1. Financial Management
RPTS 209

2. Financial Management includes all activities relating to the acquisition and disbursement of funds; budgeting (for a fiscal period or for an event or activity), and analysis and control of fiscal operations.

3. Budgets are usually seen as limits on funds available for operating an agency or a program—i.e., you must operate within the budget parameters.
Budgets may have discrete categories and transfer of funds from one to another may be prohibited.
Categories may include personnel, equipment, supplies, contracted services, utilities, etc.—each has an important role in the overall operation.

4. Budgets should be balanced—that is, the expenditures should not exceed the income or available funds, and timing of fund availability can impact planning for events. For example, if an event is to be funded through entrance fees, difficulties may be encountered on expenditures needed prior to the event. In such cases, advance ticket sales or sponsorships may be required.

5. Monitoring the Budget
Various instruments (reports) are used to monitor the budget over the designated time periods (annual, seasonal, quarterly, event duration, etc.)
These include the Balance Sheet, Income Statement, Budget and Cash Flow Statements, Project/Program Reports and Break-Even Analysis.

6. The Balance Sheet
The Balance Sheet--sometimes called the “bottom line”—displays assets, liabilities, and equity.
Assets are anything of value, including land, inventory, accounts receivable, and cash on hand. While such things as “good will” and “community support” are assets, they are not financial assets and do not appear on the balance sheet.
Liabilities include anything owed—unpaid mortgage or bond indebtedness, bills accrued but not yet paid (“Accounts Payable”), etc.
Equity represents the difference between the two—it is the value of the assets in excess of the liabilities.

7. On the balance sheet then, the Assets are equal to the Liabilities plus Equity. In the case of independent events (such as a community fair or festival) the balance sheet will be for the event rather than an agency.
Question: Can Equity be a negative figure?  If so, what are the implications?
Yes. The program will need to be subsidized if Equity is negative.

8. Consider the Balance Sheet for the Francisville July 4th Celebration shown on the next slide.
Land and utilities for the event are provided by the Francisville Parks & Recreation Department for a nominal fee of $1,500, payable after the event.
Payments due by vendors and/or sponsors amount to $7,531; unused supplies have a value of $256; and there is $5,244 in cash in a local bank account.
Equipment valued at $2,500 (principally a protected fireworks launching pad and secure storage container) will be retained for next year.
Accounts payable includes $1,600 owed to performers and $8,000 to the fireworks distributor.

9. Francisville July 4th Celebration Balance Sheet as of July 31, 2015
Assets
Liabilities
Current Assets
Current Liabilities
Cash and investments
$ 5,245
Accounts Payable
$ 9,600
Accounts receivable
$ 7,350
Municipal Fees
$ 1,500
Inventory $
Total Current Liabilities
$11,100
Total Current Assets
$12,850
Fixed Assets
Equipment
$ 2,500
Equity
$ 4,250
Total Assets
$15,350
Total Liabilities and Equity
Question: If all current liabilities are paid and if all accounts receivable are received, how much cash should be on hand to fund next year’s event ?
 $1,495

10. Income Statement
An Income Statement is another instrument used to show the profitability of a facility or program over a specified period of time.
This would include a listing of all major categories of Revenues and of Expenditures.
For the July 4th Celebration above, the Income Statement might look like this on the following slide.

11. Francisville July 4th Celebration Income Statement--July 1-31, 2015
Revenues
Sponsorships/Donations
$21,095
Vendor/Concessions Fees
$ 18,500
Rentals
$ 1,200
Total revenues
$40,795
Expenditures
Municipal Fees
$ 1,500
Fireworks
$22,500
Marketing
$ 2,500
Speaker & Demonstrator Fees
Cleanup/Maintenance
$ 2,000
Volunteer Incentives (T-shirts, drinks, etc.)
$ 2,800
Staffing
$ 6,500
Total Expenditures
$39,300

12. Break-Even Analysis
A Break-even Analysis is often used to determine whether or not to offer a program. Consider the following scenario:
A proposal is made to offer a craft course to citizens through the Francisville Park & Recreation Department (art, basket-weaving, or whatever). It will be offered in a room at the Francisville Recreation Center during normal operating hours. The rental of the center operations has been determined to be $30 per hour for the room—including utilities and maintenance. Assume that the course will last two hours per week for 6 weeks. There is then a fixed cost of $360 for the room for this program. Participants will each use approximately $10 in supplies over the 6 weeks (a variable cost), and the cost of the instructor will be billed at $18/hour ($216 total—also a fixed cost). Assume that the program, if offered, will require a minimum of 15 people and can hold no more than The fee charged is $50 per participant.
In addition to fixed and variable costs, you may have a variable fixed cost that changes incrementally with the numbers of participants. Buying in bulk could lower fixed costs per participant for supplies in larger groups, for example,

13. This is a chart of the Break-even analysis.
If you have fewer than 15 participants, you will operate at a loss. If you choose to offer the program, you will need to subsidize it from other funds.
 Question: For what reasons might you wish to subsidize the program—to offer it even though it loses funds? 
 To establish a new program; because it is seen as a vital part of your offerings; because it meets some other social good, …

14. Budget and Cash Flow Statements
To effectively manage operations, it is essential to have current information on the budget before the end of the fiscal period. A Budget Statement and a Clash Flow Statement are two tools that enable you to manage more effectively.
The Budget Statement is a periodic report which identifies the funds budgeted, the actual amounts received (for revenues) or spent (for expenditures), any commitments on unexpended funds, the remaining balance, and the percent spent or committed.

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23. Budgets and Budgeting
A budget is a plan for the accomplishment of programs related to objectives and goals within a defined time period.
A budget is used to control resources, for accountability, to provide a public measure of the entity’s performance, to evaluate the performance of managers, and to communicate plans to all managers within the organization.
It will forecast both revenues and expenditures and act as a tool to keep expenses under constraint.

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Class 1 82 95
Class 2 76 88
Class 3 84 90

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Task Description
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