Office of Administrative Services College-Wide Training

1. Office of Administrative Services College-Wide Training Budget Development & Year-End Closing April 12, 2013

2. What is a Budget? • budg·et (bəjit) noun • An estimate, often itemized, of expected income and expense for a given period in the future. • A plan of operations based on an estimate. • The total sum of money set aside or needed for a purpose e.g. construction budget. • Budgeting is an essential element of the financial planning, control and evaluation processes of governments.

3. How the Budget is Allocated District-wide

4. Budget Development • Fiscal Year – July 1 to June 30. • Budget development and management is an ongoing process • Budget revisions occur throughout the fiscal year. • Take best estimate of anticipated income and expenditures based on prior experience and future plans to develop a realistic budget for the upcoming fiscal year. Pre-planning and investment of time during budget development will save time later.

5. Budget Development • Decisions made by the Legislature, Community College System, District and College all have a significant effect on the college budget. • College funding general fund allocation is based on the SB361 Formuladeveloped at the State level. • Three major categories of funding: • Unrestricted General Fund (District Resource Allocation Model) • Restricted General Fund • Allocations via Basic Aid

6. Budget Development Unrestricted General Fund Budget - $87.1 Million • Majority of College funding and used primarily for day-to-day operations of the college College is funded through a revenue based funding model which is developed in the District Resource Allocation Committee (DRAC) Overriding Principles in resource allocation model (DRAC): • Uses the SB 361 State Funding Model • Funding primarily based on number of full-time equivalent students • Material Fees • Non-Resident Fees • Ending Balances

7. Budget Development Restricted General Fund Budget - $15.1Million • Guidelines as to how the funds must be spent. Each restricted funding allocation is managed in its own individual budget of income and expenditures. The college is audited to ensure these guidelines are followed. • Examples of restricted funds: • Grants • Disabled Students Programs and Services-Special Services (DSPS). • Extended Opportunity Program and Services (EOPS). • Matriculation. • Local restricted budgets—e.g. Parking, Health Center. We have 34 restricted college budgets excluding Basic Aid Projects

8. Budget Development Basic Aid Allocation Resource Committee (BAARC) • District-wide committee • Recommends allocation of Basic Aid funds • Charged with allocation approx. $52 Million 2013-2014 • Allocations in accordance with BP 3110 and AR 3110 • Excellent & Transparent Process/Very Important Committee

9. Budget Development The overall driving factor in most funding categories is how many students we educate or provide services for. That is why enrollment and retention is so important. If the State funds growth, we must grow in student population to meet that growth in order for our income to grow. If the student population declines, so does our income – in almost all categories.

10. Resource allocation must be tied to planning

11. Resource allocation must be tied to planning • INSERT CHARTS

12. Resource allocation must be tied to planning

13. Budget Development Calendar

14. January/February • Load positions into the budget development system* • Clean-up positions (HR system dumps every position into budget development) • Update Salaries and benefit rates • Add positions based on plans • Governor’s January budget issued • District Resource Allocation Committee (DRAC) adjusts allocations to reflect State budget • Budget development calendar issued as part of Budget Development Guidelines • Divisions complete and prioritize their resource requests * The budget development system is a stand-alone system.

15. Accounting Staff in April  We have it under control this year!

16. March/April • After local income adjusted for current year, local income budgeted in budget development for following fiscal year. • E.g. material fees, transcript fees, ticket sales. • College Resource Committee meets to prioritize resource requests • Escape is opened up for the following year with no budgets! • Budget worksheets and discretionary/operational allocations sent to Division Dean or Director • Division Dean or Director distributes allocation based on division priorities.

17. Division Responsibilities & Deadlines • During Budget Development, each Division Dean or Director is given a package that includes: • Instructions from Administrative Services • Includes deadline date to submit division input to Administrative Services. • Division Budget Worksheets • Division General Fund Budgets (Unrestricted) • Includes applicable grant and categorical budgets (Restricted) • Division Discretionary Allocation • Summary of allocations totaling current year’s allocation. • Local Income Spreadsheet • Administrative Services estimates how much local income divisions are expected to receive based on prior year actual collections.

18. Division Responsibilities & Deadlines • The Division’s discretionary allocation represents budgeted amounts that can be used for new and recurring divisional operating costs. • This allocation excludes expenditure allowances which are already incorporated into the budget: • Contract employees’ salaries and benefits. • College Duplicating Allowance • Local Income • New Resource Requests are allocated through the College Resource Committee Process! • Allocate amounts to 2300, 2400, 4000, 5000 and 6000 object code series.

19. Division Responsibilities & Deadlines • Allocate Division discretionary amount to match allocation provided by college Administrative Services. • Review budgeted positions for accuracy. • Consider the following: • Is the correct person & account shown? • Is the percentage of FTE correct (FT, PT, etc.)? • If split between multiple activities/departments, is the allocation correct? E.g. faculty teaching in multiple disciplines • Are any positions missing? • Review local income spreadsheets for accuracy and adjust as needed.

