another “immunity challenge” lies ahead in 2012-13

AB 1200INTERVENTION STARTS WITH THE COE

Intervention is progressive and needs technical tools− The type of fiscal intervention should be tailored to the

severity of the district’s financial problems

− An adverse interim report or disapproved budget requires the COE to determine the level of corrective action

Remember, the COE goal is to assist a district in resolving its financial problem at the lowest level of outside intervention

MULTI YEAR FINANCIAL PROJECTION

From 1994 through 2000, no state emergency loansWhat has changed?

SACS Requirements – minimal−Simple spreadsheets−COE requested districts to demonstrate basis for SACS certifications

Continued State Budget reductions & cash deferrals

CASH FLOW PROJECTIONS

Historical PracticeAccounting exercise – no deferralsJust another form requirementSpread budget balances evenly over remaining months

Present CircumstanceCOE provides fiscal intervention to local school districts – Cash shortfall = COE loan or State Intervention Trigger

WHEN LACK OF CASH TRIGGERS A CRISIS

Cash shortfall requires State Loan, referred to in Ed Code as Emergency Appropriation

Urgency Bill, sponsored by local representatives to the State Legislature

Requires two thirds vote of each house of the Legislature Requires Governor’s signature Process may take from 4-6 months

State Intervention Process

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AB 1200 FISCAL OVERSIGHTSTATE LOANS

Of the 8 districts and community colleges that have received state loans, 6 were certified qualified or positive at the interim immediately preceding the need for a state loan.

In comparison to other districts with state loans, King City bears an increased burden in financing and repayment of its state loan since it is not held harmless from the costs associated with financing and the loan carries a significantly higher interest rate.

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WHAT HAPPENS IF A DISTRICT GETS INTO FINANCIAL TROUBLE?

Intervention by the county office of education

The role of FCMAT

Responsibilities of a fiscal advisor

Responsibilities of a trustee

Responsibilities of a state administrator

Superintendent & Board get voted off the island

WHY DISTRICTS FAIL— COMMON ERRORS

• Lack of a position control system• Overly aggressive estimates of enrollment and ADA• Failure to consider loss of enrollment to new or expanding charter

schools• Poor or nonexistent charter school oversight• Loss of control of staffing costs—total compensation• Poor agreements made in collective bargaining• Rescinding layoff notices too early

WHY DISTRICTS FAIL—COMMON ERRORS, CONT.

• Not monitoring encroachment in restricted funds• Chronic, unplanned deficit spending• Underestimating the amount of “real” cuts to balance the budget

current plus two years• MYFP errors or lack of detailed assumptions • Not treating federal revenues as one-time • Not restoring expenditures for one-time furlough days/salary

reductions in subsequent fiscal years• Use of one-time money for ongoing expenditures

WHY DISTRICTS FAIL—COMMON ERRORS, CONT.

• Not responding to state funding reductions quickly enough or generally being too slow in decision making

• Ineffective in cost containment for special education programs• Miscalculating debt service capacity of developer fees and RDA

and having the general fund pick up the difference• Not using proper modeling for dealing with cash deferrals—

dividing by 12 is not a good strategy• Incorrect or nonexistent cash flow projections• Board/staff dysfunction• No Cash

WHAT IS “FINANCIALLY TROUBLED?” A financially troubled district:

− May have a history of deficit spending− May have qualified or negative interim reports− May have its budget disapproved by the County Office of Education

(COEs)− May not be able to conform to multiyear projection standards− May not have enough cash to meet its obligations− Probably has poor oversight and monitoring of its finances− May have all of the above!

In short, a district that cannot meet state standards on its own There is no “hidden immunity idol” for those who fail to plan

MULTI YEAR AND CASH FLOW PROJECTIONSUsing Budget Explorer

MYFP/cash flow are significant technical tools MYFP is a significant communications tool Assumption details are critical when it comes to

MYFP Most accurate in the base year, least accurate in the last year (year 3 generally)

The SSC Dartboard keeps us consistent statewide Preparing a MYFP or cash flow may feel like an

“immunity challenge”

FINANCIAL PROJECTIONS– TODAYS NECESSITY

Multi-Year Financial Projections Using Budget Explorer

BE provides for detailed analysisNew focus on resource/program demands today AND tomorrowIdentify and document MYFP shortfalls early on to provide greater response timeProvides a path for COE’s & Districts to build “Alliances” to strategize and prevent being voted off the islandTeaching moments

FORCASTING – TODAYS NECESSITYUsing Budget Explorer

Cash Flow Projections

Districts may not qualify for TRANS or have other fundsKnow the districts monthly payroll requirements Know the possible encroachment demands of restricted resourcesCommunicate-Communicate-Communicate – meet with your districts

