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Additional Documentation on Budget Issues

Additional Documentation on Budget Issues. In the following all original documents are presented in black print. All remarks, explanations, annotations etc. made by me are in red and italics. Thank you for your interest. Cornelia Alsheimer, PhD Budget Analyst

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Additional Documentation on Budget Issues

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  1. Additional Documentation on Budget Issues In the following all original documents are presented in black print. All remarks, explanations, annotations etc. made by me are in red and italics. Thank you for your interest. Cornelia Alsheimer, PhD Budget Analyst SBCC Instructors’ Association, Executive Board

  2. Table of Contents Brief Intro on the differences between accrual accounting and cash accounting (2 slides)Handout at BoT Study Session, Sept 9, 2010 (2 slides)Cash Flow report 2008/09, p.13 of Fiscal Committee 8/9/2010 minutes http://sbcc.edu/boardoftrustees/files/fiscalcommittee/BOT%20Fiscal%208%209%2010%20mon.pdfCalculation of Total Cash Fund Balances Approved minutes Board of Trustees meeting, 5-27, 2010, p. 4 July and August Invoices from Mary Rose (2 slides)Contractor Form P. 1 & 3 for Mary Rose (2 slides)Email communication re. the official request for records.

  3. Accrual vs. Cash Accounting- Definitions • The college budget is an accrual budget . It sets out the anticipated revenue and planned expenditures – what is owed to the college in federal, state and local income and what is planned to be spent during the year. The financial dictionary defines “accrual” as “[a]n accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur” • In contrast, cash flow reports show the actual or budgeted flow of cash in and cash out of the business during a particular time period, often monthly or quarterly. • Normal accounting practices do not mix these two different methods of describing the financial condition of an institution because they are intended to be different. • Either accrual or cash flow can be used but when mixed it is apples and oranges.

  4. Accrual vs. Cash Accounting - Example • Let me illustrate this theoretical approach with an example:Let’s take student tuitions paid in June for classes in the following Fall semester.CASH is collected in the outgoing academic year, i.e. that is when this amount is reported as cash inflow and when it shows up in the cash balance.The REVENUE from student tuitions for the Fall semester, however, is recognized in the budget (accrual basis) for the upcoming academic year.

  5. This was an attachment for the BoT Study Session, 9/9/10 All these Ending Fund Balances are based on ACCRUAL Accounting.

  6. Accrual Accrual Cash Cash This is not a true cash balance. It only takes into account one single cash item, the deferral. This does NOT reflect the actual General Fund Ending Cash balance, which is reported correctly in the Cash Flow report for the end of 2008/09 (see next slide). The true unrestricted GF Ending Cash balance amount is $10.8M, not $8.5M - you can’t mix accrual and cash!

  7. Total Ending Cash Unrestricted GF Ending Cash

  8. Complete Picture of Cash Reserves • As shown on the cash flow report (see previous slide), the college's actual cash resources in the General Fund AND other fund accounts as of June 30, 2009 were  $26,918,793. If we deduct the restricted GF cash balance of $2.9M this still leaves $24 Million and if we include additional discretionary cash in the SCCCD-JPA (a.k.a. Workers’ Compensation Fund) the cash resources as of June 30, 2009 totaled at least $31.2 Million (calculated per documents available to me).

  9. Presentation of deferral amountshttp://sbcc.edu/boardoftrustees/files/bot2010minutes/5-27-10%20Approved%20Minutes.pdf Approved board minutes, 5-27, 2010, p. 4 • “Report from Superintendant/President – Dr. Andrea M Serban1. Starting in 2008-09 the state has changed the funding mechanism and has instituted deferred payments, meaning that if you depend on a monthly paycheck as most of us do, this deferral means that for five months of a year you don’t get a paycheck that month, you get a paycheck in a lump sum much later, sometime even in the next fiscal year.” • The college does not depend on “A” monthly paycheck from the state, but several paychecks from several different sources. With the deferrals SBCC was NOT operating without any income for five months. The amount coming directly from the state is only about 55% of the college revenue and only a fraction of that 55% was deferred. Again, most of SBCC’s cash in-flow was from other sources and was unaffected. The normal variation in those sources of cash had a greater impact on the college’s cash resources (which were continuously over $30M during the deferrals in Jan-June 2009) than the state deferrals themselves. That state paycheck was reduced (not eliminated) by deferrals ranging from $211,981 (deferred from a $3.5M payment in May) to $3.4M (deferred from a $4.2M payment in June). The largest deferral was in June 2009 and all those deferrals were paid back in full by mid July 2009. Board members did not correct or clarify above statement at the time.

