ILLINOIS CHILDREN’S HEALTHARE FOUNDATION Children’s Mental Health Initiati ve,

1. ILLINOIS CHILDREN’S HEALTHARE FOUNDATION Children’s Mental Health Initiative, Building Systems of Care, Community by Community The How’s and Why’s of Financial Modeling Webinar, Wednesday, February 16, 2011 2:00-3:00 pm

2. The How’s and Why’s of Financial Modeling Presenter: Tammy Lemke President Illinois Children’s Healthcare Foundation 1200 Jorie Boulevard Suite 301 Oak Brook, IL 60523 Office: 630-571-2555

3. Ground Rules/Items to Note: A Few Ground Rules/Items to Note: • Please submit questions along the way – we will make every attempt to answer or will provide a follow-up memo on those that weren’t addressed. There will be an open Q&A at the end of the session as well. • Power point presentations and the documents referred to in the presentation will be available to download at www.ilchf.org after the presentation.

4. The How’s and Why’s of Financial Modeling What Makes A Good Plan? Nine Considerations and What to Look For: • Focus and Direction • Operational Excellence • Professional Excellence • Human Resource Systems • Evaluation • Organizational Structure • Management Leadership • Commitment to the Concepts of a Medical Home • Financial Sustainability

5. The How’s and Why’s of Financial Modeling What Makes a Good Plan? Financial Sustainability Building in “financial sustainability” to a plan in a time of financial uncertainty and recession is challenging. There is a balance to be struck between investing in new strategies while retaining (and building upon) what is already in place.

6. The How’s and Why’s of Financial Modeling SO, the question is: Why does filling in spreadsheets and making guestimates out 5 years help me enhance my children’s mental health system of care?

7. The How’s and Why’s of Financial Modeling The answer is simple . . . . Change and impact takes resources, whether those resources are financial or in-kind (donated/volunteer) and understanding what can be accomplished with the resources available will guide the work of the Team and in the end, provide a sense of Freedom.

8. Five Year Financial Model Where to Start? Building a five year financial model isn’t something that should be built once the implementation plan is complete! The activities and work plan for implementation and the operating budget and projections of cost for that same plan should be completed simultaneously - and, in some cases, possibly analyzing costs/sources of support first may help you in developing the priorities of your plan.

9. Five Year Financial Model Possible Steps to be Taken Step 1: Based on the activities and priorities set during the planning phase, label each activity as follows: Necessary to Build the System Infrastructure Big Ticket Item – Requires Substantial Support Low Hanging Fruit – Quick Impact Visibility – Communicates message Felt Sense of Urgency - Significant Need The Spread Effect – If we do it – others will too Leveraging of Resources - If we give a $1 – so will others Necessary to Measure Impact and to make Adjustment

10. Five Year Financial Model Possible Steps to be Taken: Step 2: After labeling proposed activities, consider the following: A MUSTNecessary to Build the System Infrastructure Can we do this? Big Ticket Item – Requires Substantial Support Let’s do these Low Hanging Fruit – Quick Impact Is visibility necessary? Visibility – Communicates message Can we pay for this? Felt Sense of Urgency - Significant Need Consider The Spread Effect Consider Leveraging of Resources A MUST Necessary to Measure Impact

11. Five Year Financial Model Possible Steps to be Taken: Step 3: Begin Building the 1st Year Operating Budget/Projections • How much will the MUSTS costs – how will we secure the costs associated with these MUSTS? • Based on the classification of activities to execute plan, what are the costs associated and how will we secure the costs associated with these activities? • If support for certain activities is not available in year 1, can the action item be in Year 2 or 3?

12. Five Year Financial ModelSubmission Requirements Financial Model Requirements • Five Year Projection of Income and Expenses & Narrative 3 year period for which ILCHF will provide resources 2 subsequent periods after ILCHF funding • Detailed Yr 1 Implementation Operating Budget & Narrative Detailed operating budget will be submitted each year that reflects the activities as outlined in the detailed work plan for that given year.

13. Five Year Financial ModelDesign of the Template The Financial Model has been designed to reflect the three significant functional expense areas of the CMHI: • System of Care Organizational Structure and Leadership • Execution of the Plan: Direct Service Expenses • Evaluation and Monitoring of the Project

14. Five Year Financial ModelDesign of the Template The Template is in excel and is constructed using the worksheet/tab function. The summary pages are formula driven. If you modify a worksheet – please modify all formulas. Fields highlighted in color of pink are input fields.Fields highlighted in the color of grey are formula fields – do not enter information in these fields.