MAXIMIZING BE PERFORMANCE

Supports any internet browser including:− Google Chrome, Firefox, Safari, Internet Explorer

New Server Hardware, Virtual Server Environment

Optimized software

BE MODEL MANAGEMENT

Creating a new model− Import SACS file

• Detail limited to SACS roll up• Locally defined resources must be established and redistributed

− Import from financial system• Requires coordination with COE & technology services• Greater detail – all resources – detailed object codes

Copying an existing model− Retails detail & rules− Updates may be needed

ADDING NEW PROJECTIONS

SHARE PROJECTIONBuilding Alliances with your Districts

Select projection (mouse over and click)

Click button On the projection sharingscreen select User and click buttonfor Read-only group or Read-write group

NAVIGATION TREE

• Summary– Unrestricted – Restricted• Import from SACS file roll up

-Add resources for locally defined-Deleting resources with no activity

TAB 1.) HOME – Projection Adjustments General projections settings listed on mouse over

Home page Statistics section contains links to projection adjustments

− Upload base values− Change projection title− Change number of years to forecast− Enable/disable audit logging

TAB 1.) HOME – Audit Log

Audit log is enabled by default Use report page to revise audit log for the

projection

TAB 2.) RULES

• Rules drive assumptions• Rules never affect the “base

year” (Budget Import)• Based on SSC Dartboard• Rules can be modified for

specific resources or objects• Hovering mouse over rule

icon

TAB 3.) ENR/ADA/STAFFING

• Extra care here can make a big difference in the MYFP

• Has a direct affect on projected:ADA populationRevenue Limit sources

• Prefill from CBEDS

• Projection methodsCohort progressionKindergarten

TAB 4.) SALARY FORECASTER

• Allows for greater detail in future costs

• Managed by resource

• Only salaries in object 1100

ADA data imports from Enrollment and ADA screens

Base revenue limit per ADA imports from SACS form RL

TAB 7.) AUTO BAL Used to balance resources with negative ending fund

balances in MYFP

Make all adjustments first! (including indirects)

This step is usually done last when completing MYFP

Two approaches:

− Reduce 4s, 5s, 6s (but you can change the sequence)

− Contribution from unrestricted (SpEd, RRM & Transportation)

TAB 6.) CASH FLOW Matches budget data in the resource summary

Multiyear cash flow projection

Established projection schedules

Cash deferrals schedules are updated

Revenue by resource detail or aggregate

Expenditures always aggregate

No required entry order

FCMAT cash flow tutorial

CASH FLOW ACTUALS - Upload

Actuals can be uploaded from file using button

CSV file format can be found on the Upload cash flow actuals window under sample file link

Select action for objects and import mode

CASH FLOW CREATION

If you did not enter your balance sheet information when you initially created your model start by selecting “create projection” and enter them.

You can also enter them directly on the cash flow screen.

Clicking the icons in the asset or liability GL section will provide you with additional common object code selections

ADDING ADDITIONAL ASSET & LIABILITY ACCOUNTS

CHECKING YOUR BALANCES

Checking your balances:

+ Beginning cash+ Budgeted revenue- Budgeted expenditures+ General ledger asset balances- General ledger liability balances

= Projected Ending Fund Balance

ACCESSING THE CASH FLOW PROJECTION

DETAIL REVENUE TRANSACTIONS

Revenue data is stored by individual resource and object

Access and enter revenue transaction detail by clicking on the object code series

PROJECTION DISTRIBUTION SCHEDULES

BE automatically includes the updated deferral schedules Revenue receipt schedules established by funding

source/resource Expenditure disbursement schedules established for each

major object code range Established schedules can be viewed by selecting the

tab on the cash flow

TAB 8.) TOOLS

Disclosure of Collective Bargaining Template

Fiscal Health Risk Analysis Report

TAB 9.) REPORTS

EDIT VALUES REPORT GENERATED

From resource screen this option provides you with detail across all resources for a particular object code. Good for balancing detail such as 8980, 8990, and 7310.

May require further drill down to access……..

PLANNING BEYOND NEXT YEARDEVELOPING THE MYFP

Other Fund Analysis

Future Salary Agreements

Future Program Needs

− Technology maintenance

− Opening/closing a school

− New textbooks

BUDGET EXPLORER FOR CHARTER SCHOOLS

983 Charter Schools year to date Approximately 100 charters schools approved

annually FCMAT is in the software development process Anticipated release in August\September 2012 Includes calculations for the General Purpose

Apportionment and Block Grants Software using “Wizard” approach with

questions to populate data

BUDGET EXPLORER FOR CHARTER SCHOOLS