KNOWING THE NUMBERS

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• KNOWING THE NUMBERS

Analyzing Public Budgets
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Workshop Objectives

• Know what information you need to analyze
  budgets.
• Understand what to look for, and what it
  all means.
• Evaluate whether or not an employer has a
  budget problem.

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What is a Budget?

• It is a political document.
• It is a financial planning tool.
• It is not etched in stone.
• We must do more than understand the budget we
  must organize and build power to win our demands.

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Why Analyze Budgets?

• To find ammunition for the bargaining table.
• To evaluate the employers finances if they plead
  poverty.
• To gain insights into the employers operations
  and plans.
• To let the employer know we are paying attention.

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A Budget Analysis Can Make a Difference
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Defining Budget Terms
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Tools You Need for a Budget Analysis

• Comprehensive Audited Financial Report (CAFR)
• Basic Financial Statement
• Past Budget Information
• Managements Discussion and Analysis
• Year-to-Date Financial Reports, if available
• Enacted Current Year Budget
• Proposed Budget for Next Year, if available

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How to Get These Tools

• Employers Budget Office
• Employer's Website

You have to ask. Employers may not be too keen on
sharing information about their financial
situation.
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Workshop Objectives

• Know what information you need to analyze
  budgets
• Understand what to look for, and what it all
  means
• Evaluate whether or not an employer has a
  budget problem

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Crunching The Numbers
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Key Questions to Ask

• Does the employer have money in reserve?
• Does the employer have a surplus or a deficit?
• Are revenues growing? If so, by how much?
• How fast are expenditures growing and in what
  areas?
• How do budgeted amounts compare to actual
  spending and revenues?

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Basic Financial StatementBalance Sheet

• Examine revenues
• and expenditures.
• Assess whether
• there is a surplus
• or a deficit.

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Surplus or Deficit?

• Revenues 450,000
• Expenditures456,000

6,000 Deficit!
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Basic Financial StatementFund Balance

• Reserved funds are off limits.
• Unreserved funds can be used for any purpose.
• Employers may attempt to restrict or earmark
  funds, but they are still unreserved!

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Knowledge Check

• 1. A Comprehensive Audited Financial Report
  (CAFR) contains
• Basic financial information
• Past budget information
• Managements discussion and analysis of the
  employers finances
• All of the above
• 2. In most cases, AFSCME members are paid out of
• Reserved funds
• Restricted funds
• The General Fund
• 3. True or False Public Employers do not have to
  provide audit reports and budget information.
• True
• False

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Answers

• 1. Correct answer all of the above
• CAFRs usually contain several sections but there
  are three that we are most interested in
• The Basic Financial Information section contains
  revenues, expenditures, fund balances, deficits
  and surpluses among other things.
• Past budget information usually includes the
  previous years budgeted and actual numbers which
  give us an idea of how accurate their budget was
  for that particular year.
• And finally, the Managements Discussion and
  Analysis gives valuable insight into how the
  employer viewed their own finances for the
  previous year. It identifies highlights in the
  general fund, summarizes divergences from the
  budget and makes predictions for the coming
  years budget.
• 2. Correct answer is General Fund
• The General Fund is very important for a budget
  analysis. Most employers have several funds that
  they account for, things like capital funds, debt
  service, sewer funds, etc. But we usually look
  at the general fund as it is the major operating
  fund and likely the fund that most of our members
  are paid out of.
• 3. Correct answer is false
• The most important thing to remember is that
  public employers must provide these documents.
  Although they may not want to let you in on their
  financial situation it is their obligation to do
  so. All you have to do is ask.

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Workshop Objectives

• Know what information you need to analyze
  budgets
• Understand what to look for, and what it all
  means
• Evaluate whether or not an employer has a
  budget problem

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How is Your Employers Fiscal Health?

• Below 5

• Between 5-15

• Over 15

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Answering Budget Questions
Q Does the employer have money in reserve? A
UFB as of Revenues Q Does the employer have
a surplus or a deficit? A Basic Financial
Statement Balance Sheet Q Are revenues
growing? If so by how much? A Balance sheets
for the past three years
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Answering Budget Questions
Q How fast are expenditures growing and in what
areas? A Balance sheets for the past three
years Q How do budgeted items compare to
actual items? A Budget vs. Actual statements
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Remember.

• Budgets help us understand an employer's
  financial flexibility.
• The General Fund and the Unreserved Fund Balance
  are key indicators of the employers financial
  situation.
• You have the tools to analyze a public budget.
• We must do more than understand budgets we must
  organize and build power to win our demands.

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For More Information
AFSCME Publication Knowing the Numbers A Guide
to Budget Analysis http//www.afscme.org/publica
tions/1661.cfm