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Budget Best Practices Gain insight into effective techniques to develop and balance municipal budgets Webinar Presentation by: Dave Boerger & Ginger Juncker – SEMCOG Rob Maleszyk – City of Warren January 19, 2012. Southeast Michigan Council of Governments. Webinar Presenters.

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slide1

Budget Best Practices

Gain insight into effective techniques to

develop and balance municipal budgets

Webinar Presentation by:

Dave Boerger & Ginger Juncker – SEMCOG

Rob Maleszyk – City of Warren

January 19, 2012

Southeast Michigan Council of Governments

webinar presenters
Webinar Presenters

Dave Boerger

SEMCOG Team

Virginia L (Ginger) Juncker

SEMCOG Team

Rob Maleszyk

Controller, Warren

agenda
Agenda
  • Intro & Overview

Dave Boerger, SEMCOG

  • Budget Best Practices

Ginger Juncker, SEMCOG

  • Warren’s Budgetary Tools and Techniques

Rob Maleszyk, Controller, Warren

  • Wrap-up and Q&A

Dave Boerger

webinar logistics
Webinar Logistics

Audio will be provided via VOIP through the speakers on your computer

For questions, type into the text box on the lower right hand side of your screen. Each will be answered at the end of the webinar

For technical help, call Susan Stefanski at 313-961-4266

Copies of this presentation will be emailed after the webinar

Use the embedded hyperlinks to access on-line information

Please compete a webinar evaluation that will be emailed with the presentation

The webinar will be archived on the SEMCOG website

who is semcog 159 member local governments 7 counties 50 of michigan s population
Who Is SEMCOG? 159 Member Local Governments7 Counties = 50% of Michigan’s Population

Assist local governments deal with issues

Plan for common needs

Recognize regional opportunities.

Facilitate cooperation among local governments for mutual benefit.

Advocate for changes in public policy

semcog member services
SEMCOG Member Services
  • How to make your community run more efficiently?
    • Local government restructuring/budgeting assistance
    • Local government collaboration & shared services
  • How to make my community greener?
    • Storm water management
    • Low impact development
  • How to make my community more desirable?
    • Economic development
    • Combating foreclosures
    • Walkable/ bikeable/road safety audits
    • Traffic access management
  • How to become a better leader
    • SEMCOG Universities & outreach workshops
    • SEMCOG Delegate/Executive Committee member
budget best practices ginger juncker
Budget Best Practices- Ginger Juncker
  • Engage & communicate openly with stakeholders
  • Consent on budget assumptions & targets, esp. revenues
  • Have a long range financial plan as a starting point
  • Variance against current budget & YTD actuals
  • Perform a comparable community gap analysis
  • Integrate performance goals & metrics
  • Link budget to Dashboard/Citizens Guide
budget best practices cont d ginger juncker
Budget Best Practices (cont’d)- Ginger Juncker
  • Establish/include action plans to attain budget
  • Develop contingency plans & alternative scenarios
  • Implement stringent cost control measures
  • Regularly report results to budget
  • Recognize accomplishments/address issues
  • Involve stakeholders continuously
personal property and state tribunal tax risks
Personal Property and State Tribunal Tax Risks
  • Impact on communities if Personal Property tax is eliminated:

Allen Park -8.4% Brighton - 8.9% Ecorse – 45.8%

Brownstown Twp. -7.4% Dexter - 14.6% Wayne - 20.2%

Southfield- 14.0% Dearborn -15.2% Warren -15.3%

  • State Tax Tribunal Risk
    • 40,000 appeals are pending in Lansing, a 3-4 year backlog.
    • Oakland County has $3.9 billion of taxable value in dispute
    • $12 million has been set aside for anticipated tax refunds
    • 62% are being ruled in favor of the property owner
budget approaches
Budget Approaches
  • Variance-based
  • Multi-year
  • Outcome (or priority)-based
  • Zero-based
  • Performance (or target)-based
variance based budgeting
Variance Based Budgeting
  • Most common approach utilized by SE Michigan local governments
  • Resource allocation is dependent largely on prior year results and the relative influence of particular department heads, with little or no regard for other likely more important factors.
  • Budget figures are compared with actual results and a simple actual-budget variance comparison is calculated. Since the analysis is simple, this analysis lacks any sophistication in terms of adjusting similar budget items for forthcoming periods by increasing or decreasing the expenditure estimates.
  • Basically, variance results are generally used for revising monetary amounts for the next planning and budgeting cycle, and also for departmental performance tracking.

http://www.gfoa.org/index.php?option=com_content&task=view&id=1279&Itemid=566#improve

multi year budgeting oakland county utilizes this approach
Multi-Year Budgeting(Oakland County utilizes this approach)

http://www.gfoa.org/index.php?option=com_content&task=view&id=1279&Itemid=566

outcome or priority based budgeting grand island ne uses this approach
Outcome (or Priority)- Based Budgeting(Grand Island, NE uses this approach)

http://www.gfoa.org/index.php?option=com_content&task=view&id=516&Itemid=277

zero based budgeting frederick md uses this approach
Zero Based Budgeting(Frederick, MD uses this approach)
  • When using zero-base budgeting (ZBB), a government builds a budget from the ground up, starting from zero.
  • ZBB has been around since the late 1970s, with renewed interest with current environment of fiscal constraint,
  • The “zero” in zero-base budgeting sends a powerful message that taxes and spending will be held in check.
  • More time consuming than other methodologies

