Florida Government Finance
Officers Association
Budgeting through the eyes of
a Constitutional Officer
February 18, 2016
Sherry Mehl, BS, MS, MBA
Director of Administration & Budget
Putnam County Clerk of Courts
Agenda
Budget Basics
•
Principles
•
Deliverables
•
Types of budgets
•
Elements of a good budget
Budget Cycle
•
Key Issues
•
Timeline
•
Assumptions
2
Agenda (cont)
Article V budget implications
Variance Analysis
Forecasting
Long Range Planning
Conclusions
3
Budget Principles
• the master plan of a business
• brings together estimates of future
revenues and planned expenditures
• tied to core operations, projects and
programs approved by the leadership
to build value
• and the options for funding them
4
Budget Deliverables
Short and long range goals and
objectives for the business
A detailed business plan to meet them
• specific policies, plans, programs and
management strategies to guide how
the business will achieve its goals
• process for measuring success or failure
• identification of potential risks and
opportunities to support quick decision
making when they inevitably occur
5
Budget Deliverables
A financial plan quantifying the
assumptions and decisions made
A method for evaluating performance
and making necessary adjustments
A communication tool
Maximum return on investment
6
Programs and financial performance
should be continually evaluated,
and adjustments made, to ensure
efficient use of resources and project progress
7
Wherever /Whenever Possible
Incorporate public participation
throughout the process, from
establishing goals, projects and
programs plans, to performance
management
• Increases accountability and
responsiveness
• Can improve public image if done
correctly
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Budgeting Methods
Traditional incremental budgeting
• Justifies variances versus prior year
spending
• Assumes the “baseline” is automatically
approved
Zero based budgeting (bottoms up)
• Every line item of the budget must be
approved, rather than changes only
• During the review process, no reference is
made to the prior level of expenditure
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Budgeting Methods
Activity Based Budgeting
Activities that incur costs in multiple functional
areas of an organization are recorded and their
relationships defined and analyzed. Activities are
then tied to strategic goals, after which the costs of
the activities needed are used to create the budget.
• Identify activities and their cost drivers
• Forecast the number of units of cost drivers for
the required activity level
• Calculate the cost driver rate (cost per unit of
activity)
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Budgeting Methods
Activity Based Budgeting (continued)
Advantages
• Recognizes that activities drive variable costs budget
• Draws attention to the costs of 'overhead activities' which can be a
large portion of total operating costs
Disadvantages
• Time and effort to establish the key activities and their cost drivers
• Difficult identifying clear individual responsibilities for activities
• Many overhead costs are not controllable in the short term and do not
vary directly with changes in the volume of activity for the cost driver
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Budgeting Methods
Project Budgeting
• Describes and gives the detailed costs
of every activity or program that is to
be carried out in a budget
• Objectives, outputs and expected
results are described fully as are their
necessary resource costs, i.e., raw
materials, equipment and staff
• The sum of all activities, across all cost
centers, constitutes the program budget
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Budgeting Methods
Priority Based Budgeting
a comprehensive view of the entire organization
identifies every program offered
identifies the costs of every program offered
identifies the time to completion
evaluates the relevance of every program offered on the
basis of the community’s priorities
• brings government managers, finance officers, civic leaders
and community residents together to make decisions that
better align the community’s resources with what its
leaders and residents value the most.
• guides elected and appointed officials to the policy
questions they can answer with the information gained
from the Priority Based Budgeting process, such as:
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•
•
•
•
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Priority Based Budgeting
Questions to be answered
• What is the local government uniquely qualified to
provide, offering the maximum benefit to citizens
for the tax dollars they pay?
• What is the community truly mandated to provide?
What does it cost to fulfill those mandates?
• Are there programs which could legally and
appropriately be funded by establishing or
increasing user fees?
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Priority Based Budgeting
• Are there programs appropriate for establishing
partnerships with other community service providers?
• Could the local government consider “getting out of
the business” of providing a certain program?
• Are there obvious overlaps and redundancies in a
community because several entities are providing
similar services?
• Where is the local government potentially competing
against private businesses within its own community?
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The Budget Office
Each government agency establishes and
organizes their budget office to meet
their specific needs
They vary in size and composition
• Centralized budget office
• Central core budget office with
departmental analysts
• Budget function integrated within the
finance department
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Putnam County
Clerk of Courts Budget Office
• Putnam County is the poorest county
in the State (according to several
outside sources)
• The Clerk’s Office has 70 employees
• Our Budget Office is…me!
