1 What c an you affor d? Do yo u wa nt to g ive yo ur e mplo ye - PDF document

L ong T e r m Planning/ Cash Basis F or e c asting Pr e se nte d by: L oc al Gove r nme nt Se r vic e s What is a for e c ast? • Pe r Me rria m-We b ste r (via the inte rne t): o “to c a lc ula te o r pre dic t (so me future e ve nt o r c o nditio n) usually a s a re sult o f study a nd a na lysis o f a va ila ble pe rtine nt da ta ” o “a pro phe c y, e stima te , o r pre dic tio n o f a future ha ppe ning o r c o nditio n” 2 F inanc ial F or e c asts Wha t is a fina nc ia l fo re c a st? o A fina nc ia l fo re c a st is pro spe c tive fina nc ia l sta te me nts tha t pre se nt, to the b e st o f ma na g e me nt’ s kno wle dg e a nd b e lie f, the g o ve rnme nt’ s e xpe c te d re ve nue s, e xpe nditure s a nd fund b a la nc e s. o I t is b a se d o n manage me nt’s assumptions r e fle c ting c onditions it e xpe c ts to e xist and the c our se of ac tion it e xpe c ts to take . 3 1

What c an you affor d? • Do yo u wa nt to g ive yo ur e mplo ye e ’ s ra ise s? L a yo ffs? • If yo u o ffe r insura nc e , ho w muc h will yo ur pre miums inc re a se ? • Ca n yo u a ffo rd a ne w o r c urre ntly e xisting se rvic e ? • Ca n we b uy so me ne w e q uipme nt o r ma ke re pa irs to fa c ilitie s? • Do yo u ha ve re se rve s fo r a n e me rg e nc y o r do wnturn in the e c o no my? • Wha t a r e the long -te r m e ffe c ts of the de c isions tha t are made today ? 4 Is this r e ally ne c e ssar y? • Why do yo u ne e d a fo re c a st?  I de ntify pro g ra ms, a c tivitie s a nd se rvic e le ve ls tha t yo u CAN pro vide c o mpa re d to wha t yo u WANT to pro vide .  I de ntify c o sts a sso c ia te d with pro viding se rvic e s a nd the funding so urc e s use d to pro vide the m.  I de ntify c a pita l ne e ds a nd e sta b lishe s a pla n fo r fulfilling tho se ne e ds.  Allo ws ma na g e me nt to se t prio ritie s a nd do c ume nt pla ns.  De te rmine the e ffe c t o n the c o mmunity  IFyou ar e de c lar e d in F isc al Watc h or F isc al E me r ge nc y by the Auditor of State , a five ye ar for e c ast is r e quir e d. 5 Who should be involve d in the pr oc e ss? • T he Go ve rning Bo dy - Co unc il • Chie f Ope ra ting Offic e r(s) – Ma yo r, Administra to r, Ma na g e r • F ina nc e Co mmitte e (if o ne e xists) • Chie f F ina nc ia l Offic e r - F isc a l Offic e r, Audito r • De pa rtme nt he a ds • Pro c e ss sho uld b e a ll inc lusive so tha t a ll pa rtie s a re a wa re o f the fina nc ia l situa tio n a nd prio ritie s c a n b e se t. 6 2

L ong-T e r m Planning • Wha t sho uld a fo re c a st inc lude ? o An Ope ra ting Pla n o A Ca pita l Pla n • Do e s it ma tte r whic h c o me s first? 7 L ong-T e r m Planning • Ope ra ting Pla n  Ba se d o n histo ric a l tre nds, ne w la ws o r re g ula tio ns, upc o ming o r e xpiring re ve nue s / e xpe nditure s, o the r fa c to rs.  Assume s e xisting pro g ra ms will c o ntinue a t the sa me le ve l o f se rvic e , b o th no w a nd in the future . 8 L ong-T e r m Planning • Ope ra ting Pla n - Whe re do yo u Sta rt?  AL WAYS sta rt with re ve nue e stima te s! Wha t re ve nue s do yo u kno w a re g o ing to c o ntinue into future ye a rs (i.e . ta xe s) a nd wha t re ve nue s ma y e xpire (i.e . g ra nts). Ne w re ve nue s?  If the se e stima te s a re no t truthful a nd a s re a listic a s po ssib le , the n the e ntire pla n is use le ss.  Wha t e xpe nditure s MUST yo u pa y fo r (i.e . de b t o r le a se pa yme nts, sa la rie s, utilitie s)? Ite ms yo u c a nno t c ut.  Wha t e xpe nditure s do yo u re a lly ne e d, b ut c a n live witho ut if a b so lute ly ne c e ssa ry (a t le a st fo r a time )?  Wish list 9 3

