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Creating a Multi-Year Budget Document

(Technical Review)

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Goal

Gain Insight Into Oakland County’s Approach to Multi-Year Budget Reporting

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Multi-Year Budget Defined

A multi-year budget is the development and formaladoption of an expenditure and revenue document that spans two or more years.

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Advantages of Multi-YearBudgeting

• Improve financial management

• Improve long-range and strategic planning

• Improve program monitoring and evaluation

• Link operating and capital activities

• Planning is beneficial to maintain reserve funds

• Identify structural imbalances between revenues and expenditure trends

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Challenges of Multi-Year Budget

• Unstable local economy may present difficulties in forecasting revenues and expenditures

• Projecting expenditures and revenues may be difficult for some departments/divisions

• The budget process may need to incorporate new policies and processes

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Governments can safeguard themselves from these potential

challenges by:

• Amending existing financial and budget policies and procedures• Linking the multi-year budget with the strategic plan, long-range

financial plan and revenue forecast, and financial and budgetary policies

• Establish a budget review process for ensuring compliance with budget policies, procedures and targets

• Assessing the local economic environment by examining key economic and financial indicators, and document underlying economic assumptions

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Reporting Multi-Year Budget(OC System Prerequisites)

• Meet existing demand for publishing both the Line-Item and Program budgets

• Must work within existing budget process. . .

• Provide an intuitive data entry process

• Most importantly, this data entry process must accept amendments that modify current and future budget years

• Communicate with existing financial system

• Provide a level of security

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•Viewed as a collection of processes

•Implemented thru existing technology within the County

•We are a PeopleSoft shop however…

•Budget “System” is not a module of PeopleSoft

Budgeting System - Simplified

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•Load End-of-Year adopted plan into current FY (Base Budget)

•Extract ledger data from this plan based on analyst preference

•Organize data within Excel relative to current budget phase

•Key budget variances into spreadsheets

•Import these budget variances back into ledger

•Report on updated budget

Budgeting Process - Simplified

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Resources We Utilized(A Collection of Processes)

Ledgers Place to Store Data

Queries Method to Extract Data

Excel Means to Change Data

Journal Utility Upload Data

Reporting Publish Data

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Ledgers(Budget Analyst Viewpoint)

• Actuals – What actually happened across our 7 core chart fieldsduring the fiscal year. This ledger is for reference only.No updates.

• Budget – Where the current fiscal year rolling budget is maintained andamended. Analyst cannot update this ledger directly.

• Budget Prep – Where the Multi-Year budget is built. Analyst canupdate (forecast) budget for the next 3 years.

• We draw upon all three ledgers to report a Multi-Year budget

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FundDepartment

ProgramAccountProject

Operating UnitFund Affiliate

••

Fiscal Year (FY)Scenario

Within Each Budget Ledger(Chart Fields)

Primary fields for Budgeting

Primary fields for Multi-Year

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Scenario – simply a text field that maintains the granularity of the budget transactions within a given budget cycle(what part of the budget does this transaction change)

Scenario Examples:FY1CEAPLN – Fiscal Year 1 Cnty. Exec. Amended PlanFY2CEAPLNA – Fiscal Year 2 Cnty. Exec. Amend Plan AmendmentsFY3CERECAJ – Fiscal Year 3 Cnty. Exec. Rec. AdjustmentsFY3FCAMEND – Fiscal Year 3 Finance Comm. AmendmentsLOADSALARY – Load New Salary Forecast

Fiscal Year – value is determined by the posting date of the journal

(Achieving Multi-Year Budgets)FY & Scenarios

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Sample RecordsLedger Account Dept

