Budget Tools: Financial Methods in the Public Sector

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Half Title CQ Press Title Copyright Contents Tables, Figures, Boxes, and Worksheets Preface How to Use This Book Acknowledgments Module 1: The Craft of Budgeting References Module 2: Organizing Budget Data Understanding the Chart of Accounts Understanding Accounting Codes Fund Sources Programs Object Codes Summary Assignments Additional Readings Appendix A: Uniform Chart of Accounts for Local Governments of Utah October 29, 2013 Module 3: Fixed and Variable Costs Definitions of Fixed, Variable, and Step Costs In-Class Exercise: The MLK Settlement House Summary Discussion Questions Assignments Additional Readings Module 4: Breakeven Analysis Definition of Breakeven Analysis A Simple Equation Midtown Soup Kitchen and Breakeven Analysis Summary Discussion Questions Assignments Additional Readings Module 5: Cost Allocation Selected Cost-Accounting Concepts Cost Accounting and Cost Objectives Program and Service Centers Direct Versus Indirect Costs Pool and Base Cost Allocation Methods Direct Allocation Method Step-Down Method Summary Assignments Additional Readings Module 6: Time Value of Money Some Basic Concepts of the Time Value of Money Formulas to Compute Time Value of Money and Simple Examples Formulas to Compute Present Value of Money and Simple Examples Net Present Value: Decision Criteria Summary Discussion Questions Assignments Additional Reading Module 7: Inflation Nominal Versus Constant or Real Dollars Base Year Calculation of Constant Dollars Deflators and Indexes Summary Assignments Additional Readings Module 8: Sensitivity Analysis Scenario Analysis Example of Scenario Analysis Understanding Sensitivity Analysis Statistical Methods Summary Assignments Additional Readings Module 9: Integrating Budgeting With Performance Budget Proposal Budget Implementation Framework for Performance Budgeting Linking Performance Measures With the Budget Targets Benchmarks Standards Comparison With Prior Successes Actuals Variances Reporting Performance Data Integrating Performance Indicators With Expenditures Outcomes Outcome Measures Outcomes and Causality Outputs Outputs and Outcomes Early-Stage Outcomes Process Measures Measures of Satisfaction Process Efficiency Process Effectiveness Financial Efficiency Equity Difficulties in Performance Budgeting Summary Assignments References Additional Readings Module 10: The Budget Process: An Overview The Budget Call The Base Budget The Budget Manual Descriptive Text Performance Information Personnel Information Financial Information Decision Packages Additional Topics Time Frame Agency Role in the Budget Process The Executive Budget Submission The Legislative Budget Process Executive Approval Implementation and Follow-On Summary Assignment Additional Readings Appendix A: Budget Guidance Appendix B: Priorities Appendix C: Example of Virginia’s Decision Package Module 11: The Budget Document Organization of the Budget Document Transmittal Letter Budget Message or Executive Summary Revenue Estimates Detailed Schedules Capital Budgets Budget Information Budget Levels Budget Formats Line-Item Budgets Performance Budgets Program Budgets Other Information in the Budget Proposed Appropriation Summary Assignments References Additional Readings Appendix A: Chicago Budget Message Appendix B: Richmond, Virginia, Budget Message Module 12: Determining the Baseline Budget Defining the Baseline Budget Nonpersonnel Services Technical Adjustments Annualizing the Base Contract Values Small, Infrequent Expenditures Ratio of Expenditures to Number of Employees Distribution to Line Items Inflation Calculation of Inflation Garden City Day Care Center’s Baseline Budget Personnel Services Changes in Personnel Levels Revenues Summary Assignments Additional Readings Module 13: Decision Packages: Cost Estimates Budgetary Cost Estimate for a Decision Package Steps for Making the Estimate and Work Paper Cost Estimate Example: Garden City Day Care Center Summary Assignments FluQ Case Additional Readings Appendix A: Format for Cost Estimate Module 14: Decision Packages: Budget Justifications Budget Justifications General Guidelines for Budget Justifications Section Breakdown Budget Justification Example Summary Assignments References Additional Readings Module 15: Budget Cutbacks Decrementalism Retrenchment Examples of Fiscal Crises An Exaggerated Fiscal Crisis A Serious Fiscal Crisis Summary Assignment References Module 16: Legislative Budget Tools Introduction to Budget Presentations Delivering the