understanding the budget and local government revenue ......government finance officers association...
TRANSCRIPT
Government Finance Officers Association
Understanding the Budget and Local Government Revenue Sources
December 6, 2019
© 2019 Government Finance Officers Association
gfoa.org@GFOA
2
• John FishbeinSenior ProgramManagerTechnical Services CenterGovernment Finance Officers Association (GFOA)Phone: 312 578 2268Email: [email protected]
2
1
3
http://www.gfoa.org/best practices
Links
4
• Budget Awards home page• http://www.gfoa.org/budgetaward
4
Links
2
5
6Town of Windsor, Colorado.
6
3
7Wake County, North Carolina
7
8City of Loveland, Ohio.
8
4
9
Financial Forecastingin the Budget Preparation Process
• Define assumptions – time horizon, objective, political/legal issues, major revenue and expenditure categories.
• Gather information.• Preliminary/exploratory analysis
Business cyclesDemographic trendsAnomaliesVariables 9
10
• Select methods – extrapolation, regression, knowledge-based.
• Implement methods, make the forecast, and forecast ranges.
• Use the forecast.Credibility of the forecasterPresentation approachLinking forecast to decision-making.
Financial Forecastingin the Budget Preparation Process
10
5
11City of Golden, Colorado
11
12St. Louis County, Missouri
12
6
13Santa Clara Valley Water District, California
13
14City of Mesa, Arizona
14
7
15St. Louis County, Missouri
15
16City of Manhattan, Kansas
16
8
17City of Merriam, Kansas
17
18
Establishing Government Charges and Fees
• Adopt formal policy (public)Factors to be taken into account in pricingIntent to recover full cost?Circumstances where more or less than 100% recovery permittedRationale for not recovering full cost
• Full cost should be calculated to provide a basis for setting fees or charges
• Review and update regularly
18
9
19
• As a part of the budget process, the Board set water rates thatwill go into effect on January 1, 2016.
• The planned water rate adjustment is 2.5% based on a cost ofservice analysis. This represents an impact of $1/month for thetypical residential customer. The main cost drivers that make anincrease in 2016 necessary are investments in infrastructurereplacement, labor expenses, security enhancements, and agradual decline in indoor water use.
• The 2016 rate is consistent with WaterOne’s approach to avoidrate volatility by creating incremental rate adjustments. Stable,predictable rates are preferred by customers and promote thegrowth of the local economy.
WaterOne, Kansas
19
20
Albemarle County Service Authority, Virginia
20
10
21Pinellas County, Florida
22
What fees should be listed in the budget document?
A. Those with a high dollar impactB. Those subject to a high level of citizen concernC. Those affected by significant changesD. A, B, and CE. A list of all fees should be presented
22
11
23
5. Establishing an Effective Grants Policy
• Provides staff guidance to staff in order to maximizethe benefits and minimize the risks of receivinggrants.
• Identifies formal steps to take prior to applying foror accepting a grant.
• Policy should include, at a minimum, the following:Grants identification and applicationStrategic alignmentFunding analysisEvaluation prior to renewal or grantcontinuationAdministrative and operational support
23
24Coconino County, AZ.
24
12
25Achieving a Structurally Balanced Budget• Clarify distinction between satisfying a statutorydefinition and a true structurally balanced budget.
• Define parameters for achieving and maintainingstructural balance whereby recurring revenues equalrecurring expenditures in the adopted budget.
• Identify key items, including:Recurring and non recurring revenuesRecurring and non recurring expendituresReserves
• Adopt a formal, written policy calling for structuralbalance of the budget.
• Require the budget presentation to clearly identifyhow recurring revenues are aligned with or not alignedwith recurring expenditures.
25
26Maricopa County, Arizona
26
13
27Maricopa County, Arizona
27
28
When analyzing key features of astructurally balanced budget, some items toconsider may include?
A. Adoption of a formal policy
B. Identify recurring and non recurringrevenue and expenditures
C. All of the above 28
14
29
Budget Monitoring
• Revenues. Governments need to carefully analyze sourcesof funds with particular attention to:• Seasonality, and whether comparable to priorobservations
• Any potential volatility and the resulting impacts• Trends and comparison to projections• Timing of receipts• Relationship to economic indicators and potentialimpacts
• Changes in policy/practice of overarchinggovernments involved in disbursement of revenues
• Review of patterns at other similar/relatedgovernments
29
30
Budget Monitoring
• How the elements should be analyzed• Root cause. Governments should move beyond justidentifying deviations from budget versus actuals andwork towards analyzing and articulating why deviationsoccurred in order to move towards resolution.
• Time frame. Is it anticipated for any identified varianceto continue or is there an underlying reason for thevariance? How does the current spending patternimpact the subsequent year’s budget?• Requirements. Structure budget monitoring to meetany interim reporting requirements that thegovernment may have, if possible.
30
15
31
Budget Monitoring• Communications
• Frequency. The frequency of how often budgetmonitoring reports and information is generated shouldbe agreed upon at all levels of the organization.
• Delivery. How the information is communicated and towhich stakeholders, both internally and externally,needs to be clearly structured.
• Format. The format for how information related tobudget monitoring needs to be clearly established aswell.
• Transparency. How can the information be shared on awide spread basis to the community and include theproper context to best inform the public and minimizeadditional request for more information.
31
32City of Independence, Missouri
32
16