Introduction to Budget

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Introduction to Budget

• FGFOA School of Governmental Finance
• November 17, 2008
• Fredrik V Coulter

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Seminole County
Source Wikipedia
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Seminole County
Source Seminole County FY 2007/08 2008/09
Biennial Budget
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Seminole County - Population
Total Population 425,745
Source Seminole County FY 2007/08 2008/09
Biennial Budget
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Seminole County - Employment
Source Seminole County FY 2007/08 2008/09
Biennial Budget
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Seminole County - Income
Source Seminole County FY 2007/08 2008/09
Biennial Budget
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Board of County Commissioners
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Seminole County
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F.T.E.(Full Time Equivalent)

• A unit of Measure used to gauge the use of
  manpower, can be budget or actual.
• 40 hours in a week
• 80 hours in a Pay period
• 2080 hours in a year

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Seminole County GovernmentEmployees (FTE)
From FY 2007/08 2008/09 Biennial Budget
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Seminole County GovernmentEmployees (FTE)FY
2008/09
From FY 2007/08 2008/09 Biennial Budget
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Seminole County GovernmentEmployees (FTE)FY
2008/09
From FY 2008/09 Second Public Hearing Book
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Property Tax Rates
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What is Budgeting?

• The creative balancing of resources and
  allocations
• A plan to allocate available resources for the
  provision of public infrastructure services for
  citizens

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Why is Budgeting?

• Legal authority to expend funds
• Done properly
• Coordination of effort
• Implementation of will of legislature

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FY 2008/09 Budget
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Fund Type and Accounting

• Fund Financial Statements
• Separate funds are established to maintain
  control over resources that have been segregated
  for specific activities or objectives
• Used to demonstrate compliance with
  finance-related legal requirements
• 3 types of fund
• Governmental, Proprietary and Fiduciary

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Governmental Funds

• General Fund general operating fund
• Special Revenue Funds account for proceeds of
  specific revenue sources that are legally
  restricted for a specific purpose
• Debt Service Funds account for payment of
  principal, interest and related costs of
  long-term debt
• Capital Projects Funds acquisition and
  construction of major capital facilities

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Proprietary Fund Types

• Enterprise Funds operations financed and
  operated similar to private business enterprises
• Internal Service Funds account for financing
  for goods and services provided internally to
  other departments

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Fiduciary Fund Types

• Trust and Agency Funds assets held in a trustee
  capacity or as an agent
• May be expendable (spend down principal) or
  non-expendable (principal remains in tact)

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Fund Measurement Focus

• Governmental Funds
• Current Financial Resources Measurement Focus
• Modified Accrual Basis of Accounting
• Proprietary Fiduciary Funds
• Economic Resources Measurement Focus
• Accrual Basis of Accounting

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Balanced Budget FY 2008/09
in millions

• Revenues

• Expenditures

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Departmental Budgets
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Fiscal Services DepartmentBudget Program
Excludes Administrative Staff MSBU Program
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Budget Types

• Program Performance Budgeting
• Multiyear Budgeting
• Zero-Based Budgeting
• Functional Budgeting
• Target Budgeting

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PoliciesGuidelines that keep you out of Trouble

• Financial Policies -- Revenue, Reserve,
  Investment, Debt, Financial Reporting, etc.
• Budget Policies -- Millage Rate, All Funds,
  Staffing, Inflationary Factors, Health Ins.,
  Contingencies, etc.
• Budget Amendment
• Capital Improvement Program
• Level of Service
• None Carved in Stone Continuous Improvement!

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Budget Calendar

• When do you start?
• Do you have Commissioner Workshops?
• When does the Certified Value arrive?
• How long does it take to Balance?
• Schedule the Revenue work also
• Are there Citizen Committees?
• Do you meet with the Departments individually?

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Budget Process

• Consensus County Manager Board
• Late spring / Early summer
• Worksession
• Late summer
• First Public Hearing
• Mid September
• Second Public Hearing
• Late September
• Adopted Budget
• October 1

Consensus
County Managers Office Weighs Departmental
Requests Allocates County Resources
www.seminolecountyfl.gov/budget
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Keeping the Process Running Smoothly

• Meet with Agency leaders budget contacts.
• Distribute Budget Guidelines Calendar of
  process.
• Communicate who is responsible for budget
  development

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Communicate Deadlines!

