Public Sector Perf Budgeting

Public Sector BudgetFormulation and Performance-Based Budgeting• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

Simon Langford - Financial Consultant

SAP Canada Public Services

GTEC 2011

October 18th-19th 2011

Budget Reforms and Mandates Are Pervasive

• The Government Performance and Results Act (GPRA) makes this a requirement by mandating that performance plans display, generally by program activity, the funding level being applied to achieve performance goals. Performance budgeting shifts the focus of attention from detailed items of expense - such as salaries and travel - to the allocation of resources based on program goals and measured results.

Budget Formulation Business Processes

Adopt & Loadto Control

Master Data Integration with ERP

Historical Data

Modeling &Forecasting

Personnel Expense Projections

Publishing &Reporting

CentralizedTarget Setting

Review &Revise

Supplementals & Decision Packages

DecentralizedBudget Requests

Government Budgeting Is Getting TougherFlat World dynamics create both challenges and opportunities

DiminishingRevenues

IncreasedDemands

IncreasedAccountability

IncreasedTransparency

More Stakeholders with Increasing Demandsvs. Diminishing Resources

Research

Energy

Democracy

Economic Aid& Development Public

Broadcasting Public Administration

Justice

ConstituentServices

Health

Tax RevenueAdmin

SocialServices

Education

PublicUtilities

Transportation

DefensePostal

Retail Services Public Security Services

BankingServices

Transparency is Becoming More Mandated

EX-NFLD. CABINET MINISTER JAILED IN SPENDING SCANDAL

A former high-ranking Newfoundland and Labrador cabinet minister has been sentenced to two years less a day in jailfor defrauding taxpayers of nearly $118,000.

Declining Revenues Amid Increasing Demands

O tt a w a r e f u s e s to r e s c u e A b i t i b i B o w a t e r 84Thousands of jobs at risk as one of country's oldest companiesand world's biggest newsprint producer files for bankruptcy protection

Dial 311 for Halton Government ServicesLear n mo r e abo ut 311

Dial 211 for information on community,health and social services or visit

TONY BOCK/TORONTO STAR

C R O M B I E BE G S C I T Y T O R E S CU E 39 P OO L S VANESSA LU

PAUL MOLONEY Apr. 17, 2009The tiny perfect mayor came to Toronto city hall to ask politicians to jump into the water.

PBF is Strategic in this EconomyBudgeting is at the Center of Everything

Efficiency: Drives productivity andreduces costs internally and externally

Insight: Fortifies decision-making and improves allocation of scarce publicresources

Flexibility: Gives customers flexibility toquickly adapt solution to meet evolving requirements

© SAP 2008 / Page 8

Evolution of Public Sector Budgetingand budget formulation technology

3PublicBudget

1Spreadsheets

Enter and Calculate rows and columns of numbers

2 Commercial Planning Tools

Display the numbers

Create simple charts and graphs

Build simple mathematical algorithms

Formulation

Get behind the numbers with fully integrated text

Link Budgets to Strategic and Performance Based Plans

Flexible and powerful Personnel Expenditure Projections

Integration to existing financial, hr, capital project, grant, and performance systems

All centralized and decentralized budget formulation processes accommodated in a single web-based system

BusinessNetwork

Older technologies and “build-it-yourself” toolkits have failed to meet the unique challenges of the modern public sector budgeting reality

© SAP 2008 / Page 9

PBF is Designed to Be ComprehensiveEnterprise Budgeting Solution

BudgetApproaches

Incremental BudgetingZero-Based BudgetingInitiative / Activity / Program BudgetingPerformance Based Budgeting

Highly FlexibleFunctional Configuration To Support Different Budget Approaches, Processes, Types and Outputs

BudgetProcesses

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n) s) LeLgeisgliastliavteivBe uBdugdegtientging(A(dAodpotipotnio)n) BuBdugdegt eEt xEexceuctuiotino:nS: pSepnednidnigngPlPanlasnAs lAloltlmotmenetn/ tA/ lAlolcloactiaotino,nB, udget/Position

CoBnutrdoglet/Position Control

BudgetTypes

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BudgetOutputs

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Reporting & Analytics

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brolilshed Budget Document

Key Foundations of SAP Public BudgetFormulation SolutionEase of Use & Conf i gur at i on

Salary and Benefits Projection

Text Handlingand Publishing

DecisionPackages

Flexible Forms& ProcessControls

Analytics andModeling

Unlimited Scenarios

Date-effectiveness on all compensation and benefits

Table-Driven projections

Integrated to position control / org management

Position/employee, job class, bargaining group forecasting

Distribution to budget Line Items, programs, performance metrics, etc.