20. Division Responsibilities & Deadlines • If your Division also oversees any grants or categorical programs, a restricted budget will also need to be prepared and returned by the deadline. • New grants starting in next fiscal year that have been Board approved. • Continuing grants that span multiple fiscal years. • Carryover budget estimate for tentative budget. • Actual carryover will be completed once closed for fiscal year and actual amount is known. • Categorical Programs • Generally budgeted conservatively at 95% of prior fiscal year allocation.

21. Division Responsibilities & Deadlines • Return completed Budget Worksheets to Administrative Services by deadline date. This year: • April 22, 2013 for the 2013-2014 Tentative Budget • One submittal from each Division • No partials (a few from each Department)

22. Planning Considerations • Consider future requirements rather than duplicate last years’ budget. • Have the Division’s responsibilities changed? • Are obligations/plans changing? • Will the needs related to temporary hourly employees change? • Proper development of your Division’s budget will minimize the need for budget transfers during the fiscal year. • Investing in the budget development process and gaining understanding now will put you in a better position once the new fiscal year begins!

23. May • Budget input for the Tentative Budget is completed by fiscal services • BAARC recommendations are presented to the Board of Trustees • May Revise is distributed by Governor, usually too late for changes to the Tentative Budget • Tentative Budgets issued to divisions for reference and revision • College Resource Committee completes recommendations Budget Development system is closed to changes while the budget is prepared for the Board.

24. June • Continual revisions based on changes in personnel, benefit rates, utility rates/use, and income allocations. • Re-balance all categorical budgets • Ongoing input from divisions for adjustments. • Conference Committees at State finalizing State budget. • State budget should be completed by July 1. • Closing out fiscal year and estimating ending balances • Tentative Budget presented to the Board of Trustees. • BAARC recommendations included in the Tentative Budget • System is re-opened after Board approval to start revising Tentative Budget to create Final Budget.

25. July Beginning of the new fiscal year but budget not final! • Conference Committees finalize State budget and DRAC allocation finalized • Continue to update budget • Books closed and ending balances determined • All budgets balanced to include actual ending balances • Estimate restricted State allocations • Final budget completed by late July, adjustments can no longer be made. • Divisions must wait until the Final Budget is Board approved and loaded into Escape before changes (budget transfers) can be completed.

26. Accounting Staff in July We thought we had it under control!

27. August • Final Budget presented to the Board of Trustees for approval • Final Budget loaded into Escape: • Budget transfers can now be processed • Expenditure restrictions put in place • Fiscal Office asks Divisions to cover negative accounts in Escape!!! September/October • Receive final allocation for State categorical programs, make budget revisions. • Final number of faculty to hire determined for Board Agenda

28. Year Round Budget Activities • Continual revisions based on changes in personnel, benefit rates, utility rates/use, and actual income. • Sometimes collective bargaining agreements are settled after the Final Budget • Restricted program income • Unrestricted local program income • Fund college plans • Emergency and safety issues • Work of DRAC ,Capital Improvement Committee & BAARC

29. Year Round Budget Activities • College assessment and plans • Work of PBSC, Consultation Council and various committees and planning processes • Attend State budget workshops to anticipate changes • Follow state budget actions. E.g. Prop 30 passed in November and impacted the current year budget that began in July • Vice Presidents and Deans meet to determine part-time faculty ‘OSH’ allocations to include stipends, sabbatical replacements and reassigned time. Consider FTES generation needs to include any growth required. This is a very important component of the budget.

30. Year End Closing Schedules

31. Year-End Closing : What Does It Entail? • Books are closed at the end of the fiscal year – June 30 • All purchase orders must be closed i.e. paid or cancelled. • All invoices related to the fiscal year must be paid or payment accrued • All income received before year-end must be posted, or a receivable recorded for income related to the current fiscal year that is not received by year-end. • All payroll relating to services in that year must be recorded in that fiscal year. • Annual categorical budget allocations must have a zero balance by June 30 unless carryover is allowed • Expiring grants must be brought to zero balance by June 30

32. Year-End Closing : What Does It Entail? • Books MUST be closed timely and accurately. • College is audited to ensure compliance. • Huge undertaking requiring cooperation from the college community to observe year-end deadlines. • Deadlines are put in place to ensure year-end closing is timely and accurate.

33. Year-End Closing : Divisional Responsibilities • Make sure you know the year-end cut-off dates & follow them. • Obtain a copy of the Budget Development and Year-End Closing Guidelines that are emailed all Deans & Administrators. • Available on the District SharePoint site. • Enter important cutoff dates in Outlook with sufficient notice to allow for completion before the deadline. • Ensure all expenses related to the current fiscal year are submitted to Accounting before the cut-off dates. • Expenditures not submitted in time to be posted will be charged next fiscal year • This will affect next year’s budget by reducing your available balance.

34. Year-End Closing : Divisional Responsibilities • Ensure all revenue received in the current fiscal year has been submitted to Accounting – don’t hold funds received! • To avoid missing a deadline, plan appropriately for: • Purchases • Events • Required Services • Conferences • Etc. For example, if you know a conference will be attended by Division staff every June, submit your requisition(s) well in advance, not the week before the conference.

35. Year-End Closing : ONCE THE YEAR IS CLOSED THERE IS NO GOING BACK!

36. Questions, Comments?Thank You!This presentation will be available on the Fiscal Services Website