Increasing the Value of the Budgeting Process

10/7/2013 #bbcon 1

Increasing the Value of the Budgeting Process

10/7/2013 #bbcon 2

JENNY CHIU – VP FINANCE, LA YMCA

KATE MELVIN – DIR OF ACCOUNTING/ASST CONTROLLER,

INDIANA UNIVERSITY FOUNDATION

BRIAN WALKER – POWERPLAN/ADVANCED BUDGET

MANAGEMENT

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TWEET ABOUT YOUR SESSION

#BBCON

#FETRACK

# BDGFUN

@KT8IRD

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• Joined YMCA of Metropolitan Los Angeles

in January 2012 as Vice President of

Finance

• Prior to joining the Y, over 12+ years of

finance, accounting, operations and

management experience working in “for-

profit” sectors

• Graduated with B.S.E with concentration in

Finance and Accounting from the Wharton

School, University of Pennsylvania

GETTING TO KNOW YOUR PRESENTER,

JENNY CHIU. . .

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• OUR CAUSE

- The YMCA of Metropolitan Los Angeles is a volunteer-led non-profit

organization dedicated to strengthening communities through programs that

promote youth development, healthy living and social responsibility.

• OUR WIDE REACH

- The YMCA of Los Angeles has been making a positive impact in our

communities for over 130 years. Our 25 branches stretch across over 100

miles of Los Angeles County, from Antelope Valley to San Pedro. Our

membership community is 264,500 strong. Membership is open to all, with

financial assistance available to those who cannot afford it. This year, the LA

Y helped 1 out of 3 member families with financial assistance.

- We cannot do our work alone, extending our work with over 200 community

partners across the county, including schools, hospitals, clinics, cities and

other civic organizations.

YMCA OF METROPOLITAN LOS ANGELES

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BACKGROUND AND OVERVIEW:

WHO ARE WE & WHERE WE WERE

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• Association

- Non-profit organization in operation for over 130 years with annual

operating budget of $75 million

- 25 branches with a corporate support office

- Approximately 3,000 employees and 5,600 volunteers

- Historic culture of independent silo operations

• Accounting System

- Oracle based system for past 10 years until 2013

- General Ledger is now Financial Edge launched January 2013

- Budgeting Software is now Advanced Budget Management

(Powerplan) launched October 2012 (for budgeting 2013)

BACKGROUND

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BUDGET PROCESS

Association Budget

Summary: Branch

Summary: Departments

Specific Program Service

Research and Planning

• Bottom up (program level) budget approach which rolls into Association

- Oracle budget module: input monthly budget figures for revenue and

expense accounts on program level

• 25 branches each operating over 50 different programs (1,250 programs)

• Over 300 staff with fiscal management responsibilities

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300+ staff and 1,250+ programs:

• System limitation and lack of standardization

- All detailed budget work done outside of system on different

spreadsheets using different methodologies

• Time consuming

- Lots of preparation work required to gather historical and

researching historical information to build budgets

Association view:

• Association review process was challenging to fully understand all

the nuances of budget aside from comparison of figures to prior years

• Difficult to compare branch budgets across program areas

BUDGET CHALLENGES

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YEAR 2012 (YEAR OF CHANGE):

WHERE WE WANTED TO GO & WHAT WE DID

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• Operate as one Y

- Leverage knowledge and resources across Association to come up

with best practices for standardization

- Increase trust and transparency

• Empower and strengthen staff (program directors) in their fiscal

management skillset and help them connect their budget with our

cause

• Increase overview as an Association to identify bright spots and

opportunities to better serve our communities

OUR GOALS

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• Standardized “driver-based” revenue budget methodology for each

major program area to be utilized across Association

- Membership

- Childcare

- Other Programs

- Financial Development

• Collaborative implementation

- Project managed by Accounting dept with mindset of avoiding

TOP DOWN approach

- Involvement of key staff from various branches in “driver-based”

budget template development

- Involvement of TRAINING and IT depts

ROLLING OUT NEW APPROACH (NEW

SYSTEM)

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Membership:

• Group consisting of select branch Membership Directors along with

Accounting, Training and IT

BUDGET TEMPLATE DEVELOPMENT

1. Compiled and discussed various

budget models used across

Association

2. Consensus on proposal of

standardized model

3. IT supported in extracting data

where needed

4. Accounting created excel template

of model

5. Membership Directors tested and

provided feedback

6. Repeated steps 3-5 until satisfied

7. Training material created and

trainings led by staff

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BUDGET TEMPLATE DEVELOPMENT

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Outcomes:

• Developed robust driver-based membership model using drivers

that speak to staff (Ex: Enrollments, Cancellations, Total Units)

and also provides easy access to historical information

• Time intensive process but ultimately through this collaborative

approach, able to get buy-in and support of all Membership

Directors in using these drivers since it was developed by fellow

peers who understood their perspective

• Excel “driver-based” template

- Requires more complicated formulas

- Need to thoroughly test all formulas for accuracy

- Need to protect cells where formulas exist

- If updates made, difficult to ensure all staff are using the correct

template version

- Challenge for higher level overview / aggregation

BUDGET TEMPLATE DEVELOPMENT

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ADVANCED BUDGET MANAGEMENT (ABM)

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ADVANCED BUDGET MANAGEMENT (ABM)

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YEAR 2013:

WHERE WE ARE NOW

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Training & Development:

• Webinar trainings throughout the year based on relevancy

- Jan - Mar: Variance reporting – how to view performance and research &

document variances compared to budget and prior year

- Apr - Jun: Forecasting reiterating purpose and “driver-based” methodology

- Aug - Sep: Budgeting reiterating purpose and “driver-based” methodology

Feedback & Improvements:

• Refined reports to be more effective for branch use or association use

• Identified areas that need further training and clarification for new year

Top Management Support:

• Supportive of changes in reports and new processes

JANUARY – SEPTEMBER 2013

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Outcomes:

• Budget process

- Good foundation of standardized “driver-based” budget methodology in

creating more detailed, well thought out budgets by staff

- More efficient and transparent budget process and reporting with new

system ABM that provides easy access to information and aggregates

automatically

• Association overview

- All branches and corporate office speak same budget language and use

same tools

- Can better compare branches via reports with detail level to identify bright

spots and opportunities, ex. Membership Trends

• Culture

- Shift towards increased teamwork and open collaboration. Approach in

implementation which involved branch and corporate staff set example of

possibilities when we work together.

JANUARY – SEPTEMBER 2013

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Increasing the Value of the Budgeting Process

PRESENTED BY CATHERINE “KATE” MELVIN

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• Indiana University Foundation

• Director of Accounting/Assistant Controller

• Bloomington, Indiana

• Working Budget since 1999

• Personnel & Program Budget Focus

• Annual Operating Budget of $27 Million

• Approximately 200 Employees

• General Ledger – Financial Edge

(Blackbaud)

• Budgeting Software – Advanced Budget

Management (PowerPlan)

GETTING TO KNOW YOUR PRESENTER,

CATHERINE “KATE” MELVIN . . .

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EVOLUTION OF THE BUDGET PROCESS

Upgrading

Technology

Changing Approach

Moving Forward

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TECHNICAL SOLUTION

ROUND 1 – “GEE, I MISS THOSE SPREADSHEETS”

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UPDATING TECHNOLOGY

Manual Budget Build

Top down process

Changes added globally

Months of budget work

Challenges

Budget was manually compiled

Analysis

across organization

Reports – not useful or timely

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Solution – Budget Development Tool

Online access for managers

Personnel budgeting

Access to updated, actual results

Value Added

Process ownership

Updated results across organization

Tools to manage funds more effectively

UPDATING TECHNOLOGY

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CHANGING OUR APPROACH

ROUND 2 – “YOU WANT US TO DO WHAT?”

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CHANGING APPROACH

Budget Preparation

Forecast of actual expenditures

Build budget for next fiscal year

Accounting consultations

Assessment

Templates completed for management review

New requests and budget cuts

Conferences with senior management

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Challenges

Compressed timeline

New levels of scrutiny

Confidence in the process

Impact

Strategic decision making

Information exchange

Improved reporting and analysis

CHANGING APPROACH

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MOVING FORWARD

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What’s Next?

FY2015 changes

Process updates

Rolling forecasts/Zero based budget?

Take Me Home

Education

Engagement

Energy

MOVING FORWARD

10/7/2013 #bbcon 32

THANK YOU FOR YOUR INTEREST!

HAVE A GREAT DAY!!

Education

Engagement

Energy