Budgeting and Financial Management for Human Services: Structure and Oversight
This content discusses the structure of governing boards and the budgeting process for human services agencies, including the roles of various entities in financial management and oversight. It also delves into the Local Government Budget & Fiscal Control Act, the Annual Budget Ordinance, and the Vending Machine Rule in relation to budget obligations and expenditures.
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Budgeting and Financial Management for Human Services Kara A. Millonzi, Professor of Public Law and Government UNC-CH School of Government Winter 2018
Structure Governing Board Budget Fiscal Mgmt Adoption/(Oversight) County Health Department County Board of Health County Commissioners County Finance Officer County Commissioners County Commissioners County Finance Officer County Social Services Department Social Services Board County Commissioners (recommended by SS board) County Finance Officer County Commissioners County Commissioners County Finance Officer Consolidated Human Services Agency Consolidated Human Services Board County Commissioners (recommended by CHS board) County Finance Officer County Commissioners County Commissioners County Finance Officer District Health Department District Board District Board District Finance Officer Public Health Authority Authority Board Authority Board Authority Finance Officer Multi-county Area Authority for MH/DD/SA Authority Board Authority Board Authority Finance Officer Public Hospital Authority Authority Board Authority Board Authority Finance Officer
Local Government Budget & Fiscal Control Act Local Government Budget & Fiscal Control Act Cash Obligating & Disbursing Public Funds Accounting & Financial Reporting Management & Investments Budgeting Auditing
Annual Budget Ordinance Grant Ordinance Project Ordinance Single Fiscal Year Operating and Capital Expenses Appropriations by Department, Function, or Project Revenues by Major Source Life of the Grant/Project Projects Funded at Least in Part with Grant $ Only Operating and Capital Expenses Life of the Project Capital Projects Only Capital Expenses
Vending Machine Rule Vending Machine Rule [A]ll moneys received and expended by a local government or public authority should be included in the budget ordinance [or project ordinance]. . . No local government or public authority may expend any moneys, regardless of their source, except in accordance with a budget ordinance or project ordinance . Exceptions: Moneys accounted for intragovernmental service fund Moneys accounted for in a trust or agency fund
General Fund General Fund Budget by Department Budget by Function Social Services dept. $1m Health dept. $1.2m Parks & Rec dept. $2m Inspections dept. $.5m Fire dept. $3m Library dept. $4m Social Services Salaries/benefits $650,000 Supplies $ 25,000 Equipment $200,000 Utilities $ 5,000 Special projects $120,000 $1,000,000 Budget by Project New Social Services Software System Personnel $150,000 Contractor $80,000 Supplies $25,000 Equipment $72,000 Lease Agreement $44,000 Contingency $25,000 Total $396,000
Area Authority for MH/DD/SA receives an unexpected $500 grant to support its work with those in the community suffering with substance abuse issues. The authority s director deposits the money in the area authority s bank account and directs the finance officer to expend the funds for a program targeted to teens with substance abuse issues. Lawful?
A grateful senior citizen makes a $150 cash contribution to the health department. The citizen requests that the funds be used to purchase a new coffee machine for the department. The request is well documented. The department s accountant orders the coffee machine. The expenditure is well documented, with appropriate receipts. It is reported to the governing board at their next meeting. Lawful?
The FY 2017-18 budget ordinance includes an appropriation authorizing the health department to spend $100,000 on supplies. As of June 2018, the department has $12,000 remaining in this appropriation. It orders goods in late June to spend most of the remaining money. The goods do not arrive until July and payment is due in August 2018. May the department pay the bill based on the budgetary authorization in the FY 2017-18 budget ordinance?
Local Government Budget & Fiscal Control Act Local Government Budget & Fiscal Control Act Obligating & Disbursing Public Funds Budgeting Cash Accounting & Financial Reporting Auditing Management & Investments Receiving cash/property Ordering goods Entering into services contracts Payroll
Deputy Finance Officer (Appointed by Governing Board) County/ Municipal/ Public Authority Governing Board County / Municipal Manager Finance Officer Sets fiscal policy Manages bank accounts May perform preaudit process Executes budget Adopts / amends budget May amend budget within a fund, with explicit board approval Supervises deposits (audits decentralized $ collection) May perform disbursement process Selects banks Sets investment guidelines Supervises finance officer Performs preaudit process Receives all donations Performs disbursement process Oversees all financial management Manages investments Sets policies related to collecting, obligating, and disbursing $ and payroll processing
Years ago, a public health director opened a bank account at a local bank for the department. From time to time, department staff deposits funds from donations, fundraisers, and small grants into the account. The director keeps detailed records of the account and approves expenditures from the account to cover department expenses. Checks on the account are always co-signed by another department employee for internal control purposes. Lawful?