Single point of entry for budget data and related text

Real-time reporting ofbudgets including text

Customer configurable Text Fields

Text intensiveReporting

Link performance toBudget Requests

Automated budgetbook publishing

Link budget/actual dollars to text, performance measures, etc.

Budget stages and controls

Security

Audit trails

Reorganizations

Decision cockpit for package ranking and decision support

Single point of entry

Expenditures

Revenues

Justification

Performance

Positions

Map to your different budget processes

Base

Packages

Capital

SpendingPlans

Other

Configured by budget people

Expenditure & Revenue Forecasting

Trend Analysis

Top-down budgeting, metric- driven budget allocation

Allocation andredistribution

Integration: SAP and Non-SAPHCM, G/L, Budget Control, Position Control, Performance Management

Public Budget Formulation Foundations

Text andPublishing

Personnel Expenditure Projection

DecisionPackages

Analysis &Reporting

DistributedBudgeting

Single point-of-entry for Budgets, Text Justification and Performance with automated budget book publishing

Highly configurable date-effective personnel cost projection supporting unlimited compensation plans

Flexible Forms with decision cockpit for package ranking and approval of requests

Expenditure and revenue forecasting and Modeling with trend analysis

Budget stages, audit trails and budget state controls with user- configurable budget form templates

Optimize Allocation of Public Resources

Provide policy-makers with the real-time fiscalimpact analysis to support decision-

making

Rank and prioritize funding requests

More Efficient Budget Process

Reduce time-consuming data manipulationand duplicate entry

Automate budget requests, reviews, adoption and publishing in one comprehensive budget formulation solution

Improve Organization Performance

Integrate funding requests with strategic planning and performance management

Greater Control

Control access, data collection and process flow with provide audit trails to all changes throughout the budget process

Solution Integration

Capital Projects / Grants

Payroll /Benefits

Planning & Performance Management

SAP Public Budget

Formulation

BudgetControl

Accounting(G/L)

PositionControl

SAP Public Budget FormulationSAP BPC

SAP Solutions:Manage the Complete Performance Lifecycle

Strategy Management

Are we doing the right things?

Cost Management

Do our expenditures align with ourstrategic vision?

Program Execution (ERP)

Analytics Public Budget Formulation

Have we allocated adequateresources?

Costs

Activities

Cost Objects

PBF Customers

City of San Diego

State of Louisiana

South Florida WMD

City of San Antonio

City of Toronto

University of Cincinnati

Texas State University

Los Angeles Community CollegeDistrict

Marin Water District

Fairfax County, VA

Fairfax County Schools, VA

State of South Carolina

Texas State University

Chicago Metropolitan WaterReclamation

Amtrak

United States Department ofAgriculture

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http://www.fsa.usda.gov/FSNmidas?area=home&subject=landing&topic=landing

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Complement Planning - HR/Payroll,Financial System, and PBF

HR/Payroll Public Budget Formulation

EmployeeMaster Data

Job, Pay Lev lSpecial Pays

Integration EmployeeMaster Data

Job, Pay Lev lSpecial Pays

PositionMaster Data

Benefit PlansBenefit Rates

PositionMaster Data

Benefit PlansBenefit Rates

Future Orientation

Financial System

Budgets Commitment Item/CE

Integration Salary and Benefit

Projections

Salary and Benefit Budget

© SAP 2008 / Page 17

PBF Calculation Order

Employee

Position

Job

Employee data for salaries and benefits

Position data is used for salaries and benefits ofVacant positions

Job data is used to calculate salaries and benefits for business cases and is used if data is not entered on employees or positions (e.g. benefits)

PBF calculates such that if the most granular level of data exists (Employee), that data is used; otherwise PBF looks to the next level (Position) followed by Job.

© SAP 2008 / Page 18

PBF Standard Data Cubes

Projection Cube• Salary projection scenario results

Budget Cube• Historical actuals and budgets

• Budget form requests– Amounts

– Positions

• Posted salary projection

Performance Measure Cube• Performance measure

actuals/planned/budget

Position, Employee and Benefits

Position

Budget and Financial Data

Service Performance Measures, Targets, Actuals

Business User Provides a FullyIntegrated Strategy-to-Execution Offering

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Thank you!

Simon Langford - Financial Consultant

SAP Canada Public Services

[email protected]

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