Midyear Forecasting March/April 2019 Thank you for coming, and welcome to the second in our series of seminars on financial management! Bryan Brown (Arts and Humanities liaison) Luba Petrov (Humanities liaison) John Murphy (Social Sciences liaison) Shuming Yao (filling in for Jackie Buchanan as Natural Sciences liaison) Jiayan Zhao (Assistant Director of Finance) Elsie Phillips (Senior Finance Analyst) Kristi Nishihara (Senior Finance Analyst) Harvey Chock (Senior Finance Analyst) Winne Wang (Senior Finance Analyst) Jim Henry (Director of Finance) March/April 2019

Midyear Forecasting Agenda Introductions (5 min) Previous Session Reminders (5 min) Context and Purpose(s) for a Midyear Forecast (10 min) Best Practices for Accurate Data (5 min) Process and Examples (55 min) What Does It All Mean? (10 min) Open Lab (30 min) Process will start at a high level, and then John will do the majority of the heavy-lifting with a dive down into the details

Midyear Forecasting Reminders from Previous Session Focus was on: Executive Summaries/Financial Narratives Determining your audience Determining your scope Understanding the annual accounting cycle Different reporting tools and what data they contain (pros and cons) Prior period data (i.e, mostly reporting on the past) In our first session, we threw a lot of information at you: Audience: Department Chairs/Program Directors? Advisory Boards? Deans? Scope: Am I looking into the Past? Present? Future? Faculty Accounts? Department/Program Accounts only? Accounting Cycle: Produce a budget, fund the budget, spend/bring in funding, midyear forecast, spend some more/bring in some more funding, yearend forecast, close the year, take a snap-shot, rinse and repeat Different Reports: FFIT, OBI OB and Non-OB Reports, Multi-Year Trend Report from OBI, Department Reserves At your recommendation, we produced a follow-up Reporting Matrix with Pros and Cons (Accounting Cycle is in progress) In this session, we will take a closer look at some of the OBI reports and how they might help provide useful information to you and your audience

Midyear Forecasting Context Where are we in the accounting cycle? Budgeted last July Funded the Budget, including 9/1 commitments in September/October Spent for half the fiscal year Transferred many mid-year funding commitments and possibly brought in additional funding Are we on track so far for the year (past-looking)? Are we on track for year-end (forward-looking)? Where are we anyway? Some funding commitments may still be outstanding, especially if they are from outside the School; talk to your liaison if you have HSDO funding commitments that can be met at this time. It’s good to get the funding in place sooner rather than later to make your yearend forecasting easier. Shift from past-looking to forward-looking

Midyear Forecasting Purpose(s) To determine whether you are overspending (and whether you have sufficient reserves to cover the overspending) To determine whether you have sufficient funding to support incremental activities One-Time Activities vs. Ongoing Activities To determine your year-end fund balance status and compare to prior year balances Why are reserve levels trending the way they are? Are you sustainable? Are you building reserves for a rainy day to ensure future sustainability? Incremental Activities: Help to inform Chair/Director decisions about “Can I do X?” If you have sufficient funding to do X, is it just because of circumstances this year (one-time)? Or will it be every year (ongoing)? When completing a midyear forecast, be sure to highlight your assumptions so that you will know the “why” of why reserve levels are doing what they are doing and can then address the question of sustainability or future rainy days

Midyear Forecasting Best Practices for Accurate Data Transactions have been entered and approved in a timely fashion Expenditures have been reconciled and reviewed prior to forecasting Outstanding Oracle expenditure commitments have been reviewed and suppressed (if appropriate) Labor schedules are also accurate through the end of the year Outstanding funding commitments have been gathered from HandSOn Timely: If transaction entry and approval lags too much, it may be difficult to determine burn rates for the remainder of the year Reconciled: Make labor adjustments, changes to labor schedules, org suspense clearings, and iJournal corrections where necessary and as soon after the error occurred as possible! Commitments: Oracle expenditure commitments include only base salaries (bargaining unit and other hourly employees excluded) and purchase order commitments. Talk to your liaison if you are uncertain how to suppress outstanding commitments

Midyear Forecasting Process Overview Download reports Enter anticipated revenue Outstanding HandSOn funding commitments Anticipated gifts or designated revenue Enter or modify anticipated expenses Specific Oracle expenditure commitments Include burn rate when appropriate Determine end-of-year remaining balance in each PTA OB then Non-OB Non-OB: Know how your OB PTAs are funded so you know where to move year-end surplus or deduct for overdrafts Consolidate information into projected reserve report(s) Analyze and summarize At a high level, six steps. Burn rate may be calculated by examining current or prior year trends; you may need to examine expenditure details if there are any anomalies that stand out Recommend that you start with OB (primarily expenditures but some additional funding), then move to non-OB (mostly funding and some limited expenditures + year-end close transactions)

Midyear Forecasting Process Outline Create Worksheets Enter Projections Review Results

