MultiYear Budgeting Looking Beyond One Year FGFOA School of Government

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Multi-Year Budgeting Looking Beyond One
YearFGFOA School of Government

• November 14, 2007
• Kurt Petersen, Assistant Manager,
• Orange County Government
• Javier Gonzalez, Budget Manager,
• Osceola County Government

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OUTLINE

• Multi-Year Budgeting Concept
• Orange County Government Overview
• Budgeting Process

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OUTLINE

• Multi-Year Budgeting Concept

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MULTI-YEAR BUDGETING

• He who fails to planplans to fail
• Americans . and their governments live paycheck
  to paycheck
• Governments .shutting down due to budget impasses

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MULTI-YEAR BUDGETING

• GFOA recommended budget practice
• The GFOA recommends that governments at all
  levels forecast major revenues and expenditures.
  The forecast should extend at least three to five
  years beyond the budget period and should be
  regularly monitored and periodically updated. The
  forecast, along with its underlying assumptions
  and methodology, should be clearly disclosed

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MULTI-YEAR BUDGETING

• Advantages of multi-year budgeting
• Integrates goal-setting and budgetary process.
• Reinforces commitment to long-term fiscal
• health by looking beyond a one-year time
• horizon.
• Promotes more orderly spending patterns
• Retains the fiscal control provided by annual
• budgets.
• Saves time and effort in preparing annual
• budgets.

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MULTI-YEAR BUDGETING

• Disadvantages to be overcome
• Perception of legislative loss of control and
  oversight
• Unanticipated economic fluctuations
• Transition from annual budgets
• Needed changes to policies and procedures

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MULTI-YEAR BUDGETING

• Political factors to consider
• Statutory authority and limitations
• The relationship of the budget cycle to the
  elections cycle
• Interrelationships with other units of government
• Do key stakeholders view the process as a threat
  to their budgetary oversight?

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MULTI-YEAR BUDGETING

• First stepa Multiyear Financial Plan
• Multiyear Financial Planning Defined
• A multiyear financial plan projects revenues and
  expenditures for several years into the future.
  Unlike a multiyear budget, it does not authorize
  expenditures (although it should be linked to the
  current budget).

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MULTI-YEAR BUDGETING

• Major Elements of a Multiyear Financial Plan
• Revenue Projections
• Expenditure Projections
• Annual Deficits/Surpluses
• Reserves/Fund Balances

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MULTI-YEAR BUDGETING

• Additional Elements of a Fiscal Performance Plan
• Fiscal Improvement Plan
• Fiscal Accountability Report

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MULTI-YEAR BUDGETING

• Creating a Multiyear Plan Getting Organized
• Gather data on recent financial results
• Decide on a timeframe
• Describe your assumptions
• Be comprehensive enough to ensure that the plan
  accurately describes the operations of your
  government
• Revisit the multiyear financial plan at least
  annually

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MULTI-YEAR BUDGETING

• General Principles
• Start with What You Know Historical Trends
• Consider Policy Changes Local, State and
  Federal
• Dont Sweat the Small Stuff

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MULTI-YEAR BUDGETING

• Revenue Projections
• Real Property Taxes
• Sales and use tax and other Non-Property Taxes
• Departmental Income
• Other Local Revenues
• State and Federal Aid
• Interfund Transfers
• One-Time Revenues

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MULTI-YEAR BUDGETING

• Expenditure Projections
• Personal Services
• Operating Expenditures
• Equipment and Capital Outlay
• Debt Service
• Interfund Transfers
• Capital Improvements
• Reserves and Other

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MULTI-YEAR BUDGETING

• Bottom Line
• Your fiscal plan
• Communicate budget guidelines
• Enforce guidelines department submittals
• Follow the plan
• Provide feedback to all stakeholders

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OUTLINE

• Orange County Government Overview

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COUNTY BUDGET

• 5th largest county in Florida
• Over 1,000 square miles
• Total budget 3.4 billion
• 600 funds
• 19,000 line items
• First in tourist development tax collections
• Second in sales tax collections

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COUNTY BUDGET

• Overall budget 3.4 billion,
• but what is it?

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COUNTY BUDGET
Budgets Unrelated to Property Taxes

• Water and Waste Water
• Solid Waste
• TDT Related Budgets
• Building
• Grants
• Debt Service
• Restricted revenues

Total 2.3 Billion
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COUNTY BUDGET
Budgets related to Property Taxes

• General Fund
• Fire Rescue
• Parks and Recreation
• Capital Projects

Total 1.1 Billion
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COUNTY BUDGET

• Fiscal Year 2007-08
• Rollback to 2006-07
• Allows increase for new construction
• A 5 cut for all millage rates except Fire Rescue
  MSTU
• Fire Rescue MSTU is treated as independent
  district and had a 3 cut
• A 14 reduction in the county aggregate millage
  rate