15. Five Year Financial ModelDesign of the Template Items to note when using the Template: • Model is not oriented to a Lead Agency format • Dollars should be entered in whole numbers rounded to nearest $100 • For expenses associated with Personnel – ILCHF is not requiring a functional allocation – you may include the expenses where a significant portion of time is spent

16. Five Year Financial ModelClassification of Expenses System of Care Organizational Structure and Leadership. Ensuring a children’s mental health system of care is enhanced and/or developed and has the organizational structure and leadership to be sustainable. • Lead Agency Personnel • Salary of the Project Director • Workgroup Coordinator Salary • Expenses associated with Convening Meetings • PR/Communication on Project

17. Five Year Financial ModelClassification of Expenses Other Items to Consider: System of Care Organizational Structure and Leadership • Is our System structured in the most cost effective manner? • After the third year of ILCHF Funding - how will these costs be supported in your community? • Does the level of expenses associated with the structure and leadership of our system need to be maintained at the same level year after year?

18. Five Year Financial ModelClassification of Expenses System of Care Organizational Structure and Leadership Example of Items that are not reimbursable by ILCHF: • Overhead that is also included in the indirect cost calculation • Capital expenditures outside of small equipment needs • Costs associated with setting up a new organization for the project Example of items that may not be reimbursable by ILCHF: • Stipends for Governance Committee Members to attend meetings

19. Five Year Financial ModelClassification of Expenses Execution of the Plan: Direct Service Expenses. Do children improve? Ensuring services (professionals and materials) are available to meet the needs of children in your community. • Recruiting, Hiring, and Retaining Professionals necessary to build and/or enhance your system • Start-up costs associated with family and care coordinators • Training - Community Specific • Training – As a learning Collaborative • Training – Services from NTI Upstream • Pilot Projects/Studies on Reimbursement Rates/costs • Prevention Strategy Costs

20. Five Year Financial ModelClassification of Expenses Other Items to Consider: Execution of the Plan: Direct Service Expenses • Is your system investing in people which have a long-term payback potential? • Is your system investing in a balance of upstream and downstream interventions? • Does direct service expenses/execution of your plan expenses swing towards one or two agencies? If so, is there consensus on the community team that this is the best strategy for building a system of care? • How will the costs be incorporated into community funding streams after ILCHF’s funding is complete?

21. Five Year Financial ModelClassification of Expenses Execution of the Plan: Direct Service Expenses Example of Items that are not reimbursable by ILCHF: • Capital expenditures outside of small equipment needs • Billing time lost as a result of trainings, etc. • Costs associated with activities not related to Children Example of items that may not be reimbursable by ILCHF: • Fees for services as a result of state of Illinois Cash Flow/Budget issues

22. Five Year Financial ModelClassification of Expenses Evaluation & Monitoring of the Project. Is our community making a positive difference? Is the CMHI making a positive difference? What adjustments need to be made in order to better serve children and families? • Local Evaluator salaries/contracts • Data Collection Efforts • Focus groups/surveys • If applicable, IRB Costs • Costs associated with documenting your journey and system of care strategies

23. Five Year Financial ModelClassification of Expenses Other Items to Consider: Evaluation & Monitoring of the Project • Does your budget incorporate costs associated with participation in the cross-site evaluation as well as local evaluation and data collection needs? • After the third year of ILCHF Funding - how will these costs be supported in your community? (Note: ILCHF is considering funding a certain level of evaluation/monitoring activities in Years 4 & 5) • Does the level of expenses associated with the evaluation and monitoring of the project need to be maintained at the same level year after year?

24. Five Year Financial ModelClassification of Expenses Evaluation & Monitoring of the Project Example of Items that are not reimbursable by ILCHF: • Data collection studies not specific to children. • Costs associated with Presentations of project outside of the presentation guidelines (to be determined by sub-committee) Example of items that may not be reimbursable by ILCHF: • Pending

25. Five Year Financial Model Once you have completed these steps, determined the expenses for year 1 and how the costs will be supported, complete again for year 3-5!

26. Question & Answer Period