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Financial Information Made Simple (FIN31)

APRIL 3-6, 2013, LONG BEACH, CA. Financial Information Made Simple (FIN31). These materials have been prepared by CASBO Associate Members. They have not been reviewed by State CASBO for approval, so, therefore, are not an official statement of CASBO. Today’s Presenters. with.

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Financial Information Made Simple (FIN31)

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  1. APRIL 3-6, 2013, LONG BEACH, CA Financial Information Made Simple (FIN31) These materials have been prepared by CASBO Associate Members. They have not been reviewed by State CASBO for approval, so, therefore, are not an official statement of CASBO.

  2. Today’s Presenters with TRRSchool Business Consulting

  3. Workshop Description • As a business official it is crucial to understand what is important in explaining complex financial information to the Board and community.  • This workshop will address: • What details to provide in order to make informed financial decisions • Ideas for how financial information can be effectively presented to the board and community, along with: • Key assumptions • Questions to consider

  4. Good Communication is Important • Financial data impacts policy decisions and vice versa • Policy makers should be educated in more than just the conclusions • Assumptions • Alternatives • Risks/benefits • As a business official, your job is to ensure informed financial decisions are made.

  5. This Workshop Will Summarize the Questions to Ask Regarding… • Have you provided enough information and the right information to policy makers (board members) and/or chief executives (superintendents) for them to make a sound financial decision?

  6. Making Informed Financial Decisions . . .

  7. Questions to Address - Budget

  8. More Questions to Address - Budget

  9. Additional Questions to Address - Budget

  10. Provide an Overview of the State Budget Process

  11. Describe the Steps in the District’s Budget Process

  12. Identify the Budget Planning Process • January – Share budget development with Board • Incorporate State’s budget calendar • Use most recent information • January proposed budget, then • May revise • January/February – Board approval of district budget guidelines and assumptions • Apply interim assumptions to the annual budget

  13. Identify the Budget Assumptions √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √ √

  14. Provide Detail of Revenue Assumptions

  15. Graphically Present High Level Revenue Summary Total General Fund Resources

  16. Provide Detail of Expenditure Assumptions

  17. Graphically Present High Level Expenditure Summary Total General Fund Expenditures

  18. Focus on Enrollment, Staffing and Revenue • Identify district’s ADA to enrollment yield • Budget for enrollment • For teachers and other staffing • Build in a conservative factor for enrollment growth/decline and yield • Revenue limit typically built on less ADA than staffing assumptions in growing districts • Know what a 1% increase in ADA yield would net District • Enrollment projections for facilities purposes will be discussed later

  19. Provide Detail of Enrollment Projections3-Year Weighted Average Cohort Methodology

  20. Preparing Interim Reports and MYP

  21. Provide Detail of 3 Year MYP

  22. Making Informed Financial Decisions . . .

  23. Questions to Address - Audit

  24. Define the Purpose and Expectations of the Annual Audit • Financial Statements are the responsibility of management • The numbers belong to the District • The auditors express an opinion • What kind of opinion did you get? • Unqualified or “Clean” • Qualified • Identify any audit adjustments to the SACS Unaudited Actuals as received by the board the prior Fall • If adjustments, why? • What can be done to prevent future audit adjustments?

  25. Provide Details of an Audit Analysis and Findings • Schedule of Financial Trends and Analysis • Trends in changes to fund balance • Do reserves meet required standards? • How do ADA changes track over the years? • How do long-term debt trends compare to changes in district size and revenues? • Identify reasons for unusual variances • Findings and Recommendations • Are there findings other than the typical ADA and ASB findings? • Are there compliance findings or financial findings?

  26. Making Informed Financial Decisions . . .

  27. Questions to Address – Cash Flow

  28. Provide Cash Flow Considerations • Of course, the State’s fiscal and cash situation can impact a school district’s cash position

  29. Present Monthly Cash Flow 2012-13

  30. Explain Any Short-term Borrowing Solutions • Compare all options to determine the most cost effective solution

  31. Making Informed Financial Decisions . . .

  32. Questions to Address - Debt

  33. More Questions to Address - Debt

  34. Even More Questions to Address - Debt

  35. Items to be Addressed in Every Financing

  36. Types of Debt Instruments

  37. Why is the Financing Taking Place?

  38. Does the Financing Mechanism Match the Purpose of the Financing?

  39. All Borrowings Must Be Repaid…What is the Repayment Source?

  40. What is the Ultimate Repayment Source? • General Obligation Bonds => district’s tax base • Community Facilities District (Mello-Roos) Bonds => the Community Facilities District only • Certificates of Participation, Lease Revenue Bonds, Lease Purchases, Qualified Zone Academy Bonds, Qualified School Construction Bonds => the district’s General Fund • Bond Anticipation Notes, Grant Anticipation Notes => Depends on the true legal structure, may be the tax base or the grant itself or could be the district’s General Fund

  41. Understanding Assumptions is Key • Financial plans are all built on assumptions • The validity of these assumptions can drastically impact the plan • The assumptions need to be reasonable • Types of assumptions: • Interest rates, assessed value growth rates, rate and timing of new development, annual increases in tax collections, future cost of energy, timing of receipt of revenues, etc.

  42. How is the Debt Structured?

  43. What Arethe Interest Payment Methods on Bonds and Why Utilized?

  44. Are the Issuance Costs Reasonable?

  45. Is the Issuance Timing Reasonable? • Has the Board and community had sufficient time to evaluate the financing and review documents? • Is the financing needed to fund expenditures within the next 3 years?

  46. Making Informed Financial Decisions . . .

  47. Making Informed Financial Decisions . . .

  48. Questions to Address – Need for New Facilities

  49. More Questions to Address – Need for New Facilities

  50. New Construction/Expansion Considerations • To show the need for new facilities, 2 main factors should be considered: • Enrollment • Capacity

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