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COUNTY BUDGET
FY 07-08 property taxes (no change in millage
rate)
843 Million
FY 06-07 property taxes
FY 07-08 property taxes (rolled back w/ 5 cut)
719 Million
724 Million
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COUNTY BUDGET
FY 07-08 property taxes (no change in millage
rate)
843 Million
FY 06-07 property taxes
FY 07-08 property taxes (rolled back w/ 5 cut)
124M or 17 Increase
719 Million
724 Million
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COUNTY BUDGET
FY 07-08 property taxes (no change in millage
rate)
843 Million
119M or 14 Decrease
FY 06-07 property taxes
FY 07-08 property taxes (rolled back w/ 5 cut)
124M or 17 Increase
719 Million
724 Million
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COUNTY BUDGET

• Budget Cuts
• 10 cut to operating budgets
• 10 cut to various agencies
• No new Parks or Park programs
• Delay new fire stations
• Delay new roads
• Delay all other capital projects and programs
• Cut 5 of the workforce
• (except public safety)

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COUNTY BUDGET
Rising Costs Operating costs have risen
sharply over the past 10 years
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COUNTY BUDGET
FY 07-08 General Fund Expenditure Budget

• Sheriff 175
• Corrections 152
• Health Family Services 83
• Outside Agencies (LYNX, CRAs, etc.)
  81
• Other Budgets (Economic Dev., Fiscal, Misc.)
  63
• Other Constitutional Officers 55
• Administrative Services (Facilities, Real Estate,
  Misc.) 48
• Community Environmental Services 22
• Growth Management 10
• Public Safety/Emergency Mgmt. 8
• Stormwater 1
• Reserves 55
• TOTAL 753

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OUTLINE

• Budgeting Process

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Budgeting Process
?Economic Indicators
? Budget Amendment
? Priorities
? Adopted Budget
? Department Requests
BUDGET CYCLE
? Public Hearings
? County Mayor/ County Administrator Meetings
? BCC Changes TRIM
? Proposed Budget
? BCC Worksessions
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ECONOMIC INDICATORS - JAN/FEB
1

• Historical Trends
• Long Term Stability
• Most Recent 3 Years
• Monthly Revenue Tracks
• Quarterly Reports
• Departments Input

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ECONOMIC INDICATORS - JAN/FEB
1

• Department of Revenue
• Industry Patterns
• Economists
• Cash Brought Forward
• Monitor Legislative Agenda

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ECONOMIC INDICATORS - JAN/FEB
1

• Update 5 Year Financial Model

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ESTABLISH PRIORITIES JAN/FEB
2

• Meetings with County Administrator
• Meetings with County Mayor

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DEPARTMENT REQUESTS FEB/MAR
3

• Budget kick-off with Departments
• Priorities and guidelines
• Proposed salary increases
• Criteria for position classification changes
• Legislative impacts
• FRS Rates, Potential Cost Shifts, Other
• Performance Measures
• Two year budget input in BRASS financial software
• Budget due March 31

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COUNTY ADMINISTRATOR/MAYOR MEETINGS APR/MAY
4

• OMB compiles budgets
• CA/OMB individual meetings with Departments
• Increases/decreases in budget
• Increases/decreases in positions
• Position classification changes
• Legislative impacts
• FRS Rates, Potential Cost Shifts, Other
• Performance measures
• County Mayor individual meetings with Departments
  (Presentations)

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PROPOSED BUDGET - JUNE
5

• Balance proposed budget
• Complete budget book for July Worksession

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BCC WORKSESSIONS - JULY
6

• Commissioners Aides Briefing of Proposed Budget
• Prepare Department presentations for BCC
  worksessions
• PowerPoint (standard format)
• One presentation book with all presentations
• Three Day Budget Worksession (third week in July)

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BCC CHANGES TRIM AUG
7

• Adjust budget for BCC requested changes from
  Budget Worksessions in July
• Update cash brought forward
• TRIM notice
• Prepare public hearing package

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BUDGET PUBLIC HEARINGS SEPT
8

• Budget Brochure
• 1st Public Hearing
• Mandatory Refuse
• Non-Ad Valorem Assessment Roll
• All other County Millages and Budgets
• 2nd Public Hearing
• Adopt all County Millages and Budgets

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ADOPTED BUDGET OCT
9

• October 1 New Budget Fiscal Year
• Finalize Budget Book (Oct/Nov)
• Encumbrance Rollovers

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BUDGET AMENDMENT NOV/DEC
10

• Annual Budget Amendment
• Encumbrance rollovers
• Grant rollovers/carryover funding
• CIP rebudget adjustments
• Cash brought forward
• Other necessary adjustments

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Budgeting Process
?Economic Indicators
? Budget Amendment
? Priorities
? Adopted Budget
? Department Requests
BUDGET CYCLE
? Public Hearings
? County Mayor/ County Administrator Meetings
? BCC Changes TRIM
? Proposed Budget
? BCC Worksessions
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2ND YEAR OF THE BUDGET

• Whats the process for the second year of the
  budget?
• Same process, but less time in Department
  preparation
• Budget Office and County Administration save time
  going through entire budget. Can focus on changes.

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Multi-Year Budgeting Looking Beyond One
YearFGFOA School of Government

• November 14, 2007
• Kurt Petersen, Assistant Manager,
• Orange County Government
• Javier Gonzalez, Budget Manager,
• Osceola County Government