CPPA Seminar 25 August 2011 “Budgeting in Tough Times” Paul McGirr Senior Regional Financial Advisor Ministry of Education Christchurch DDI

“Budgeting in Tough Times” Staffing & Operations Grant Funding Calculator: –currently showing 2011 $rates –default setting show figures as GST Inclusive but can show GST Exclusive figures (option at bottom) – ( see last page )

“Budgeting in Tough Times” Know your “cost structure”: –fixed v variable v semi fixed / variable –what are the trigger points that will make them change type –know your current leases, painting & mtce contracts etc expiry dates –what are you going to do re renewal of leases or if you wish to cancel some (can be an expensive option) –control signing up new leases

“Budgeting in Tough Times” Understand the funding streams and what expenditure you incur against each: –Operations Grant – revenue / expenditure –Trading ( uniforms / canteens etc ) - revenue / expenditure –Fundraising / PTA – revenue / expenditure –RTLB etc – revenue / expenditure (watch if you are a fund holder school) - Other ( e.g. International Students ) – revenue / expenditure

“Budgeting in Tough Times” 2012 Budget –on template show: (happy to to you) 2010 actuals 2011 –full year budget / YTD to ( say ) August / September / full Year Forecast 2012 –show funding streams and related expenditure –show basis of calculation especially roll number based costs –possible budget drafts »Business As Usual (BAU) – on various rolls »“a different way of running the school” – on various rolls –document why changes were made and $ impact –be careful rolling forward 2011 figures – »an artificial year re Operations Funding and “goodwill” received and how you spent it –make sure Budget Holders are involved in process – ownership –have you the reserves to fund a deficit budget (both operating and capital) 2013 and future years – you need to take a long term view

“Budgeting in Tough Times”

Capital Expenditure Budget: –definition of CAPEX – items over a certain $value ( $250, $500, $1k ) – reasonable? –detail the items you wish to purchase not just a bulk amount –show how you are going to fund each purchase (fundraising / PTA / reserves / Ops Grant / etc) –have a rule – “no income no spend” –report monthly and forecast year end result –make it a “Wish List” that becomes updated

“Budgeting in Tough Times” Delegated Financial Authorities ( DFA’s): –do they need to change (should Board confirm) –are the amounts shown GST inclusive / exclusive ( 15% difference in value ) –review what is delegated to others - $value and type of item –withdraw “order books” end of Term 3 –control purchasing in term 1 just in case budget cut required –check what is hiding behind those locked doors before buying –staff expense claims each monthly, not just at year end –segregation of duties / checks and balances –approved budget does not equal ability to spend – spending controlled by DFA (which may say spend up to budget – wise ?)

“Budgeting in Tough Times” Current Reserves – is it well understood and documented what they are held for: asset replacement painting obligations etc Carrying forward unspent budgets and commitments made from 2011 carried over to 2012 ?

“Budgeting in Tough Times” Monthly Accounting / Reporting: –are the results shown in your monthly accounts a surprise to you –provide reports to your budget holders – issue of ownership –was there a large difference between your December 2010 Monthly Management Accounts and your 2010 Annual Accounts why the difference (e.g. overused bank staffing / depreciation / cluster funds) is the same going to occur this year? be careful with comment “ don’t worry that is a year end adjustment ” – such tend to be only bad news adjustments

“Budgeting in Tough Times” “Some One Liners”: –know where every $ is spent –make good use of the “goodwill” offered and spend it wisely –have your printers set to print on both sides –use up what you have got before buying more –don’t be afraid to say “no” –be careful not to make variable costs, fixed –when suppliers are around, have other suppliers brochures on the table, make them sweat, sharpen their pencil –are those laptops really “old and useless” after three years of lease – could you re-lease at far cheaper rate –maximise use of bank staffing –“institutionise” the good changes you have made

“Budgeting in Tough Times” Summary: –have a good understanding of the current situation –have good budget template / process –have supporting documentation and track changes to budget versions –have an understanding of your monthly accounting process and reporting –ask for help (e.g. Accounting Service Provider, the Ministry)