Financial Management

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Financial Management

• Budgeting
• For the Public
• Leisure Services Agency

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Financial Management

• Preparing and Executing Budgets
• Accounting Procedures
• Accountability issues

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Definition of the Fiscal Management Process

• The management, custody and control of all
  revenues received by the agency and funds
  expended......or the handling and responsibility
  for all money and items of value with the intent
  to accomplish the agencys mission

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Budgeting-Fiscal Management

• A manager who believes in the value of his/her
  agencys services to its constituents should be
  an aggressive seeker of funds to support its
  mission......not just a spender/allocator of what
  the agency receives.

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Budget directors (agency manager) dilemma

• Balance
• Fiscal Conservancy
• dont overburden taxpayer
• maintain reasonable spending
  __________________________________
• With
• maintaining a viable, state of the art agency

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Role of Leisure Service professional in fiscal
management

• need basic understanding of revenue sources,
  controls and accounting
• need to be able to utilize budget to meet agency
  goals

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Budget

• Think of it as a fiscal or financial
  management plan for a given period of time
• (most typically 1 year)

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A well designed budget should accomplish the
following

• 1. provide a general statement of financial
  status (needs and resources), for all key
  operational (including program) elements.
• 2. Inform stakeholders of cost of achieving
  agency goals
• 3. Simplify operational procedures with well
  classified expenditures
• 4. Serve as a means of evaluating objectives

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Budget types

• Operating
• day to day operations such as
• salaries
• rents
• supplies

• Capital Improvements
• significant expenses such as large equipment,
  facilities and land
• often managed as a separate fund (ie a bond issue)

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Operating Budget styles

• Line Item
• (object classification by broad categories)
• AGENCY
• commodities
• services personal
• current charges, etc.
• Problem uses logical categories like supplies,
  but where the supplies are used cannot be
  determined

• Program
• starts with a line item basis but codes accounts
  by program units
• AGENCY
• Adult Softball
• commodities
• services personal
• current charges

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Program Style Budget illustrating several
divisions and categories. A straight line
item/object budget would not have the extra
division columns
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Benefits of program style budget(Using the
budget as a tool)

• The reason for the popularity of the program
  budget type is the amount of useful information
  it can provide.
• Programs can be evaluated and compared for cost
  effectiveness. Almost any combination of levels
  can be used.
• For example, the administration account might
  remain general while tennis is broken into
  specific activities.

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Legal aspects of budgeting

• Enabling legislation and related state or local
  statutes typically outline agency fiscal
  policies, including but not limited to
• sources of revenue (taxes, fees, etc.)
• accounting procedures and tracking (audits)
• calendars/presentation deadlines
• public input, hearings and approval process

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Budget process

• Steps include
• 1. PREPARATION matching fiscal resources to the
  agencys strategic plan
• combo of top-down/bottom up approaches
• develop justifications for all level
• 2. APPROVAL The policy board rules after agency
  presents and public input is heard
• 3. IMPLEMENTATION The manager authorizes
  
  expenditures while conforming to state law
  and established procedures

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Budget preparation - need

• Base budget on need that is justifiable
• inflated arbitrary expenses reduce agency
  credibility
• however, an agency loses credibility also if the
  manager is unwilling to ask for sufficient
  resources to do the job well....
• just getting by isnt supplying a quality service

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Incremental budgets

• Using incremental budgeting involves the process
  of adding a small increment (e.g. 4) to last
  years budget.
• it is easy and fits top down information on
  upcoming allocations (it is often used as a
  result)
• This process is faulty in that it assumes that
  last years budget continues to meet constituent
  needs without justification.
• instead, use the incremental approach for basic
  needs such as utilities, etc.. and let programs
  justify their existence.

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Zero based budgeting options

• zeroes out each account each year, requiring
  annual justification of every aspect of agency
  operations
• is expensive and very
  time-consuming
• As a result, many agencies use a modified zero
  base approach instead.where programs that are
  new, untested or marginal can be zeroed out and
  established programs not

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Budget cutting

• What to look for
• cuts in large expenditure areas result in the
  greatest savings
• if personnel accounts for 75 of expenditures a
  10 cut in this area will result in 75 of needed
  savings
• consider cutting or privatizing entire program
  units rather than hurting all programs
• look for poorly performing or expensive programs
• cutting cost effective programs is inefficient
• cutting adult sports (no subsidy) instead of
  youth sports (50 subsidy) results in no savings

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Hints for budget preparers

• always underestimate revenues
• maintain a slight surplus (carryover) for
  emergencies and shortfalls
• develop a special account (avoid use of the
  term miscellaneous) MPRD calls theirs
  NEW Programs, so that new programs, not
  thought of during the planning process, can
  be added while maintaining agency
  compliance with the Cash Basis Law

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Investment of Idle funds

• Agency managers are expected to invest idle funds
  so that interest can be earned until the funds
  are needed
• the preferred investment is a certificate of
  deposit, as these are safe, relatively liquid and
  can be purchased with varying maturity dates. KS
  State Bank has a special savings/checking account
  that earns the owner 3-4 interest but requires
  10 or more transactions per month. In other
  words, look closely at like options.
• Your student recreation fees are invested but the
  interest is credited to the states general fund
  and not rec services

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Bank selection

• In a community the selection of a bank or banks
  might take the following forms
• require a bi-annual (or less frequent) bid of
  services and merely take the best bid (certainly
  acceptable)...
• use several banks to keep taxpaying banks happy
  (one for operating, one for capital, another for
  grants, etc..) can be confusing and necessitates
  some paperwork expenses.

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Use of Banks

• Banks are taxpayers and it is a nice to be able
  to use different banks in a community
• The best policy is probably to have financial
  service bid on by various banks every 3 years or
  so (everyone has an equal chance)
• Other approaches include keeping separate funds
  in different banks, or alternating, etc..

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