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Elements of a good budget
Buy-in from key stakeholders
Clearly established and communicated
mission, goals and project/program priorities
Clear and complete business plans for each
program/project including goals, timelines
with human resource requirements, milestone
payments and/or large purchases for raw
materials, capital equipment, etc.
Multi-year timeframe
Accurate revenue forecasts and timing
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Elements of a good budget (cont)
Accuracy
Objectivity
Identification of recurring and nonrecurring revenues and expenditures
Identification of fixed and variable
revenues and expenditures
Identification of controllable and noncontrollable revenues and expenditures
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Elements of a good budget (cont)
Identification of potential risks and
opportunities
Periodic reviews of timelines, resource
utilization and projected revenues
Ability of management to redirect
resources when opportunities arise
A comprehensive Post Mortem!
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Planning for the
Next Budget Cycle
Major events/leading indicators that will affect
the upcoming budget
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Property taxes
Legislation
Cost of Living and Inflation
Health Insurance
FRS rates
Fuel prices
Collective bargaining agreements/compensation
Guidance from leadership and the public
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COLA assumption = 2%
same for inflation
22
Assume 6.5% increase?
23
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How long before your best people leave?
25
Projected FRS increase = ?
Elected Official
Spec Risk - Admin
Special Risk - Reg
???
Senior Mgt
DROP
Regular
Unfunded Liability
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Diesel for Public Works, EMS,
etc. = $2.75 ? Asphalt = $500
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Regular Gasoline = $2.60 ??
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Budget Cycle
assuming 9/30 year end
October/November
• Review prior year’s revenue and
expenditure budgets
• Research large variances
• Discuss underlying issues with cost
center managers
• Develop knowledge of key drivers of
revenues and expenses
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Budget Cycle
December/January – project and cost
center managers
• Update goals for projects
• Update status of active projects
• Update resource plan – human and
dollars, including timing of utilization
• Update revenue sources – service
charges, grants, etc.
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Budget Cycle
Jan/Feb – BOCC/Senior Managers
• Update global mission, goals and
priorities
• Review updated project plans
• Review and propose budget
assumptions for big dollar items
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Budget Cycle
• Feb/March – BOCC/Senior Managers
• Complete review of project plans
• Set project/program priorities and projected
revenues/costs
• Finance presents high level plan with
revenue and expense projections, debt
service, etc.
• Review plan and make revisions
• Update financial plan
• Define cost center and project targets
• Define budget assumptions
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A method for evaluating the Project Portfolio
using cost, time to completion,
perceived value and perceived risk
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Budget Assumptions
for all managers
• 2% COLA
• Employer paid Health Care for FT
employees up 6.5% ($9,585)
• No increase for FRS
• Diesel at $2.75/gallon
• Asphalt at $500
• Regular gasoline at $2.60
• No additional increases until presented
and approved by budget committee
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Budget Cycle
• April – Cost center managers develop
budget using assumptions provided
• May – Departmental and Senior
Management reviews/revisions
• June 1 –Budget Proposal(s) submitted
• June – September – reviews, revisions,
publication
• September – Final review and approval
• October – Close the books and start
again!
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The Clerk of Courts Budget
process is driven by
Revision 14 to Article V of the Florida
Constitution
• Approved by voters in 1998
• Implemented July 2004
Relevant ballot language follows:
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Article V ballot language
• Article V. Section 14.
• SECTION 14. Funding (b) All funding for the offices of the clerks
of the circuit and county courts performing court-related functions,
except as otherwise provided in this subsection and
subsection (c), shall be provided by adequate and appropriate
filing fees for judicial proceedings and service charges and costs
for performing court-related functions as required by general law.
Selected salaries, costs, and expenses of the state courts system
may be funded from appropriate filing fees for judicial proceedings
and service charges and costs for performing court-related
functions, as provided by general law. Where the requirements of
either the United States Constitution or the Constitution of the
State of Florida preclude the imposition of filing fees for judicial
proceedings and service charges and costs for performing courtrelated functions sufficient to fund the court-related functions of
the offices of the clerks of the circuit and county courts, the state
shall provide, as determined by the legislature, adequate and
appropriate supplemental funding from state revenues
appropriated by general law.