Midyear Forecasting Process Outline Create and Enter Projections in 3 Worksheets Projecting Year-End OB Funding and Expenditures Projecting Year-End Non-OB Fund Balances Reviewing Non-OB Fund Balance Multi-Year Trend

Midyear Forecasting Process Outline Project OB Funding & Expenditures Additional funding and outstanding commitments Remaining expenditures and transfers out Project Non-OB Fund Balances Additional Non-OB revenue OB funding adjustments Review Non-OB Multi-year Balances Add projected Non-OB balance Compare projected fund balances by Award

Midyear Forecasting 1. Projecting Year-End OB Funding and Expenditures Create Worksheet Using Browser Navigate to H&S Financial Dashboard in OBI Open OB Fund Balance Review Enter Award Number = OB Award and Fiscal to Date GL Period Name = FEB-2019 Export to and open with Excel Using Excel Add three columns: Additional Funding (R) Remaining Expenditures and Transfers Out (S) Projected Balance (T) Enter formula for Projected Balance (T) = YTD Available Balance (N) + Additional Funding (R) - Remaining Expenditures and Transfers (S)

Midyear Forecasting 1. Projecting Year-End OB Funding and Expenditures Enter Projections Additional Funding Outstanding funding commitments HandSOn for HSDO and PPO Other schools and departments Drill down to investigate details in OBI or FFIT Remaining Expenditures and Transfers Out Projection methodologies (projection methodology will vary by PTA) Expenditure commitments YTD annualized Prior year actuals Current Year Budget “Proof of Concept” H&S OBI projection tool

Midyear Forecasting 1. Projecting Year-End OB Funding and Expenditures Review Results Where OB PTA has a surplus, How was this PTA funded? Can all or a portion of the surplus be returned to your Non-OB fund(s)? Will any of the surplus be required to fund OB PTA deficits? Where OB PTA has a deficit, Will all or a portion of the deficit be funded from your Non-OB funds? These decisions will impact the projected Non-OB fund balances

Midyear Forecasting Process Outline Project OB Funding & Expenditures Additional funding and outstanding commitments Remaining expenditures and transfers out Project Non-OB Fund Balances Additional Non-OB revenue OB funding adjustments Review Non-OB Multi-year Balances Add projected Non-OB balance Compare projected fund balances by Award

Midyear Forecasting 2. Projecting Year-End Non-OB Fund Balances Create Worksheet Using Browser Navigate to H&S Financial Dashboard in OBI Open Non-OB Fund Balance Review Enter Organization = Org Code and Fiscal to Date GL Period Name = FEB-2019 Export to and open with Excel Using Excel Add four columns: Additional Revenue (Q) Remaining Expenditures and Transfers Out (R) OB Funding Adjustments (S) Projected Balance (T) Enter formula for Projected Balance (T) = YTD Available Balance (L) + Merged Pool Remaining Payout (M) + Additional Revenue (Q) - Remaining Expenditures (R) + OB Funding Adjustments (S)

Midyear Forecasting 2. Projecting Year-End Non-OB Fund Balances Enter Projections Additional Non-OB Revenue Designated income Gift pledge payments Remaining Expenditures and Transfers Out OB Funding Adjustments Projected Balance from Projecting Year-End OB Funding and Expenditures Review funding sources when projecting pullback of surplus Determine funding sources when projecting funding of deficit

Midyear Forecasting 2. Projecting Year-End Non-OB Fund Balances Analyze Results Where the Non-OB fund balance is in deficit, Is the deficit the result of overfunding your OB from this source? If so, what is the impact on OB PTAs when this funding source is reversed or partially reversed to resolve the deficit? Will all or a portion of the deficit be funded from your other Non-OB funds?

Midyear Forecasting Process Outline Project OB Funding & Expenditures Additional funding and outstanding commitments Remaining expenditures and transfers out Project Non-OB Fund Balances Additional Non-OB revenue OB funding adjustments Review Non-OB Multi-year Balances Add projected Non-OB balance Compare projected fund balances by Award

Midyear Forecasting 3. Reviewing Non-OB Multi-Year Fund Balance Trend Create Worksheet Using Browser Navigate to H&S Financial Dashboard in OBI Open Department Reserve Reports Select Reserves tab Enter Award Org Name and Fiscal Year Between 2014-2018 Export to and open with Excel Using Excel Add one column: 2019 (I) Enter formula for Grand Total = sum(i7:i28) * adjust depending on number of rows and if also adding subtotals by category

Midyear Forecasting 3. Reviewing Non-OB Multi-Year Fund Balance Trend Enter Projections By Award, add Projected Balance from Year-End Non-OB Fund Balance worksheet to the new column 2019 Analyze Results Compare projected 2019 fund balances by award, by category, and in total, to prior years balances

Midyear Forecasting 3. Reviewing Non-OB Multi-Year Fund Balance Trend Analyze Results

Midyear Forecasting Analyze Fund Balance Trend What Does It All Mean?