1. KNOWING THE NUMBERS Analyzing Public Budgets

2.  Know what information you need to analyze budgets.  Understand what to look for, and what it all means.  Evaluate whether or not an employer has a budget problem. Workshop Objectives

3. What is a Budget? It is a political document. It is a financial planning tool. It is not etched in stone. We must do more than understand the budget – we must organize and build power to win our demands.

4. Why Analyze Budgets? To find ammunition for the bargaining table. To evaluate the employer’s finances if they plead poverty. To gain insights into the employer’s operations and plans. To let the employer know we are paying attention.

5. A Budget Analysis Can Make a Difference

6. Defining Budget Terms BUDGET TERMS Fiscal Year (FY) SurplusDeficit Fund Balance CAFR General Fund ExpendituresRevenues

7. Tools You Need for a Budget Analysis Comprehensive Audited Financial Report (CAFR) –Basic Financial Statement –Past Budget Information –Management’s Discussion and Analysis Year-to-Date Financial Reports, if available Enacted Current Year Budget Proposed Budget for Next Year, if available

8. How to Get These Tools Employer’s Budget Office Employer's Website You have to ask. Employers may not be too keen on sharing information about their financial situation.

9. Workshop Objectives  Know what information you need to analyze budgets  Understand what to look for, and what it all means  Evaluate whether or not an employer has a budget problem

10. Crunching The Numbers

11. Key Questions to Ask Does the employer have money in reserve? Does the employer have a surplus or a deficit? Are revenues growing? If so, by how much? How fast are expenditures growing and in what areas? How do budgeted amounts compare to actual spending and revenues?

12. Basic Financial Statement: Balance Sheet Examine revenues and expenditures. Assess whether there is a surplus or a deficit.

13. Surplus or Deficit? Revenues= $450,000 Expenditures=$456,000 $6,000 Deficit!

14. Basic Financial Statement: Fund Balance Reserved funds are off limits. Unreserved funds can be used for any purpose. Employers may attempt to “restrict” or “earmark” funds, but they are still unreserved!

15. Knowledge Check 1.A Comprehensive Audited Financial Report (CAFR) contains: o Basic financial information o Past budget information o Management’s discussion and analysis of the employer’s finances o All of the above 2.In most cases, AFSCME members are paid out of: o Reserved funds o Restricted funds o The General Fund 3.True or False: Public Employers do not have to provide audit reports and budget information. o True o False

16. Answers 1.Correct answer – all of the above CAFRs usually contain several sections but there are three that we are most interested in: oThe Basic Financial Information section contains revenues, expenditures, fund balances, deficits and surpluses among other things. oPast budget information usually includes the previous year’s budgeted and actual numbers which give us an idea of how accurate their budget was for that particular year. oAnd finally, the Management’s Discussion and Analysis gives valuable insight into how the employer viewed their own finances for the previous year. It identifies highlights in the general fund, summarizes divergences from the budget and makes predictions for the coming year’s budget. 2.Correct answer is General Fund oThe General Fund is very important for a budget analysis. Most employers have several funds that they account for, things like capital funds, debt service, sewer funds, etc. But we usually look at the general fund as it is the major operating fund and likely the fund that most of our members are paid out of. 3.Correct answer is false oThe most important thing to remember is that public employers must provide these documents. Although they may not want to let you in on their financial situation it is their obligation to do so. All you have to do is ask.

17. Workshop Objectives  Know what information you need to analyze budgets  Understand what to look for, and what it all means  Evaluate whether or not an employer has a budget problem

18. How is Your Employer’s Fiscal Health? Between 5-15% Below 5% Over 15%

19. Answering Budget Questions Q: Does the employer have money in reserve? A: UFB as % of Revenues Q: Does the employer have a surplus or a deficit? A: Basic Financial Statement Balance Sheet Q: Are revenues growing? If so by how much? A: Balance sheets for the past three years

20. Answering Budget Questions Q: How fast are expenditures growing and in what areas? A: Balance sheets for the past three years Q: How do budgeted items compare to actual items? A: Budget vs. Actual statements

21. Remember…. Budgets help us understand an employer's financial flexibility. The General Fund and the Unreserved Fund Balance are key indicators of the employer’s financial situation. You have the tools to analyze a public budget. We must do more than understand budgets – we must organize and build power to win our demands.

22. AFSCME Publication: “ Knowing the Numbers: A Guide to Budget Analysis ” http://www.afscme.org/publications/1661.cfm For More Information