1 Budgeting Basics FGFOA Budget Workshop December 19, 2013 Todd Bond, Budget Officer Polk County...

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Budgeting Basics

FGFOA Budget Workshop

December 19, 2013

Todd Bond, Budget OfficerPolk County Board of County

Commissioners

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Course Outline► Budget background

What is a budget? What Guides the Budget?

► Budget Process and Policy Funds and Balancing TRIM – What is it and how it impacts us

► Budget Types Operating CIP Process

► Budget Methods Line Item Program Budgets Zero Based Budgeting for Outcomes

► Budget Monitoring and Reporting

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What is a Budget?

►The Merriam-Webster dictionary definition:

A statement of the financial position of an administration for a definite period of time based on estimates of expenditures during the period and proposals for financing them

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What is a Budget?

REVENUE

TaxesUser Fees

License FeesPermit Fees

Fund Balance

Bond Proceeds

Misc. Revenue

EXPENSE

Position CostsOperating

CostsCapital

EquipmentCapital ProjectsReserves

How much are citizens willing to pay?

What level of service do citizens want?

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What is a Budget?►Government Finance Officers

Association (GFOA) Financial Plan - a plan of what is

projected to be received in revenue, as well as how much will be spent over the same time

Operations Guide – used as a tool by organizations to guide operations, as well as capital expenditures

Policy Document – provides information on goals, objectives, service levels, challenges, trends, and policies

Communications Device - communicates to the Board and the public what is being done with tax revenues

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Orange County Sources of Funds

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Pasco County Expenditures Chart

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Polk Adopted Budgets

$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

$1,200,000,000

$1,400,000,000

$1,600,000,000

$1,800,000,000

$2,000,000,000

FY99/00

FY00/01

FY01/02

FY02/03

FY03/04

FY04/05

FY05/06

FY06/07

FY07/08

FY08/09

FY09/10

FY10/11

FY11/12

FY12/13

FY13/14

FY14/15

$668

,036

,988

$813

,376

,215

$848

,185

,080

$873

,278

,602

$884

,142

,451

$999

,869

,798

$1,3

34,5

90,5

33

$1,6

05,4

58,8

44

$1,8

24,8

50,2

91

$1,7

23,8

30,2

26

$1,6

12,3

47,8

76

$1,3

35,6

72,9

94

$1,3

32,8

12,9

64

$1,3

07,2

85,7

66

$1,2

60,4

45,2

37

$1,0

16,2

42,4

89

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Putting the budget ahead of the policy is the wrong way to do it. It's too often the way it's done in Washington.

Spencer Abraham

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What Guides our Budget?

►Florida Statutes►Best Practices – GFOA►Generally Accepted Accounting

Principles►Local Policies

Ordinances, Resolutions, Charters

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Florida Statutes►There are numerous Florida Statutes

Chapter 129 County Annual Budget►Establishes guidelines for County Annual

Budget FS 129.01 “Budget system established.” FS 129.03 “Preparation and adoption of

budget.” FS 129.04 Sets the “Fiscal Year”.

FS 166.241 for Municipality Budgets, Fiscal Years, and Budget Amendments

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Florida Statutes Continued

►Chapter 200 Determination of Millage FS 200.065 Method of Fixing Millage

►Sets the timeline for establishing property taxes for all local governments and other taxing authorities

FS 200.011 Duty of County Commissioners and School Board in setting rate of taxation

►Establishes that the Commissioners determine the amount to be raised for all County purposes for the Board as well as other County taxing authorities

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Florida Statutes Continued

►Budget must be balanced►Defines budget process►Establishes budget amendment

process►Defines budget system►Defines fiscal year►Establishes that it is unlawful to

overspend the budget

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Legal Requirements

►Budget shall conform to the State’s uniform chart of accounts Expenses are assigned to functional

categories►General Government►Public Safety►Transportation►Economic Environment►Human Services►Culture/Recreation►Inter-fund Transfers

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Basic Structure►Fund Types

General Fund►Only fund that can be used across the Board

for all General County Purposes Special Revenue Funds

►Account for proceeds of specific revenue sources requiring separate accounting because of legal or regulatory provisions or administrative action

e.g. Transportation Trust Fund, Special Revenue Grants, Fire Services Fund, etc…

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Basic Structure (continued)►Fund Types (continued)

Debt Service Funds►Account for the accumulation of resources for

and payment of the County’s long-term debt other than those payable from the operations of Enterprise Funds

Capital Funds►Account for the acquisition or construction of

major capital facilities and the acquisition of environmentally sensitive land

e.g. CIP Road Projects Fund, Public Safety Capital Improvement Fund

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Basic Structure (continued)►Fund Types (continued)