Don Don t Be Sheriff James t Be Sheriff James Sheriff received $2,665 check made out to Washington County Detention Sheriff deposited $2,000 in Sheriff s Office bank account and used rest for Sheriff s Office petty cash Money used for Sheriff Office purposes Jury found Sheriff guilty of EMBEZZLEMENT
The social services department receives a donation of 25 bank-issued gift cards, each for $100. What do you do? Used by department personnel? Given away? Treated as revenue Treated as personal property Governing board must amend budget to recognize revenue and authorize its expenditure Governing board must accept donation (or designate someone else to accept) Follow internal control procedures; keep cards in safe, under direction of finance officer Follow internal control procedures; keep cards in safe
G.S. 159 G.S. 159- -28 28 Budget Ordinance / Project Ordinance Determine costs of goods or services Order goods / execute contracts Goods arrive / services performed Preaudit process Disbursement process Pay for goods / services
Preaudit process Budget Ordinance / Project Ordinance Determine costs of goods or services Order goods / execute contracts Goods arrive / services performed Disbursement process Pay for goods / services 1. Ensure expenditures follow budget 2. Alert vendors/contractors that there is budgetary authority for expenditure
Order goods / execute contracts Budget Ordinance/ Project Ordinance Preaudit process Determine costs of goods or services Goods arrive / services performed Disbursement process Pay for goods / services
Preaudit Preaudit Process? Process? Before an obligation is incurred, finance officer (or deputy finance officer) must: 1. Check to see if there is an appropriation in budget ordinance or project ordinance for amount due this fiscal year 2. Check to see if sufficient funds remain in the appropriation to cover amount that will come due this fiscal year 3. Affix signed preaudit certificate to any writing that evidences contract/agreement/order*
Process triggered when: Process triggered when: 1. A local unit enters into contract or agreement (or places an order) for goods or services that are accounted for in the budget resolution; AND 2. the local unit is obligated to pay money by the terms of the contract/agreement/order; AND 3. the local unit anticipates paying at least some of the money in the current fiscal year (fiscal year in which the contract/agreement/order entered into).
Preaudit Preaudit Required? Required? Public health director order $500 in supplies in September (which is below the unit s PO threshold). Social services director issues PO to order program supplies in January. Order received and payment due in February. Public health director hire staff member in August. Clerk to area authority board uses area authority credit card to pay for snacks for board meeting in February. Social services director enters into multi-year service contract in May. First payment due in July.
*Exemptions from Step 3 *Exemptions from Step 3 (Certificate Requirement) (Certificate Requirement) Payroll expenditures, including all benefits for employees of the [local unit]. Electronic transactions (charge card, credit card, debit card, gas card, procurement card)
Step 1: Step 2: Step 3: No Yes Step 4: Encumber obligation Encumber obligation This instrument has been preaudited in the manner required by the School Budget and Fiscal Control Act. /s/ Finance Officer Step 5:
If No If No Preaudit Preaudit .. .. Contract/agreement/order is VOID and cannot be enforced http://images.sodahead.com/polls/000966519/penalty_answer_1_xlarge.jpeg Any individual or officer who enters into contract/agreement /order or causes funds to be disbursed without following statutory processes may be held personally liable for amounts committed or disbursed
Determine costs of goods or services Order goods / execute contracts Goods arrive / services performed Disbursement process Pay for goods / services Budget Resolution Preaudit process
Before Disbursed, Finance Officer (or Deputy) must: 1. Check to make sure amount is payable 2. Check to see if there is (still) an appropriation in budget ordinance or project ordinance for amount due 3. Check to see if sufficient funds remain in the appropriation to cover amount due 4. Affix signed disbursement certificate to check, draft or electronic payment*
Disbursement Certificate Disbursement Certificate Local Unit 1000 BlueSky Drive Anywhere, NC 27000 This disbursement has been approved as required by the Local Government Budget and Fiscal Control Act.
