CCSESA Session III AB 1200 Fiscal Oversight Using Budget Explorer

1. B U D G E T   E X P L O R E R   v. 5. 0 Multiyear Financial Forecasting Software for K-12 School Agencies CCSESA Session IIIAB 1200 Fiscal OversightUsing Budget Explorer • Presented by: • Anthony Bridges, CFE, Deputy Executive Officer • Marisa Ploog, CPA, Fiscal Intervention Specialist

2. AB 1200 Using Budget ExplorerIntervention Starts with the COE Looks like another “immunity challenge” lies ahead in 2012-13

3. 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

4. MULTI YEAR FINANCIAL PROJECTION From 1994 through 2000, no state emergency loans What has changed? • SACS Requirements – minimal • Simple spreadsheets • COE requested districts to demonstrate basis for SACS certifications • Continued State Budget reductions & cash deferrals

5. CASH FLOW PROJECTIONS Historical Practice • Accounting exercise – no deferrals • Just another form requirement • Spread budget balances evenly over remaining months Present Circumstance • COE provides fiscal intervention to local school districts – Cash shortfall = COE loan or State Intervention Trigger

6. 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

7. State Intervention Process

8. 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.

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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”

15. FINANCIAL PROJECTIONS– TODAYS NECESSITY Multi-Year Financial Projections Using Budget Explorer • BE provides for detailed analysis • New focus on resource/program demands today AND tomorrow • Identify and document MYFP shortfalls early on to provide greater response time • Provides a path for COE’s & Districts to build “Alliances” to strategize and prevent being voted off the island • Teaching moments

16. FORCASTING – TODAYS NECESSITYUsing Budget Explorer Cash Flow Projections • Districts may not qualify for TRANS or have other funds • Know the districts monthly payroll requirements • Know the possible encroachment demands of restricted resources • Communicate-Communicate-Communicate – meet with your districts

17. MAXIMIZING BE PERFORMANCE • Supports any internet browser including: • Google Chrome, Firefox, Safari, Internet Explorer • New Server Hardware, Virtual Server Environment • Optimized software

18. 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

19. ADDING NEW PROJECTIONS

20. SHARE PROJECTIONBuilding Alliances with your Districts • Select projection (mouse over and click) • Click button • On the projection sharing screen select User and click button for Read-only group or Read-write group

21. NAVIGATION TREE • Summary– Unrestricted – Restricted • Import from SACS file roll up • -Add resources for locally defined • -Deleting resources with no activity

22. 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

23. TAB 1.) HOME – Audit Log • Audit log is enabled by default • Use report page to revise audit log for the projection

24. 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

25. TAB 3.) ENR/ADA/STAFFING • Extra care here can make a big difference in the MYFP • Has a direct affect on projected: • ADA population • Revenue Limit sources • Prefill from CBEDS • Projection methods Cohort progression Kindergarten

26. TAB 4.) SALARY FORECASTER • Allows for greater detail in future costs • Managed by resource • Only salaries in object 1100

27. TAB 5. REVENUE LIMIT (District) Base revenue limit per ADA imports from SACS form RL ADA data imports from Enrollment and ADA screens

28. 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)

29. 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 alwaysaggregate • No required entry order • FCMAT cash flow tutorial

30. 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

31. 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.

32. ADDING ADDITIONAL ASSET & LIABILITY ACCOUNTS Clicking the icons in the asset or liability GL section will provide you with additional common object code selections

33. CHECKING YOUR BALANCES Checking your balances: + Beginning cash + Budgeted revenue - Budgeted expenditures + General ledger asset balances - General ledger liability balances = Projected Ending Fund Balance

34. ACCESSING THE CASH FLOW PROJECTION

35. 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

36. 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

37. TAB 8.) TOOLS • Disclosure of Collective Bargaining Template • Fiscal Health Risk Analysis Report

38. TAB 9.) REPORTS

39. 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……..

40. PLANNING BEYOND NEXT YEARDEVELOPING THE MYFP • Other Fund Analysis • Future Salary Agreements • Future Program Needs • Technology maintenance • Opening/closing a school • New textbooks

41. 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

42. BUDGET EXPLORER FOR CHARTER SCHOOLS

43. Thank You