• Schedule time for review with departments
• Provide date / responsible party / task check
  list
• Communication!

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Budget Process Tips

• Publish budget documents and schedule workshops
  for public input
• The Internet is your friend
• Set Tentative and Final Budget Hearings
• Consider biennial budget

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Capital Improvement Element of Comprehensive Plan

• Those CIP projects necessary to maintain or
  achieve adopted level of service standard
• Update annually
• Must demonstrate financial feasibility

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Long Range Financial Planning

• Develop trends for revenues and expenditures
• Include new facilities with impact on operations
• Project out based on current levels
• Use to estimate impact on taxes

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Long-term Financial Planning Cycle
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TRIMTRuth In Millage

• Department of Revenue - TRIM Manual
• Timing Guideline
• Required Advertising (example)
• Required Public Hearings
• Avoid Non-Compliance
• Second Advertisement (tells the world)
• Additional Final Public Hearing

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Budgeting Revenues

• Look at the Historical Trend
• Know your Community
• Building Permits / Real Estate Market
• New Revenues, Programs, Fees, etc?
• Local Govt. Financial Info. Handbook
• Ad Valorem Revenue - Millage Rate
• Dont Over Estimate!

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Beginning Fund Balance(Cash Carryforward)

• A Budgeted Source of Funds, the available,
  remaining, leftover funds from the prior year.
• Project the current year revenues, add the
  audited beginning of the year fund balance, then
  subtract the projected expenditures of the
  current year. Answer is the Cash Carryforward
  for the future budget being developed.
• Fund Balance available as Cash Carryforward from
  prior year. Take Cash Cash Equivalent -
  current payables
• Compare to Unrestricted Fund Balance
• Use the lesser of the two

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Budgeting ExpendituresIncremental Approach

• Current Level vs. Expanded Service Level
• Personal Services (be careful)
• count the FTEs, check the rates, pay periods, is
  there a waiting period for benefits
• Operating Expenses
• use trends and specific events/transactions
• Policy for Inflation Trend
• Capital Outlay (Capitalization policy?)
• Specific Items, show a list

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Budgeting ExpendituresZero Based Budgeting

• Starting from scratch
• Ignore previous years budget
• Entire budget must be justified
• Disadvantage very time consuming labor
  intensive

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Budget Document

• A Policy Document
• A Financial Plan
• An Operations Guide
• A Communication Guide
• The Public View of the Budget
• Forest versus Trees

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Distinguished Budget Presentation Award

• Program offered by the GFOA
• Independent Review of Budget Document
• Helps Bond Ratings
• For more information http//www.gfoa.org/download
  s/budgetawardsbrochure.pdf

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Electronic Document Preparation

• No additional standards have been issued by the
  GFOA
• Two versions
• Online access downloadable
• Electronic physical page numbers match
• Bookmarks duplicate Table of Contents
• Use internal links
• DO NOT SCAN THE PHYSICAL BOOK

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Changes after Adoption

• State law requires ordinance to change
• Fund Budget (change in revenues)
• Change in Reserves
• Change in Interfund Transfers
• Inter-departmental Transfer
• Everything else CAN be delegated by the
  legislature to staff

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Mistakes to Avoid

• Not scheduling sufficient annual planning time.
• Not communicating the plan to the agency
  (repeatedly).
• Exclusion of operating costs for completed CIP
  projects.
• Dont minimize the importance of the appearance
  and footing of a public document.

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Final Thoughts

• Work on the Big Numbers
• What Revenues do you control when were the
  rates last adjusted
• Are Enterprise Programs funding themselves
• Track Vacancies (identify the savings) and
  potential position removal
• Financing, Leasing, Bonding where appropriate

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Questions?

• Fredrik V. Coulter
• [phone]
• fcoulter_at_seminolecountyfl.gov

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Acknowledgements

• Lisa Spriggs
• For thinking of me when this course needed an
  instructor
• Lin Polk Betty Segal
• For proofing and editing the PowerPoint
  presentation. Anything good about it comes from
  them. Bad things are my fault
• Peter Colby, Ph.D. (UCF eMPA Program)
• For walking into a class and giving the two
  budget students the Dilbert cartoon