Oper Unit Program Fund

Bud Re f

Fund

Affil Project Year Period Budgeted ScenarioBUDG_PREP 626619 4030601 116200 10100 2,010 12 -15,590.00 FY1FCAMENDBUDG_PREP 630392 4030925 110070 27100 2,010 12 -8,530.00 FY1FCAMENDBUDG_PREP 722800 4030601 40030 116180 10100 2,010 12 -1,751.00 FY1FCAMENDBUDG_PREP 722810 4030601 40030 116180 10100 2,010 12 -375.00 FY1FCAMENDBUDG_PREP 722820 4030601 116200 10100 2,010 12 8.00 FY1FCAMENDBUDG_PREP 626619 4030601 116200 10100 2,010 12 -15,590.00 FY2FCAMENDBUDG_PREP 630392 4030925 110070 27100 2,010 12 -8,530.00 FY2FCAMENDBUDG_PREP 630539 4030501 40500 116230 10100 2,010 12 -261,016.00 FY2FCAMENDBUDG_PREP 632093 4030601 40030 116180 10100 2,010 12 234,994.00 FY2FCAMENDBUDG_PREP 702010 4030501 116230 10100 2,010 12 94,576.00 FY2FCAMENDBUDG_PREP 702010 4030501 40500 116230 10100 2,010 12 74,188.00 FY2FCAMENDBUDG_PREP 702010 4030601 116200 10100 2,010 12 9,110.00 FY2FCAMENDBUDG_PREP 702010 4030601 40030 116180 10100 2,010 12 -123,433.00 FY2FCAMENDBUDG_PREP 626619 4030601 116200 10100 2,010 12 -15,590.00 FY3FCAMENDBUDG_PREP 630392 4030925 110070 27100 2,010 12 -8,530.00 FY3FCAMENDBUDG_PREP 630539 4030501 40500 116230 10100 2,010 12 -261,016.00 FY3FCAMENDBUDG_PREP 632093 4030601 40030 116180 10100 2,010 12 234,994.00 FY3FCAMENDBUDG_PREP 702010 4030501 116230 10100 2,010 12 94,576.00 FY3FCAMENDBUDG_PREP 702010 4030501 40500 116230 10100 2,010 12 74,188.00 FY3FCAMENDBUDG_PREP 702010 4030601 116200 10100 2,010 12 9,110.00 FY3FCAMENDBUDG_PREP 702010 4030601 40030 116180 10100 2,010 12 -123,433.00 FY3FCAMENDBUDG_PREP 670114 4030401 113380 10100 2,010 12 -20.00 FORCASTVARBUDG_PREP 670228 4030101 112580 10100 2,010 12 -4,482.00 FORCASTVARBUDG_PREP 670570 4030601 110000 10100 2,010 12 -10,576.00 FORCASTVARBUDG_PREP 670570 4030901 110090 10100 2,010 12 -35,165.00 FORCASTVARBUDG_PREP 702010 4030201 112580 10100 2,010 12 48,264.00 FORCASTVARBUDG_PREP 702010 4030201 112580 10100 NON_PROJ_OT 2,010 12 -10,600.00 FORCASTVARBUDG_PREP 702010 4030301 112620 10100 2,010 12 5,522,210.00 FORCASTVARBUDG_PREP 702010 4030401 112600 10100 2,010 12 -4,948,444.00 FORCASTVARBUDG_PREP 702010 4030510 116230 10100 2,010 12 63,101.00 FORCASTVARBUDG_PREP 702010 4030601 40040 116180 10100 2,010 12 379,733.00 FORCASTVARBUDG_PREP 702010 4030901 110050 10100 2,010 12 -99,769.00 FORCASTVARBUDG_PREP 712020 4030101 112580 10100 2,010 12 -9,000.00 FORCASTVAR

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(Achieving Multi-Year Budgets)Ledger - Scenarios

•Budgets are built by posting journals against a given ledger during the current fiscal year controlled by a specific scenario.

•Ledger Budget consists of two scenarios. Adopted records and Amended records. Here scenarios separate what was adopted from amended for the current year only.

•Ledger Budget Prep is different. Budgets are built in the current fiscal year for the upcoming three years. The scenario itself helps separate the future year budget transactions.

Using Scenarios Differently

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(Achieving Multi-Year Budgets)Ledger - Scenarios

Budget Ledger [FY2010]

BY2010 (Rolling Budget)

C_ADOPTED

C_AMEND Ongoing Amendments posted to scenario “C_AMEND”

AMENDED Budget

Populated from what was built in FY2009

Adopted Amendments Amended

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As we moved into FY2011…

Budget Prep Ledger [FY2010]

FY2011 (FY1) FY2012 (FY2) FY2013 (FY3)FY1CEAPLN

FY1CEAPLNA

FY1CERECAJ

FY1FCAMEND

FY1LASTBOC

LOADSALARY

REVERSESAL

ZEROBUDFY1

FY1CEAPLN

FY1CEAPLNA

FY1CERECAJ

FY2CEAPLN

FY2CEAPLNA

FY2CERECAJ

FY2FCAMEND

FY2LASTBOC

LOADSALARY

REVERSESAL

ZEROBUDFY1

ZEROBUDFY2

FY1CEAPLN

FY1CEAPLNA

FY1CERECAJ

FY2CEAPLN

FY2CEAPLNA

FY2CERECAJ

FY3CERECAJ

FY3FCAMEND

FY3LASTBOC

LOADSALARY

REVERSESAL

ZEROBUDFY1

ZEROBUDFY2

Budget Ledger [FY2011]

FY2011 C_ADOPTED

ADOPTED Budget

ADOPTED Budget

Posted

Into

OAK_BUD_ADOPTED_FY2011

Forming a Year withina given Fiscal Year using Scenarios

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Budget Prep Ledger

Rolling

FY2010 into FY2011

Budget Prep Ledger [FY2010]

