Inaugural Extension Council Conference March 4, 2017

Fiscal Reports & Budgeting 2017 Iowa Extension Council Association Annual Conference Gene Mohling, Regional Director Region 15

Presentation includes: What’s In Your Wallet? (I mean bucket) Table Tax-Mil Rates & Limits How Do Valuations Impact Counties Timing of Tax Fund Acquisition Concept of Carryover & What’s Healthy? So You Are Going To Be Audited! (Are you worried?)) Using Fee Programs for WHAT? Reading and Understanding Fiscal Reports Questions

Donor Restrict Subfund What’s in your Bucket? Fund Accounting 101 There are 4 Sub-Funds which make up the Extension Education Fund Tax & Other Subfund Grant & Contract Donor Restrict Subfund Program Fee

Extension Law Taxation Caps FY 17 & 18 The Double Cap Issue: 2010 Population Dollar Cap Increases Each Year by Levy Rate   FY 2017 FY 2018 Less than 30,000 $6,000 0.3000 $ 231,000 $ 237,000 30,000 to 49,999 $7,000 0.2025 $ 272,000 $ 279,000 50,000 to 89,999 $9,000 0.1350 $ 346,500 $ 355,500 90,000 to 199,999 $15,000 $ 540,000 $ 555,000 More than 200,000 $25,000 0.0500 $ 800,000 $ 825,000

Tax Law – Effective Valuations: Translates into the aggregate District Taxable Valuation needed to avoid the double cap, the Levy cap: FY 2017 FY 2018 Less than 30,000 0.3000   $ 770,000,000 $ 790,000,000 30,000 to 49,999 0.2025 $ 1,343,209,877 $ 1,377,777,778 50,000 to 89,999 0.1350 $ 2,566,666,667 $ 2,633,333,333 90,000 to 199,999 $ 4,000,000,000 $ 4,111,111,111 Greater than 200,000 0.0500 $ 16,000,000,000 $ 16,500,000,000

How Do Valuations Effect Tax Revenue? 59 Districts currently have a single cap - $ only 41 Districts now have the “double cap” – both $ and levy cap 22 of those districts can not raise even 75% of the dollar cap 10 of those districts can not raise even 50% of the dollar cap Another 12 Districts vulnerable to levy cap within 3 years if no significant valuation changes in their county Almost all of the Districts with these double cap challenges are in the “below 30,000 population bracket” with majority of counties below 11,000 in population

Conservative Budgeting Suggests Timing of Tax Receipts   Average Range in % Conservative Budgeting Suggests July 0.6% .3 to .8 don’t plan on any August 0.1% 0 to .7 September 4.5% .6 to 7.6 1% October 39.0% 36.0 to 41.8 35% November 6.2% 3.8 to 9.1 4% December 2.2% 1.5 to 2.9 January 0.7% .6 to .9 February 0.5% .5 to .7 March 2.4% 2.1 to 2.9 2% April 37.9% 36.0 to 38.6 36% May 5.0% 4.0 to 7.5 June 0.8% .7 to 1.0 balance

Carryover Rule: The District may carry over in the tax subfund up to 50% of that fiscal year’s tax subfund expenditures.

How do you determine the health of a district budget?

Budget Review Let’s talk .......given the following... Balance Sheet FYE’16 Revenue & Expense Summary FYE’16 Budgeting Planning Summary FY’18 Answer the following questions.....?

Of the $215,675 carryover, how much of it is in the tax subfund Of the $215,675 carryover, how much of it is in the tax subfund? (Hint-use the balance sheet)

For the FY ending June 30, 2016, what was the maximum carryover limit that would have been allowed? (Hint-Rev./Exp. Summary)

Am I within my 3-4 month “rule of thumb” for carryover?

Have I under or over spent my tax subfund the last 3 years?

Based on net tax subfund income FY14-16, what was my FY14 beginning tax subfund amount?

Can Program Fee revenue be used to cover wages? Is the use of Program Fee to purchase a full time position sustainable?