Enterprise Funds►Used to account for operations that are

financed and operated in a manner similar to private business enterprises

e.g. Solid Waste Funds, Utilities Funds, Rohr Home Fund

Internal Service Funds►Account for the financing of goods and

services provided by one department or agency to other departments or agencies, and to other governments on a cost reimbursement basis

e.g. Fleet Maintenance Fund, Fleet Replacement Fund, Employee Health Insurance Fund, Information Technology

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Generally Accepted Accounting Principles (GAAP)

►Combination of standards and simply the commonly accepted ways of recording and reporting accounting information

►Governmental Accounting Standards Board (GASB) The source of GAAP used by State and

Local governments in the United States

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Best Practices - GFOA

►GFOA has established a collection of practices that identify enhanced techniques and effective strategies for state and local government practitioners

►http://www.gfoa.org/index.php?option=com_content&task=view&id=118&Itemid=130

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Local Policies - County Charter

► Article I: “Polk County shall be a Home Rule Charter County, and except as may be limited by this Home Rule Charter, shall have all powers of self-government granted now or hereafter by the Constitution and Laws of the State of Florida”

► Article II: “The Board of County Commissioners shall have specific powers and duties to review the budgetary requests including salaries and make the final budgetary determinations and appropriations for all County governmental operations…”

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Budget Process

Budget & CIP CalendarTrainingBoard Retreat5 – 10 Year Projections

Budget KickoffForms & InstructionsWork Sessions with County ManagerTRIMProposed Budget

BoCC & Public Review

Two Public Hearings

Adoption

Preparation Phase

Review Phase

Adoption Phase

Planning Phase

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TRIM Process►Florida Statute 200 –

Determination of Millage TRIM – stands for Truth in Millage Sets timeline for millage that drives the

whole budget calendar for local government

The process that establishes property taxes

All taxes are computed based upon taxable value

►Taxable value/1,000 x millage rate = property tax

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TRIM Process

Day # “Typical” Date* Agency Activity

1 July 1Property Appraiser

Certifies taxable value

Within 15 July 15Taxing Authority

Proposed Budget presented to Board

35 August 4Taxing Authority

Advises Property Appraiser of proposed millage

55 August 24Property Appraiser

Prepares Notice of Proposed Property Taxes (TRIM Notice)

Between 65/80

September 3 - Sept. 18 Taxing Authority

Hold Tentative or First Public Hearing on the budget and millage. (Noticed on TRIM)

Between 80/95

Sept. 18 - October 3Taxing Authority

Advertises for Final Public Hearing to adopt a budget and millage rate.

Between 2-5 Days After

AdsSept. 20 - October 8

Taxing Authority

Final or Second Public Hearing to adopt the budget and millage rates. Hearing CANNOT be held sooner than 2 days nor later than 5 days after it is advertised in the newspaper.

Local Government Statutory TRIM Timetable

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Property Tax Calculation

►Example: Assessed value: $150,000 Less Homestead Exemption: ($50,000) Taxable value: $100,000 100,000/1,000 = 100 x 6.8665 = $686.65

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Polk County Property Value

0

5,000,000,000

10,000,000,000

15,000,000,000

20,000,000,000

25,000,000,000

30,000,000,000

35,000,000,000

40,000,000,000

98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14

14,2

27,2

51,7

90

14,5

08,6

15,3

68

15,4

94,1

82,5

05

16,8

33,8

84,2

71

17,9

92,9

19,2

98

18,9

95,6

94,0

16

20,6

35,7

56,8

50

23,7

64,4

13,9

52

30,2

75,9

42,1

71

35,6

09,4

73,4

00

34,4

61,5

94,3

34

30,4

28,4

80,6

93

26,0

84,6

82,7

89

24,4

51,0

94,4

50

23,2

39,8

69,8

78

24,0

85,1

22,5

30

Countywide Final Taxable Value

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Polk County Millage

5.0000

5.5000

6.0000

6.5000

7.0000

7.5000

8.0000

8.5000

9.0000

98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14

7.97

70

7.97

70

7.72

70

7.72

70

7.72

70

7.72

70

7.72

70

8.72

70

8.33

30

6.86

65

6.86

65

6.86

65

6.86

65

6.86

65

6.86

65

6.86

65

Countywide Property Tax Rate

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Polk County MillageFY 12/13Adopted

FY 13/14Proposed Change

Countywide

General Fund 5.6665 5.6665 -0-

Environmental Lands 0.2000 0.2000 -0-

Transportation 1.0000 1.0000 -0-

Countywide Total 6.8665 6.8665 -0-

Unincorporated

Parks MSTU 0.4219 0.4219 -0-

LibrariesMSTU 0.2109 0.2109 -0-

Stormwater MSTU -0- 0.1000 0.1000

Unincorporated Total 0.6328 0.7328 0.1000

Total Millage 7.4993 7.5993 0.1000

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Sonoma County California

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Budget Types

►Operating Budget One year Multiyear – recommended practice

►Capital Budget Adopted as part of overall budget Developed separately as a “Capital

Improvement Plan” (CIP) First year is funded

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Operating Budgets

►Personal Services Salaries and benefits

►Operating Expenditures Office supplies, fuel,

contracts, etc.►Capital Expenditures

Equipment, vehicles, etc.