  10. >>> Andreea Serban 10/15/10 2:31 PM >>> • Cornelia: • As noted yesterday, the accounting staff has been fully engaged with the work for the annual audit and other reporting. Based on workload and scheduled vacations and after consultations with the accounting staff, the 2006/07 through 2009/10 information will be provided on October 28. • The adjusted budget for 2010-11 will take more time to be posted to the system. Thus, the additional information for 2010/11 per adopted budget will be provided on November 8. • Best regards, • _____________________________ • Andreea M. Serban, Ph.D. • Superintendent/President • Santa Barbara City College • >>> Cornelia Alsheimer-Barthel 10/15/2010 2:03 PM >>> • Honorable members of the Board of Trustees, Dr. Serban, • please allow me to follow up on the discussion of yesterday's study session and on my request for information which I submitted 11 days ago. • Dr. Serban noted at the study session that I had requested "a comparative analysis" over several years and indicated that this requires a considerable amount of work and time of the staff to complete. • I want to state here that I have never requested "a comparative analysis" of any kind. I just requested the bare revenue and expense data, not "a comparative analysis". • To summarize again, I had requested • For the years 2006/07 through 2009/10 the actual amounts of all revenue and expense items with revenues detailed by account and expenses detailed by organization in the restricted and unrestricted General Fund and for the year 2010/11 the projected amounts of each of those resp. revenue and expense items. • Also I had asked to be provided with the list of cuts made to departments for 2008/09, 2009/10 and current year which is maintained and regularly updated by Leslie Griffin. • Again, at no time I have requested any kind of comparison and/or analysis, but just the bare data. From yesterday's discussion I learned that budget reports are fairly easily accessible through an internal log-in into the college accounting system. • While I understand that projected amounts for 2010/11 might not yet be available due to recent changes in state and college budget, I am sure that all other items which I have requested (actuals from past academic years), are information which does not need to be specifially prepared but should be available. • Please note that I will be happy to come in and make copies or print outs of the resp. records myself, in case there is a staff shortage delaying the availability of the requested items. Alternatively, if the college would provide the IA with a log in to the accounting system, which gives access to the requested data, I would be happy to try accessing the information myself. • In case you feel that there is still some kind of misunderstanding or anyting I overlooked, please let me know. For your convenience, please find my original request copied below. Hopefully, with the auditors concluding their audit as of today, I am confident that I will have the chance to receive the requested materials, or at least part of them, during the next week. • Thank you very much, • Cornelia Alsheimer, Instructors' Association • >>> Cornelia Alsheimer-Barthel 10/4/2010 >>> • Dear Dr. Serban • Dear Sue, Jack, and Joe • The Instructors' Association would like to request the following budget information: • 1) For the years 2006/07 and 07/08 and 09/10 the actual amounts of all revenue and expense items WITH REVENUES DETAILED BY ACCOUNT AND EXPENSES DETAILED BY ORGANIZATION in the restricted and unrestricted General Fund. • 2) For the year 2010/11 the projected amounts of each revenue and expense items WITH REVENUES DETAILED BY ACCOUNT AND EXPENSES DETAILED BY ORGANIZATION in the restricted and unrestricted General Fund. • 3) The list of cuts made to departments for 2008/09, 2009/10 and current year. (It was mentioned at the last CPC meeting that Leslie Griffin is maintaining a spreadsheet with that information.) • I would be very grateful, if this request would be answered as soon as possible. • Thank you very much. • Cornelia Alsheimer, Instructors’ Association

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