BY2011 (FY1) BY2012 (FY2) BY2013 (FY3)FY1CEAPLN

FY1CEAPLNA

FY1CERECAJ

FY1FCAMEND

FY1LASTBOC

LOADSALARY

REVERSESAL

ZEROBUDFY1

FY1CEAPLN

FY1CEAPLNA

FY1CERECAJ

FY2CEAPLN

FY2CEAPLNA

FY2CERECAJ

FY2FCAMEND

FY2LASTBOC

LOADSALARY

REVERSESAL

ZEROBUDFY1

ZEROBUDFY2

FY1CEAPLN

FY1CEAPLNA

FY1CERECAJ

FY2CEAPLN

FY2CEAPLNA

FY2CERECAJ

FY3CERECAJ

FY3FCAMEND

FY3LASTBOC

LOADSALARY

REVERSESAL

ZEROBUDFY1

ZEROBUDFY2

Adopted Budget

Budget Prep Ledger [FY2011]

BY2012 (FY1) BY2013 (FY2)

FY1CEAPLN

BASE Budget

FY1CEAPLN

FY2CEAPLNAdd

AddSubtract

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FY2009

FY2010

FY2011

BY2009

BY2011

BY2010

BY2012

BY2011

BY2013

BY2012

BY2012

BY2013BY2010

BY2011 BY2014

Budget(Ledger)

Budget Prep(Ledger)

(Achieving Multi-Year Budgets)Ledger - Scenarios

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Queries

• Working from one base query, each query simply prompts and/or groups the chart fields differently

• Allows the analyst to revise their records from a line-item viewpoint, but organize the data for use within the journal posting routine

• Queries designed to extract only data relevant to the current budget cycle

• Took advantage of the SQL “Case” Statement along with “Sum” and “Order By”

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Excel

• Data extracted with query is saved to Excel

• Run one macro to organize data for budgeting(Organization is driven by the selected query)

• Analyst key changes at the line item level

• Run second macro to prepare the budgeted line items for journal import

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Excel Screen Shot

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Journal Utility

• Most Ledger Systems have Journals, and, mosthave some facility to get external data into thesystem thru these Journals

• In our case, the County already utilizes such a utility to post Journals to our Ledgers

• Process consists of:Cut budget data from Summarized Excel sheetPaste the updated budget data into Journal UtilityUpload budget data to Ledger and Post

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Reporting

• Are you already reporting off of your ledger?

• If so, the same tool should now allow you to report your new Multi-Line budget

• In our case, the PS n-Vision reporting tool is utilized to accomplish most of the financial piece of budget publication

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FY 2009 Actual

FY 2010 FY 2011 FY 2012 FY 2011 FY 2012 FY 2013

Adopted Amended Amended Amended County Exec. County Exec. County Exec.

Budget Budget Plan Plan Recommended Recommended Recommended

Sample Report Heading (Ledger Source)

Actuals

BudgetBudget Prep

C_ADOPTED

C_ADOPTED

C_AMEND

FY1CEAPLN

FY1CEAPLNA

FY2CEAPLN

FY2CEAPLNA

FY1CEAPLN FY1CEAPLNA FY1CERECAJ

FY2CEAPLN FY2CEAPLNA FY2CERECAJ

FY3CERECAJ FY3FCAMEND FY3LASTBOC

LOADSALARY REVERSESAL

ZEROBUDFY1 ZEROBUDFY2

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Prerequisites Resolved•Capable of producing a Multi-Year Line-Item based Operating Budget

•Intuitive data entry format that allows entering budget informationwithout wondering thru a series of screens

•This data entry format must accept amendments that modify boththe current and future year budgets

•Capable of “interfacing” with existing financial system

•Provide a level of Security / Auditing

•Assist in Publishing Line-Item-BudgetProgram Budget

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Lessons Learned

• Understand the Granularity of your “Scenarios” (Does what you want to report need to be maintained in a separate scenario?)

[(Example) Adopted -- Amendments -- Amended]

• If adding an additional scenario, does it stand alone or is it accumulated with other scenarios?

• Understand how a given analyst looks at a budget and provide this view when downloading and organizing data

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Future Vision for Multi-Year Budget

• Position Budgeting Integration

• Streamline and/or Automate the Amendment Process

• Incorporate Performance Measurers and Program Analysis

(Data is available / budgeted at the Program level and reportable now, however, no performance data is hookedinto this system)

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Contact Information

• Jeff Phelps – Fiscal Services Supervisor IIOakland County Department of Management and BudgetFiscal Services Division(248) 858-5319 phelpsj@oakgov.com

• Dave Nelson – Budget Systems CoordinatorOakland County Department of Management and BudgetFiscal Services Division(248) 858-4057nelsond@oakgov.com