►Reserves

Personal Services13.19%

Operating Expenses13.57%

Capital Outlay0.93%

Grants and Aid3.93%

Constitutional Officers *

54.00%

Reserves10.95%

Transfers-Internal3.35%

Other Non-Operating0.08%

GENERAL FUND EXPENDITURES BY CHARACTER

FY13/14

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Multiyear Budget

►Second year plan or “Rolling Plan” The first year is adopted and following

years are a tentative spending plan Budgets and Plans are re-done every year

►Two-Year Budget 2nd year plan is adjusted in the “off year”

and adopted Every other year becomes a one year

budget ►TRIM process is required every year

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Benefits of Multiyear Budgeting

►Enables strategic and tactical thinking►Identifies trends►Demonstrates the need for reserves►Early problem identification►Viewed favorably by bond rating

agencies

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Capital Improvement Plan Budgets

►Five to twenty-year plan Includes funding sources and operating

costs of finished projects May also include Unfunded Projects

►Approved through a separate process ►Adopted annually as a plan►Included in adopted budget

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Types of CIP Projects

► Roads► Intersections► Jails► County Facilities and Buildings► Parks and Athletic Fields► Drainage► Landfills► Water mains, pumps, and wells

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Capital Improvement Plan

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Polk County CIP Process

►Departments and Divisions identify projects

►Divisions prepare “Carry forward” Update (April - May)

►County Manager Reviews (June)►Board Workshops (August)►Approval During Public Hearings

(September)►“True Up” of Adopted Budget

(December)

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Budget Methods

►Line Item Budget Focuses on items being bought or paid for

►Travel, office supplies, fuel, etc. Keeps track of how much was spent on

items Easy to develop, start with last year’s cost Also known as “Traditional Budgeting”

►Typically built upon last year’s cost Emphasis is not placed on services

provided

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Budget MethodsLine Item Budget

Division: Fire RescueProgram: OperationsCost Center: 290522012

DescriptionFY2014/15

Plan

Total Personnel Services 22,300,919Operating ExpensesProfessional Services 15,000Purchase Of Computer Software 10,000Laundry and Dry Clean 0Other Contractual Services 55,000I.T. 15,271Travel Out Of County 2,000Travel In County 0Communication Services 75,000 Utility Services 185,000Rent Lease Equipment Building 20,000Risk: Property Damage 2,500Maintenance Building/Grounds (Misc. Facilities Recurring)300,000

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“We can't solve problems by using the same kind of thinking we used when we created

them.”

Albert Einstein

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Budget Methods

►Program Budgets Focuses on expected services and

activities►Performance objectives are used

Revenue and expense are linked to programs that meet community goals

Identifies anticipated results and outputs

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Budget MethodsProgram Budget

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Budget Methods

►Zero Based Asks managers to build a budget, starting

from zero All expenses must be justified for each

new budget Budgets are analyzed for its needs and

costs regardless of whether the budget is higher or lower than the previous one

Time-consuming and costly

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Budget Methods

►Performance Based Focus on results/outcomes, not inputs Shows relationship between program

funding levels and expected results Aids in assessing productivity, quantity,

and quality Multiple variations, such as “Budgeting for

Outcomes”

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Budget Amendments

►Florida Statute 129.06 “Execution and Amendment of budget” Local authorities can approve or delegate

authority to approve amendments, if total appropriations of the fund do not change.

Use of Reserves has to be Board approved.

Funds can be increased by resolution for unanticipated revenue.

Public Hearing required for any other purposes.

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Budget Monitoring and Reporting

►Budget vs. actual reports % spent compared to % of year

completed Keep in mind normal/seasonal fluctuations

►Debt service may be paid early in the year►Park costs increase during league seasons

Payroll schedules

Division Pfdesc Budget Actual Balances % Budget Used Explanation

Adult Day Health Care Centers 1,449,546 888,683 560,863 61.31%

General Fund 1,371,546 859,991 511,555 62.70%

Special Revenue Grants 78,000 28,692 49,308 36.78%

Assessment Projects 2,894 2,064 830 71.32%

Special Assessment Funds 2,894 2,064 830 71.32%

Board of County Commissioners 37,101,681 16,398,564 20,703,117 44.20%

General Fund 36,789,483 16,086,366 20,703,117 43.73%

General Capital Improvement Funds 312,198 312,198 0 100.00% Transfers processed.

Actual vs Budget Expense SummaryOCT-12 through JUN-13

75% through fiscal yearby division, all funds

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Dashboards

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Dashboards continued

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Questions?

Thank You!