Department of Local Government Finance In Intr trod oduc ucti - PowerPoint PPT Presentation

Department of Local Government Finance In Intr trod oduc ucti tion on to o th the e New F w For orm m 4B 4B Budget Division Department of Local Government Finance March 18, 2020

Agen enda da For the 2021 budget season, the Department will be debuting an upgraded version of the Form 4B. This presentation is designed to provide an introduction and outline of the new format. 1. Purpose of Form 4B • Current Layout Overview 2. Introduction to the New Form 4B • Advantages of the New Form 4B • The New Form 4B – Layout 3. Best Practices 2

Pu Purpose rpose of of For orm m 4B 4B 3

For orm m 4B 4B – Fi Fina nanc ncia ial Sta tatem emen ent The Form 4B is the heart of the budgeting process. • Output put Input ut Data is s entered ered Data is carried ied The e proper perty ty tax onto o the “input” from om Form orm 4B to levies ies and d rates s forms rms (CYF YFW, , the e Form orm 3 and are calcula ulated ed. Debt bt Worksh shee eet, t, Form rm 4. Form orm 1, Form orm 2) is pul ulled ed into o Form orm 4B. 4B . • Form 4B summarizes the financial status of a fund. 4

Bu Budg dget F t For orms ms – Fl Flow w Char art Cur urrent rent Year r Form rm 1: Form rm 2 Debt bt Financia ancial l Bud udge get t (Misc. c. Worksh kshee eet Worksh kshee eet Es Estimat mate Reven enue) e) Form rm 4B: Bud udge get t Es Estimat mate, e, Financi ancial al Statem ement nt and Propos osed d Tax Rates es Form rm 4: Ordinan nance ce/ Form rm 3: Resolut solution ion Noti otice ce to Taxpayer ers 5 5

For orm m 4B 4B – Cur urren ent t Ga Gateway y La Layout out • The general format of the Form 4B dates back to the 1950’s. • The purpose of Form 4B is to aggregate 18 months of financial data from the other budget forms in order to calculate the property tax levy and tax rate to be advertised and adopted. Form 4B divided into 3 distinct sections: • 1. 1. Funds s Required uired For Expe penses nses to Dec. 31 Of Incoming ming Year: r: Expenses for 18 months. 2. Funds s On Hand d from m Sources es Other er Than Tax x Levy: Cash and revenues for 18 months. 3. Proposed posed Tax Rate e and nd Levy: Operating balance and property taxes. 6

For orm m 4B 4B – Cur urren ent t Ga Gateway y La Layout out Sourc rce 1 & 4A 4B 4B Expenses Ex enses CYFW FW for 18 CYFW FW Months nths CYFW FW CYFW FW CYFW FW Cash h and d Revenues venues for r 18 CYFW FW mon onth ths s excl cluding ding proper perty ty Form 2 taxes es for r the e follow lowing ing year Form rm 2 7

For orm m 4B 4B – Cur urren ent t Ga Gateway y La Layout out Op Operating rating Balance nce Total al N/A N/A A to Most Total al Reser served ved for DLGF Proper perty ty Tax Levy vy Proper perty ty Tax Rate Property perty Tax Cap to Sourc rce calcula ulate te the 1 and 4A “Net Budget” 8

For orm m 4B 4B – Cur urren ent t 178 782 L 2 Layout out The 4B is also included on the 1782 for each certified Expens nses es for fund. 18 Months ths The template is slightly Cash h and Revenues es for 18 months ths excluding ding prope pert rty y different than the version taxes s for the following wing year in Gateway, but the same 18 lines are present the same data for the fund. 9

The e New For orm m 4B 4B 10

The e New F w For orm m 4B 4B - Go Goal als With a template that dates back as far as the 4B, changing the form is not something that we considered lightly. As we were developing the new format, there were several goals that we wanted to accomplish: 1. Use of the same source material for the new template. 2. Present the revenue and expense information chronologically. 3. Elimination of gross & net budget to explain property tax caps. 4. Easily locatable and understandable operating balance. 5. Create a revenue first approach for proactive budgeting. 11

The e New F w For orm m 4B 4B - Ov Over ervie view • The New Form 4B still have three distinct sections: 1. Current Year: 1. Time Period: June 30, 2020 through December 31, 2020 2. The Current Year Section will be separated into: A. Cash Balance and Revenues B. Expenses 2. Budget Year 1. Time Period: January 1, 2021 to December 31, 2021 2. The Budget Year Section will be separated into: A. Revenues B. Expenses 3. Data Entry and Tax Rate Calculation 12