L ong-T e r m Planning • Ca pita l Pla ns  Pla n fo r c a pita l e xpe nditure s o ve r a pe rio d o f ye a rs  Se ts fo rth e a c h pro je c t o r purc ha se in whic h the lo c a l g o ve rnme nt is to ha ve a pa rt  I de ntifie s the re so urc e s to b e a va ila b le to fina nc e the pro je c t / purc ha se 10 L ong-T e r m Planning • Ca pita l Pla n - Whe re do yo u Sta rt?  De ve lo p a list o f pro je c ts & purc ha se s - no c e iling  I nc lude ro a ds, b ridg e s, b uilding s, pa rks a nd re c re a tio n fa c ilitie s  I de ntify re pla c e me nt o f e xisting ve hic le s a nd e q uipme nt  Se t pr ior itie s base d on……  I de ntify re so urc e s to fina nc e the e xpe nditure s  Are the re a ny a lte rna tive s (i.e . sha re d se rvic e s, sha re d g ra nts) 11 L ong-T e r m Planning • Ho w c a n I pa y fo r Ca pita l E xpe nditure s?  Re duc ing e xpe nditure s e a c h ye a r to b uild up a b a la nc e in a fund.  Re se rve Ba la nc e Ac c o unts  No te o r Bo nd I ssua nc e s  L o a ns – OPWC/ OWDA/ E PA/ USDA/ ODOT , e tc .  Spe c ia l Ca pita l le vie s  Gra nts  Spe c ia l a sse ssme nts  ORC 5705.13 Ca pita l Pro je c ts F und 12 4

L ong-T e r m Planning • Spe c ia l Re ve nue F und (ORC 5705.13)  Ac c umula te s re so urc e s fo r the pa yme nt o f sic k le a ve a nd va c a tio n le a ve , a nd fo r pa yme nts in lie u o f ta king c o mpe nsa to ry time o ff, upo n the te rmina tio n o f e mplo yme nt o r the re tire me nt o f e mplo ye e s/ o ffic e rs.  Ma y a lso a c c umula te re so urc e s fo r pa yme nt o f sa la rie s during a ny fisc a l ye a r whe n the numb e r o f pa y pe rio ds e xc e e ds the usua l a nd c usto ma ry numb e r o f pa y pe rio ds. 13 L ong-T e r m Planning • Ca pita l Pro je c ts F und (5705.13)  Ac c umula te s re so urc e s fo r the a c q uisitio n, c o nstruc tio n, o r impro ve me nt o f c a pita l a sse ts, inc luding mo to r ve hic le s  Mo re tha n o ne c a pita l pro je c t fund ma y b e e sta b lishe d a nd ma y e xist a t a ny time 14 L ong-T e r m Planning • F o r Ope ra ting a nd Ca pita l Pla ns, wha t type o f L e g isla tive a ppro va l sho uld the re b e ?  L o ng -T e rm Ope ra ting Pla n  Cho ic e o f the L e g isla tive Bo dy  Co mmitme nt is the c urre nt ye a r Appro pria tio n Me a sure  Ca pita l Pla ns  Cho ic e o f the L e g isla tive Bo dy  Co mmitme nt to a pro je c t ta ke s pla c e whe n a ppro pria te d a nd b ids a re a utho rize d 15 5

F inanc ial F or e c asts • Manage me nt – T ho se pe rso ns who a re e xpe c te d to dire c t the o pe ra tio ns o f the e ntity during the pro spe c tive pe rio d. Ma na g e me nt typic a lly re fe rs to tho se pe rso ns a t the hig he st le ve l o f a utho rity within the e ntity. • Assumptions – T he b uilding b lo c ks fo r the fo re c a st de ve lo pe d fro m the ke y fa c to rs. T he y ide ntify sig nific a nt ma tte rs tha t a re e xpe c te d to o c c ur, b a se d o n a n e ntity’ s pla ns. 16 F inanc ial F or e c asts s – T he sig nific a nt ma tte rs o n • Ke y F ac tor whic h a g o ve rnme nt’ s future re sults a re e xpe c te d to de pe nd. Suc h fa c to rs a re b a sic to the g o ve rnme nt’ s o pe ra tio ns a nd thus e nc o mpa ss ma tte rs tha t a ffe c t, a mo ng o the r thing s, the g o ve rnme nt’ s fina nc ia l a c tivitie s. Ke y fac tor s se r ve as a foundation for pr ospe c tive financ ial infor mation and ar e the basis for the assumptions . 17 F inanc ial F or e c asts • A fina nc ia l fo re c a st is use d: o As a pla nning to o l o T o ide ntify to g o ve rnme nts whe the r the y c a n pro vide se rvic e s o r unde rta ke pro je c ts the y a re pla nning . o T o he lp gove r nme nts de te r mine whe the r or not the y ar e he ade d towar d financ ial diffic ulty . 18 6

F inanc ial F or e c asts • Wha t a re ma na g e me nt’ s re spo nsib ilitie s? o Re a so na b le ne ss o f the a ssumptio ns o Pre pa ra tio n o f the fo re c a st o Ac c ura c y o f the pre se nte d fig ure s 19 F or e c ast Pr e par ation Guide line s • AI CPA “Guide fo r Pro spe c tive F ina nc ia l I nfo rma tio n” pro vide s ge ne r al guide line s to the re spo nsib le pa rty fo r pre pa ring fina nc ia l fo re c a sts. T he se a re : o F o re c a sts sho uld b e pre pa re d in g o o d fa ith o F o re c a sts sho uld b e pre pa re d with a ppro pria te c a re b y q ua lifie d pe rso nne l o F o re c a sts sho uld b e pre pa re d using a ppro pria te a c c o unting princ ipa ls 20 F or e c ast Pr e par ation Guide line s • Assumptio ns use d in pre pa ring fo re c a sts sho uld b e a ppro pria te • K e y fa c to rs sho uld b e ide ntifie d a s a b a sis fo r the a ssumptio ns • I nfo rma tio n use d in pre pa ring fo re c a sts sho uld b e c o nsiste nt with the pla ns o f the e ntity 21 7