KNOWING THE NUMBERS
Analyzing Public Budgets
Workshop Objectives
 Know what information
you need to analyze
budgets.
 Understand what to look
for, and what it all
means.
 Evaluate whether or not
an employer has a
budget problem.
What is a Budget?
• It is a political document.
• It is a financial planning tool.
• It is not etched in stone.
We must do more than understand
the budget – we must organize and
build power to win our demands.
Why Analyze Budgets?
• To find ammunition for the bargaining table.
• To evaluate the employer’s finances if they plead
poverty.
• To gain insights into the employer’s operations and
plans.
• To let the employer know we are paying attention.
A Budget Analysis Can Make a
Difference
Defining Budget Terms
Revenues
Expenditures
General
Fund
Fiscal Year
(FY)
BUDGET
TERMS
CAFR
Surplus
Deficit
Fund
Balance
Tools You Need for a
Budget Analysis
•
Comprehensive Audited Financial Report
(CAFR)
–
–
–
•
•
•
Basic Financial Statement
Past Budget Information
Management’s Discussion and Analysis
Year-to-Date Financial Reports, if available
Enacted Current Year Budget
Proposed Budget for Next Year, if available
How to Get These Tools
•
•
Employer’s Budget Office
Employer's Website
You have to ask.
Employers may not
be too keen on
sharing information
about their financial
situation.
Workshop Objectives
 Know what information
you need to analyze
budgets
Understand what to look
for, and what it all means
Evaluate whether or not
an employer has a budget
problem
Crunching The Numbers
Key Questions to Ask
•
•
•
•
•
Does the employer have money in reserve?
Does the employer have a surplus or a deficit?
Are revenues growing? If so, by how much?
How fast are expenditures growing and in
what areas?
How do budgeted amounts compare to actual
spending and revenues?
Basic Financial Statement:
Balance Sheet
•
•
Examine revenues
and expenditures.
Assess whether
there is a surplus
or a deficit.
Surplus or Deficit?
•
Revenues= $450,000
•
Expenditures=$456,000
$6,000 Deficit!
Basic Financial Statement:
Fund Balance
• Reserved funds are off
limits.
• Unreserved funds can be
used for any purpose.
• Employers may attempt to
“restrict” or “earmark”
funds, but they are still
unreserved!
Knowledge Check
1. A Comprehensive Audited Financial Report (CAFR)
contains:
o
o
o
o
Basic financial information
Past budget information
Management’s discussion and analysis of the employer’s finances
All of the above
2. In most cases, AFSCME members are paid out of:
o Reserved funds
o Restricted funds
o The General Fund
3. True or False: Public Employers do not have to
provide audit reports and budget information.
o True
o False
Answers
1. Correct answer – all of the above
CAFRs usually contain several sections but there are three that we are most
interested in:
o The Basic Financial Information section contains revenues, expenditures, fund balances,
deficits and surpluses among other things.
o Past budget information usually includes the previous year’s budgeted and actual
numbers which give us an idea of how accurate their budget was for that particular
year.
o And finally, the Management’s Discussion and Analysis gives valuable insight into how the
employer viewed their own finances for the previous year. It identifies highlights in the
general fund, summarizes divergences from the budget and makes predictions for the
coming year’s budget.
2. Correct answer is General Fund
o The General Fund is very important for a budget analysis. Most employers have several
funds that they account for, things like capital funds, debt service, sewer funds, etc. But
we usually look at the general fund as it is the major operating fund and likely the fund
that most of our members are paid out of.
3. Correct answer is false
o The most important thing to remember is that public employers must provide these
documents. Although they may not want to let you in on their financial situation it is
their obligation to do so. All you have to do is ask.
Workshop Objectives
 Know what information
you need to analyze
budgets
Understand what to look
for, and what it all means
Evaluate whether or not
an employer has a budget
problem
How is Your Employer’s
Fiscal Health?
• Below 5%
• Between 5-15%
• Over 15%
Answering Budget
Questions
Q: Does the employer have money in reserve?
A: UFB as % of Revenues
Q: Does the employer have a surplus or a deficit?
A: Basic Financial Statement Balance Sheet
Q: Are revenues growing? If so by how much?
A: Balance sheets for the past three years
Answering Budget
Questions
Q: How fast are expenditures growing and in what
areas?
A: Balance sheets for the past three years
Q: How do budgeted items compare to actual items?
A: Budget vs. Actual statements
Remember….
• Budgets help us understand an employer's financial
flexibility.
• The General Fund and the Unreserved Fund Balance
are key indicators of the employer’s financial situation.
• You have the tools to analyze a public budget.
• We must do more than understand budgets –
we must organize and build power to win our
demands.
For More Information
AFSCME Publication:
“Knowing the Numbers: A Guide to Budget Analysis”
http://www.afscme.org/publications/1661.cfm