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County Obligations
Original Ballot Language
(c) No county or municipality, except as provided in this subsection,
shall be required to provide any funding for the state courts system,
state attorneys' offices, public defenders' offices, court-appointed
counsel or the offices of the clerks of the circuit and county courts
performing court-related functions. Counties shall be required to
fund the cost of communications services, existing radio
systems, existing multi-agency criminal justice information
systems, and the cost of construction or lease, maintenance,
utilities, and security of facilities for the trial courts, public
defenders' offices, state attorneys' offices, and the offices of the
clerks of the circuit and county courts performing court-related
functions. Counties shall also pay reasonable and necessary
salaries, costs, and expenses of the state courts system to meet
local requirements as determined by general law.
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F.S.29.008(1)(a)
one paragraph out of 5 pages
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F.S.29.008(1)(f)(2)
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Unusual aspects of the Clerk budget
Two Budget Submissions
BOCC funded
Balanced budget
• Revenues from service charges in Recording, Tax Deeds,
etc., primarily identified by trend analysis and automation
updates
• Appropriation from BOCC to cover portions of Finance,
Recording, Clerk to Board, Records Management and Clerk
Overhead required to support BOCC activities
• Also to cover departmental costs which must be funded by
the BOCC per F.S.29.008
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Unusual aspects of the Clerk budget
Two Budgets
State Funded
Budget authorization for deficit county
• Relies on collections from all 67 counties
• Allocation to an individual Clerk’s Office is
based on caseload and cost per case
• Personnel costs and allocation methodology for
splitting any costs between BOCC and State
must be justified
• Certification required by Clerk on submission
42
Foreclosure Case Filings per year
case forecasting is uncontrollable
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Personnel Budget
Org Chart
Allocations
Costs
44
Org Chart & Allocations
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Personnel Cost Variables
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Personnel Worksheet
Current Year
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Personnel Worksheet
Proposed Costs
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Personnel Worksheet
Proposed Allocations
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Sample Allocation Basis Analysis
Recording Split – State vs BOCC
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Total Documents Recorded
per year (top) versus the % of
Court Documents Recorded
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Operating Expense Allocations
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Clerk Budget Certification
Tim Smith
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State Funded Budget Submission
• Collections by Division and Type
• Total Headcount and State Funded
Headcount (to derive OH rate)
• Allocation of State funded headcount, labor
costs and operating costs to Court Division
• Forecast for new cases and reopens by
Court Division
• Yields cost per case
• Compared to peers
• Significant variances justified or proposed
appropriation reduced
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Next Cycle
Planning to break cost per case down
further
• Adding case processing, case
management, financial processing
and reporting breakdown by Court
Division
• Heading towards ABC and ABB
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Unfunded Mandates
• Scan and index official records and court documents history
per statute (during boom)
• Scan and index as you go (part of workflow)
• Redact all files
• Make searches and Official Records available online for public
• Online docket access for attorneys and public
• E-filing – attorneys then public (filed documents available,
redacted for public)
• E-recording
• View on Request – for files prior to scanning –
scan/index/redact/make available online
• Pro se support
• MANY New reports and tracking requirements
• Expanded Compliance and other Audit requirements (DFS,
etc.)
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Budgeting, Variance Analysis
and Forecasting
• VERY closely linked
• Must understand cost center budgets
projects, drivers, large expense items
• Rolling 12 month trend analysis
• Understand outliers
• Headcount plan
• Research
• Develop close working relationship with
cost center managers
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Forecasting
• The process of projecting revenues
and expenditures
• Define time period – current fiscal?
• A good forecast for the current fiscal
will allow management to reallocate
resources to meet unexpected
challenges or opportunities
58
Long Range Planning
• Combines financial forecasting with
strategy
• Highly collaborative
• Considers future scenarios
• Helps navigate challenges
59
Financial Forecasting
• Process of projecting revenues and
expenditures over a longer term
period
• Economic considerations/assumptions
• Changing demographics
• Future programs and projects
Aligning financial capacity with
long term service objectives
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Requirements
Time Horizon - >= 5 years
Scope – all funds, focused on top concerns
Frequency – as needed to support budget process
and project planning
Content
Analysis of financial environment
Revenue and expenditure forecasts
Debt position and affordability analysis
Strategies for achieving and maintaining financial
balance
• Monitoring mechanisms
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Conclusions
Budgeting and Long Range Planning MUST have high level
management support to be executed properly and
maximize value
There are many methods to use for creating a budget –
some can be very intense, but also yield the highest return
on investment
Budgeting, Variance Analysis, Forecasting and Long Range
Planning can feel like a closed loop
Be FLEXIBLE!
Email me with additional questions: sherrymehl@putnam-fl.com,
‘sherrymehl@putnam-fl.com
For a completely different take on the budget process, check out
http://www.fgfoa.org/resources.aspx?CNID=4586
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