Does this County have a carryover problem? Using the Balance Sheet and Revenue & Expense Summary through February 28, 2017, what would you advise?

Summary on Tax Revenues 1/3 ---of the counties levy 100% for Extension Education fund as well as levy for either Tort, Unemployment, or both 1/3 ---of the counties levy 100% of the Extension Education fund but did not levy for Tort Liability fund or the Unemployment Compensation fund this past year 1/3 ---of the counties did not levy to their first their cap -- $600,000 left just in the Extension Education fund

“Tax” Expenses – Actuals FY16 District Expenses as a Percent of Tax Sub-Fund Revenue Mean Median Maximum Minimum Standard Deviation Personnel Expense 72.4% 71.6% 109% 44% 12.4% Facility Expense 9.9% 8.7% 42% 0% 6.3% General Office Expense 12.8% 12.1% 24% 7% 3.8% Non-Fee Expense 2.9% 1.3% 23% 4.3% Residual: Net Gain or Loss 2.0% 4.1% -35% 10.7% Note: Tax sub-fund includes interest, rental, resale & other revenues too

What about the Double-Capped Counties Rev & Exp Structure? Hypothesis: As their taxation is limited, there would be a difference in the expenditure category mix Nope! Percentages in each category nearly identical to the whole set Implies good financial management – “We Make Do with What We Have”

New Ways – Example $ Ratios Ending Operating Account Balance FYE 16 Mean Median Maximum Minimum Standard Deviation As a % of Actual Tax Revenue for the Year 82.3% 75.3% 274% 30% 34.0% As a % of all Actual Expense for the Year 54.8% 53.5% 138% 23% 20.6%

Time for a Financial Health Index? Reasons For: Could be our equivalent to the bank’s stress test Early warning system Objective measure to help council members Natural next step of collected data and our financial system Accreditation metric Debt… Reasons Against: Agreeing on the criteria Would it be used? Do we need to know if a district is having financial issues? Would it ultimately lead to improved performance?

Financial Health Categories? “SEVERE” Use of Warrants to pay bills -or- Projection for year shows using warrants -or- Total Operating Account at FYE is 10% or less of budgeted expenses Implications – Considerations: Dissolving discussions Merger options MOU stipulations Authority to offer programs revoked (4-H, PPAT, etc) Mandatory financial SWAT team

Next Category of Concern “VULNERABLE” FYE operating account is 10-25% of projected expense -and- Decreasing % Operating Account carryover 1-2 years -and- Decreasing % Tax Sub-Fund balance -and- Personnel expenses shows lack of sustainability Rapidly draining Program Fee balances

One more level of concern… “Watch List” ?? Double-capped taxation -and- ?? Leveraged with debt Decreasing FYE operating account balances 3 straight years Other objective measures

AND – Other End of Spectrum! “Under-investing notation” Districts with good financial ability and capacity, BUT: Do not demonstrate investing in at least 3 of the 4 program areas, either hiring their own staff or working with multiple Field Specialists No plan to offer a comprehensive educational program plan within their financial means Easy, objective measures such as Extension Calendar indicates a lack of educational offering against set standards

What is needed for an AUDIT? Receipt books, deposit slips All bank statements, voucher reports, invoices Financial reports-month end (X12) Proof of publication-hearing and year end All year end reports Proof of bonding Proof of filing w/Auditor and Treasurer Organizational minutes & certificate of organization Fiscal policy & all minutes (signed!) IDOM forms, budget template Full disclosure and access to staff for questions.....

Summary Taxation Revenue Source – What to Monitor Rule of Thumb: Carry 3-4 months of tax revenue in subfund Non-Taxation Revenue Sources – Closer Examination Can these support infrastructure needs periodically? Expenses To Purposely Manage: Human Resources – Increased Skill Development of our: Educators/Associate Educators group Front Counter (Support Staff) group Management & Leadership group Facilities Continue to Improve All our Systems Impacting the Field Operation

Thank for attending today! Questions? mohling@iastate.edu 319-330-4681