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BUDGETing 101

BUDGETing 101. An Introduction to Budgeting. I. Introducin. Agenda. Welcome and Introductions Budget and Fund Overview Game Time! Understanding the General Fund Revenue and Expenditure Overview BREAK – 10 Minutes Key Drivers of Expenses The Mysteries of Forecasting

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BUDGETing 101

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  1. BUDGETing101 An Introduction to Budgeting

  2. I • Introducin

  3. Agenda • Welcome and Introductions • Budget and Fund Overview • Game Time! • Understanding the General Fund • Revenue and Expenditure Overview • BREAK – 10 Minutes • Key Drivers of Expenses • The Mysteries of Forecasting • Fund Balances and Reserves • Budget is an Art and Science • Can you Juggle? • Resources • Summary

  4. Introducing the New Budget Math • Ma and Pa Kettle Style

  5. August 18, 1990

  6. August 18, 1990 August 14, 1990 What is a Budget? • Serves as a Financial Plan and Guide • Reflects the Numerical Representation of Council Priorities and Goals • Establishes Funding Levels for City Services

  7. Budget at a Glance

  8. What’s a Fund Anyway? The budget is made up of several types of “funds” or “piggy banks” for different types of revenue and expenses: • General Fund • Special Revenue Fund • Debt Service Fund • Capital Project Fund • Enterprise Fund • Internal Service Funds • Trust and Agency Funds

  9. City of Tracy Fund Structures

  10. Government Funds General Fund • Chief operating fund - main City “checking account” • Repository for most general tax revenue and operating expenses Special Revenue Funds • Accounts for revenues, restricted for a particular purpose • Landscape Maintenance District Assessment • Community Development Block Grant (CDBG) • Gas Tax

  11. Government Funds Debt Services Funds • Payment of principal/interest on long term debt • COPS for Regional Mall • Community Facilities and Assessment Districts • Lease Revenue Bonds to refinance COP debt Capital Project Funds • Used for acquisition, construction, and infrastructure improvements • General Fund 301 - fire station, animal shelter • Infill Development Funds • New Area Development Funds

  12. Government Funds Internal Service Funds • Used for goods and services to support departments • Costs recovered through user charges • Equipment Replacement; Building Maintenance; Central Garage • Information Systems; Risk Management Fiduciary Funds • Regional Transportation Impact Fund • Post-Employment Benefit Trust Fund • Agency Debt Funds • Enterprise Funds • Water Fund • Airport Fund • Transit fund

  13. General Fund is like a Checkbook Personal Income Monthly Expenses Mortgage Food Utilities Credit Cards Home Maintenance • Paycheck • Rental Income • Bank Interest

  14. City Checkbook: $52M General Fund Sources of Revenue Operating Expenses Salary & Benefits Materials & Supplies Utilities Vehicle & Building Maintenance Debt Service • Property & Sales Tax • Special Assessments • Franchise Fees • Enterprise Charges • License & Permits • Fees & Fines • Grants and Reimbursements

  15. General Fund Revenue GF Revenue: $52M

  16. Did You Know? Sales Tax 1 cent for every 8.5¢ of sales tax paid per dollar Property Tax 10-15 cents for each property tax dollar paid Tracy Measure E Sales Tax 1/2 cent for every 8.5¢ of sales tax paid per dollar

  17. General Sales Tax History

  18. Property Tax Revenue History

  19. General Fund Operating Expenses

  20. Break – 10 Minutes

  21. Key Drivers of GF Expenses • Salaries • Healthcare Costs • Affordable Care Act (ACA) • Employer PERS Rates • State Takeaways • Service/Contract Inflationary Increase

  22. Forecasting is an Art & Science

  23. 5-Year Forecast

  24. Planning for the Future Home Budget GF Budget Revenue – Expenditures = $ Available for Fund Balance Income – Expenses = $ Available for Future Savings • Rainy Day • College • Home Improvements • Retirement Economic Downturns Capital Projects Unexpected Expenses

  25. What’s a Fund Balance Anyway? • Fund Balance is the difference between fund assets and liabilities, or the City’s total net assets • Not all of net assets are available for use. Some are legally restricted for a specific purpose, while others are unassigned. • There are 5 components of fund balance: $27.7M + CONSTRAINED --

  26. It’s All About Juggling Internal Juggling • Revenues vs. Expenditures • Short Term vs. Long Term • One Time vs. Ongoing • Operating vs. Capital • Administration vs. Services • Management vs. Staff (& Unions) • Department vs. Department • Public Safety vs. Everything Else • Quality vs. Efficiency

  27. And More Juggling • External Juggling • Economy • Council Priorities • Community Pressure/Wants • Other Governments (State, County, Cities) • Media

  28. The Art and Science of: Juggling Budgeting • Physics • Perception • Dynamics • Courage • Math/Statistics • Forecasting • Accounting • Decisions

  29. Can You Juggle? • Budget Basics Exercise Purpose: • This exercise is designed to help participants understand the fiscal and policy implications associated with developing a City budget—it ain’t all that easy!

  30. Questions & Answers(Maybe)

  31. Resources

  32. Summary We Learned that a City Budget: • Is a Numerical Representation of the Council and Community’s Goals and Priorities • Is Guided by a Financial Plan, known as the 5-Year Forecast • Has 3 Components: Operating, Capital, Debt Service Budgets • Consists of a lot Funds!

  33. Summary We Learned that the General Fund is like the City’s Personal Checkbook: • It’s monthly income comes from mostly Sales and Property Tax and Measure E Revenue. • It’s monthly expenses are Salaries and Benefits, including Healthcare and PERS costs. We learned that reserves make up the City’s fund balance.

  34. Summary And last, we learned that: Budgeting is like juggling—it is an Art and a Science that requires the management of a variety of internal and external pressures.

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