Budget and Testifying Two Scenarios First Testimony Second Testimony Legislative Hearings Message Focus Clarity Preparedness Loyalty Legislative Analyst’s Tools Quantitative Information Transactional Changes Capital Budget Qualitative Information Status Policy Choices Committee Report Summary Assignments Additional Readings Appendix A: New York City Fire Department’s Fiscal 2014 Budget Module 17: Cost-Benefit Analysis Concept of Cost-Benefit Analysis History of CBA: A 200-Year-Old Tool Conducting Cost-Benefit Analysis Determining Standing and Perspectives Determining Alternatives or Basis for Comparison Listing Impacts Monetizing Impacts, Including Both Costs and Benefits Inferential Methods Discounting Future Impacts Calculating Program Net Present Value Example of Net Present Value Benefit-Cost Ratio Example of Net Present Value and Benefit-Cost Ratio Performing Sensitivity Analysis Partial Sensitivity Analysis Total Valuation Analysis Monte Carlo Analysis Example: Cost-Benefit Analysis of Brooklyn’s Atlantic Yards Selecting the Alternative With the Largest Net Social Benefits Limitations of Cost-Benefit Analysis Summary Assignments Additional Readings Module 18: Life Cycle Costing Basic Concept of Life Cycle Costing Brief History of Life Cycle Costing Calculating Life Cycle Cost Example of Life Cycle Cost Limitations and Qualifications of Life Cycle Costing Example of Life Cycle Costing in Public Projects With Unequal Economic Lives Current Status in Application The Future of Life Cycle Costing Summary Assignments Additional Readings Module 19: Capitalization and Depreciation Government Accounting Standards Board (GASB) Asset Capitalization Categories of Capital Assets Valuation of Capital Assets Depreciation Standards of Depreciation Methods of Depreciation Summary Discussion Questions Assignments Additional Readings Module 20: Long-Term Financing Financing Capital Projects Municipal Bonds Types of Municipal Bonds Bond Structure: Term and Serial Bonds Debt Repayment Schedules Summary Assignments Additional Reading Module 21: Investment Strategies Governing Authority and Investment Policy Investment Policy Investment Policy Statement Short-Term Investment Strategy Issues in Short-Term Investments Investment Objectives: Safety, Liquidity, and Yield Default Risk and Market Risk Key Short-Term Investment Vehicles Long-Term Investment Strategy Key Concepts and Issues in Pension Fund Investment Long-Term Investment Practices and Considerations Key Investment Vehicles Summary Discussion Questions Assignments Reference Appendix A: Sample Investment Policy Module 22: Operating Plan and Variance Analysis Allocation Allotment Variance Analysis What Causes Variances? Budget Modifications Summary Assignments Additional Readings Module 23: Cash Management and Internal Controls Cash Management Policy Types of Cash Cash Receipts Cash Payments Checking Accounts Petty Cash Funds Credit and Debit Cards Electronic Transactions Controlling Personnel and Nonpersonnel Services Requiring Vacations Controlling Travel and Cell Phone Use Monitoring Vendors Preventing Bribery Examples of Fraud Summary Discussion Questions Assignments References Additional Readings Module 24: Forecasting and Managing Cash Flow Liquidity Cash and Cash Flow Management Cash Flow Budgets Preparation of a Cash Flow Budget Cash Flow Management Strategies What Options Are Available If a Cash Shortfall Occurs? What Options Are Available in the Case of Too Much Short-Term Cash? Investing Short-Term Cash Margin of Safety Implementing and Updating the Cash Budget Summary Discussion Questions Assignments Additional Reading Module 25: Government and Nonprofit Accounting Fund Accounting The Accounting Equation The Balance Sheet or the Statement of Financial Position Income Statement or Statement of Activities: The Statement of Revenues, Expenditures, and Changes in Net Position Statement of Cash Flows Journal Entries Debits and Credits Example of Debits and Credits Summary Assignments Additional Readings Module 26: Financial Statement Analysis Fund Accounting Oversight Financial Statements Government Balance Sheet: Statement of Net Assets or Statement of Financial Position The Income Statement: The Statement of Activities or the Statement of Revenues, Expenditures, and Changes in Fund Balance Ratio Analysis Liquidity Solvency Profitability Sustainability Example of Ratio Analysis Summary Assignments Additional Readings Located Online Appendix A: New York State Chart of Accounts Appendix B: Spreadsheet Basics Appendix C: Graphing Data Using Excel Glossary Index Advertisement