Presented at the Revenue Management and Development School, March 2013

1. Revenue Management and Development
School
March 11, 2013
Government Finance Concepts
Tom O’Rourke, CPRP
Executive Director
Charleston County Park and Recreation Commission
Charleston, South Carolina
www.ccprc.com/orourke

2. Learning Outcome
I want to make sure you can sit in the room
and participate in a conversation pertaining
to any government financial issue with your
director, administrator, or elected official.

3. There is a job opening!
Recreation Director of the biggest city in your area– Salary
$175,000
The job opened because of financial improprieties.
The Department had a terrible reputation in the area of Credibility
Employee morale was at an all-time low
The Elected people did not have any trust for the position of Recreation Director
There was a vote to eliminate the department. The department was saved by a
vote of 5-4.
You figure you are the person to turn it
around because you went to Revenue
School. You decide to apply.

4. Good News and Bad News
You Got the Job
What do you do?

5. Grab the last Audit Report

6. Audit Components
• Examination by a third party – Financial Statement Audit
• Performed usually by independent CPA firms
• Must utilize standards in which to complete the audit – (GAAS)
Generally Accepted Accounting Standards

7. Financial Statement Audits
• Goal is to assure that those statements are fairly presented.
• Fairness is represented by adhering to a set of criteria known as
generally accepted accounting principles, (GAAP)
• The most important source of GAAP for state and local governments is
the Governmental Accounting Standards Board (GASB)

8. Audit is in your hand
• Read the Opinion Letter
• Statement of Net Assets – Usually right in the front.
Assets – Liabilities = Net Assets
• FOOTNOTES!
• Management Letter

9. `
You Have Examined the Audit
• You actually have some assets
• The organization is, for the most part, financially organized efficiently
• Your tax base seems to be in line with other Tax Districts
• You have been hit, a little, on some cash control issues and policies.
• There was a report stating that you don’t have adequate internal
financial policies.
• Your General Fund, fund balance is dangerously low
What do I look at next?

10. Budget!
Grab the budget book
Read the opening Budget Letter

11. Operating Budget
Capital Budget
Enterprise Budget

12. Operating Budget
• Budget Summaries, Broken Down – Line Items.
• Generally have to stay true to these guidelines.

13. Capital Budget
• Outstanding Debt, (Capital,) and Debt service tax collections
• Budget to construct things
• Usually Multi Year for everything that has a longer than normal life

14. Enterprise Budget
Business Accounts
Generally operate without the use of tax dollars.
Less Scrutiny
Fund Balance must take depreciation of assets into
account.

15. ENTERPRISE EXAMPLES

16. Enterprise Examples

17. You’ve examined the Budgets –
Here is what you discovered!
• There has been NO Capital spent in the Recreation Department
in the past 7 years. NONE!
• Over 90% of the Department Revenues are derived from Tax
Collection.
• A large disproportionate share of the budget is for Personnel
Costs.
• There is no operating money to offer anything new
• The opening budget letter talks about a public hearing where
the public has stated that they would like to see a new and
improved Recreation Agency.

18. BACKGROUND
FINDINGS!
• Very few people attending programs and activities
• Recreation Budget has not increased in 10 years
• Population is growing

19. Exercise

20. Your first meeting is with your 6
senior managers. You want to
articulate a game plan.
1. What needs to be addressed
2. What is your conceptual Plan

21. Taxes and Taxation
What it is and how it effects you.

22. Taxation
Who Pays
• Residential
•Commercial
•Agricultural
•Industrial

23. Determining the Rate of Taxation
Mill Levy or Millage Tax
• Establish the value of each taxable property – Assessed Value
• The assessment of all taxable properties are added together
• Budgets are established
• The governing body examines the total assessed values and equalizes them.
• A tax rate is established – (Millage Rate, Millage tax, Levy)

24. Taxing Example
A mil = 1/10th of 1 cent
So, for $1,000 of assessed property value, one mill would be equal to one dollar.

25. What can cause your taxes to increase
• The budgets increase and the value of the property stays the same
• The budgets and value of the individual’s property remain the same but the value
of the property in the entire government decreases.

26. Taxation and What you need to know.

27. TAXATION EXAMPLE
What percentage of the whole pie does the recreation department
get?
Total Taxable Income $10 Million in 2002 - $15 million in 2012
Total Rec. Dept. Budget $ 1 Million in 2002 - $1 million in 2012
You are getting 10 %
1
2

28. Taxation
• What is the total tax bill on a $200,000 home.
If a citizen pays $400.00 year in taxes, and the Recreation
Department gets 10% of the total budget, this person REALLY,
pays $40.00/year for Recreation Dept. Taxes.
NEXT – Know what that person is getting for their $40.00

29. Other Things
• Foundation
• TIF Districts

30. In Summary
Set aside time to understand and grasp the
FINANCIAL elements of the government in
which you work.

31. The End