http://www.gfoa.org/index.php?option=com_content&task=view&id=1279&Itemid=566#ZBB

performance or target based budgeting sterling heights warren use this approach
Performance (or Target)-Based Budgeting(Sterling Heights & Warren use this approach)
  • The practice of developing budgets based on the relationship between program funding levels and expected results from that program.
  • Based on the premise that presenting performance information alongside budget amounts will improve budget decision-making by focusing funding choices on program results.
  • The performance-based budgeting process is a tool that program administrators use to manage more cost-efficient and effective budgeting outlays.
  • This approach to budget analysis and utilization is many steps ahead of traditional methods.
  • Performance budgeting comprises three elements:
    • the result (final outcome)
    • the strategy (different ways to achieve the final outcome)
    • activity/outputs (what is actually done to achieve the final outcome
  • Performance Measurement and Performance Based Budgeting (PBB):

This presentation provides the basic concepts of performance measurement, benchmarking, and performance/target-based budgeting.

gfoa budget survey
GFOA Budget Survey

((Performance or

recommended approach
Recommended Approach

Hybrid Solution:

  • Multi-year
  • Performance-based
  • Use variances from current year actuals and projected financial data for next year
budget best practice resources
Budget Best Practice Resources
  • Government Finance Officers Association: www.gfoa.org

This organization represents many of the Finance Directors and other finance professionals in the public sector. It as additional links to reference materials, training, and other good to know information.

  • Government Accounting Standards Board: www.gasb.org

The mission of the Governmental Accounting Standards Board is to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports and guide and educate the public, including issuers, auditors, and users of those financial reports.

  • International City/County Mangers Association: www.icma.org

ICMA's mission is to create excellence in local governance by developing and fostering professional local government management worldwide.

warren budget process
Warren Budget Process
  • December: The preparation of the budget begins with the distribution of budget instructions
  • January & February: the Mayor and Controller’s Office hold meetings with all departments, divisions, and commissions to review proposed spending and activities.
  • January & February: concurrently, alternative approaches are sought to provide better services and reduce costs.
  • March: Departmental requests are addressed by the Mayor within overall City needs and available resources.
  • Early April: the Mayor submits to the Council a recommended budget for the next fiscal year that is within the tax limit and other revenue sources of the City.
  • Mid-April & Mid-May: Council reviews the Mayor’s recommended budget, together with supporting schedules, information and messages.
  • Early May: a public hearing on the budget is held not less than one week before its final adoption.
  • Mid May: Council, by resolution, adopts a budget for the next fiscal year in accordance with the Michigan Uniform Accounting and Budgetary Act.
budgetary standards
Budgetary Standards
  • Uniform Budget Act
  • The City is legally subject to the budgetary control requirements of State of Michigan P.A. 621 of 1978 (the Uniform Budgeting Act). Major provisions include:
    • • Budgets must be adopted for the General Fund, Special Revenue Funds, and Debt Service Funds.
    • • The budgets must be balanced.
    • • The budgets must be amended when necessary.
    • • Debt cannot be entered into unless permitted by law.
    • • Expenditures cannot exceed budget appropriations.
    • • Expenditures cannot be made unless authorized in the budget.
    • • A public hearing must be held before budget adoptions.
  • Budgetary Basis of Accounting
  • Budgets for the General, Special Revenue, Debt Service and Capital Project Funds are prepared and adopted on the modified accrual basis of accounting consistent with Generally Accepted Accounting Principles (GAAP).
  • Government Financial Officers Association (GFOA)
  • Local government unit must publish a budget document that meets the program criteria as a policy document, as an operations guide, as a financial plan, and as a communication device.
wrap up final thoughts dave boerger
Wrap-up & Final Thoughts- Dave Boerger
  • Budgets are critical for success
  • Supplemented by efficiency, productivity improvement, collaboration & performance measurement processes
  • Restructuring may be necessary to balance budgets by consolidating, privatizing and/or selectively reducing services
  • Regularly engage all stakeholders
  • Steadfast leadership
  • Request SEMCOG consulting team assistance at no cost
sampling of lgec projects
Sampling of LGEC Projects
  • Shared service assistance
  • Privatization help
  • Court consolidation
  • Employee benefits analysis
  • Munetrix fiscal information
  • AgileGov searchable database
  • Millage vote readiness assessment
  • Dispatch collaboration
  • Benefit cost savings
  • Citizen Guide/Dashboard development
  • Citizen surveys w/ Cobalt
  • Comparable benchmark analysis
  • Budget assistance
  • Performance measurement
  • Fiscal assessment process
  • Energy efficiencies
  • Presentation to elected officials/staff
  • Taxable value forecasts
  • Financial plan development
  • Department consolidation
q a webinar evaluation
Q&AWebinar Evaluation
  • Type your questions into the text box on the right hand side of your screen
  • Complete and return a webinar evaluation that will be emailed along with this presentation shortly after the webinar
  • Also included will be information from Cobalt on the employee survey and how to apply
  • The webinar will be archived on the SEMCOG website within the week
slide42

For additional information or assistance, contact:

Dave Boerger, SEMCOG

248-875-7120

boerger@semcog.org

www.semcog.org

Southeast Michigan Council of Governments

535 Griswold St., Suite 300

Detroit, MI 48226