New F w For orm m 4B 4B – Cur urren rent t Yea ear Sec ecti tion on 13

The e New F w For orm m 4B 4B – Cur urren rent t Yea ear Sec ecti tion on The Current Year section of the new 4B covers the revenue and expenditure activity for the remainder of the calendar year. 14

The e New F w For orm m 4B 4B – Cur urren rent t Yea ear Sec ecti tion on New w 4B Sour urce ce Old 4B Line ne Nu Numb mber er Line ne Descripti ription on Material rial Line ne Nu Numb mber er Line 1 June 30 cash balance. CYFW Line 6 Line 2 Property taxes to be collected in December CYFW Line 7 15

The e New F w For orm m 4B 4B – Cur urren rent t Yea ear Sec ecti tion on New w 4B Sour urce ce Old 4B Line ne Nu Numb mber er Line ne Desc scription ription Material rial Line ne Nu Numbe mber r Line 3 Miscellaneous Revenue (other than property taxes) to be Form 2 Line 8a collected between June 30 and December 31 Line 4 Total Revenue for last six months of year N/A N/A (Line 1 + Line 2 + Line 3) 16

The e New F w For orm m 4B 4B – Cur urren rent t Yea ear Sec ecti tion on New 4B Source ce Old 4B Line Line Descr crip iptio tion Materi erial al Line Number mber Number mber Line 5 Remaining appropriation CYFW Line 2 Line 6 Additional Appropriations for the last half CYFW Line 3 Line 7 Totals the transfers/temp loans from the CYFW and the school transfers CYFW Line 4a entered on Form 4B 17

The e New F w For orm m 4B 4B – Cur urren rent t Yea ear Sec ecti tion on New 4B Source ce Old 4B Line Number mber Line Descr crip iptio tion Materi erial al Line Number mber Line 8 Total Expenses for last six months of year N/A N/A (Line 5 + Line 6 + Line 7) Line 9 Estimated Cash Balance on December 31 N/A N/A (Line 4 – Line 8) 18

The e New F w For orm m 4B 4B – Cur urren rent t Yea ear Rec ecap ap The Current Year Section calculates the estimated cash balance • for the current year in three steps: Begin with the 6/30 cash balance. • • Add revenues for the last 6 months. • Subtract expenses for the last 6 months. • This estimated ending cash balance field indicates how much funding will be available at the end of the year for cash flow purposes or to fund deficit spending. 19

The e New F w For orm m 4B 4B – Cur urren rent t Yea ear Sec ecti tion on How much did this unit reduce their cash balance between June 30 (Line 1) and Dec. 31 (Line 9)? 20

New F w For orm m 4B 4B – Bu Budg dget t Yea ear Sec ecti tion on 21

The e New F w For orm m 4B 4B – Bu Budg dget t Yea ear Sec ecti tion on The Budget Year Section covers the revenue and expenditure activity for January 1 to December 31 of the budget year. 22

The e New F w For orm m 4B 4B – Bu Budg dget t Yea ear Sec ecti tion on New w 4B Sour urce ce Old 4B Line ne Line ne Desc scription ription Material rial Line ne Nu Numbe mber Nu Numbe mber r Line 10 Reserved for the DLGF application of levy excess DLGF 15 Line 11 Property tax levy is entered in the data entry section. In Unit 16 Gateway, the Property Tax levy will still be able to be calculated using based on information about a target levy, operating balance, or rate. 23

The e New F w For orm m 4B 4B – Bu Budg dget t Yea ear Sec ecti tion on New 4B Source ce Old 4B Line Number mber Line Descr crip iptio tion Materi erial al Line Number mber Line 12 Tax cap impact is a negative adjustment to the revenue. N/A N/A Property tax will be treated as a reduction to revenue in the Budget Year, and not as an expense on the Form 1. The Department will begin phasing out language related to ‘gross’ and ‘net’ budget 24

The e New F w For orm m 4B 4B – Bu Budg dget t Yea ear Sec ecti tion on New w 4B Sour urce ce Old 4B Line ne Line ne Desc scription ription Material rial Line ne Nu Numb mber er Nu Numbe mber Line 13 Miscellaneous Revenue (other than Form 2 Line 8B property taxes) to be collected between January 1 and December 31 Line 14 Total Budget Year Revenue N/A N/A Line 10 + Line 11 + Line 12 + Line 13 25

The e New F w For orm m 4B 4B – Bu Budg dget t Yea ear Sec ecti tion on New 4B Source ce Old 4B Li Line Nu Number mber Li Line Description cription Materi erial Li Line Nu Number mber Line 15 Budget estimate Form 1 Line 1 Line 16 The combined totals of the transfers, temporary loans CYFW Line 1A from Lines 16a, 16b, and 16c. By separating the Line 4B amounts into individual lines, the Department can more accurately separate the total on Line 16. 26