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Objective:<br />
Review the 2014/15 to 2017/18 fiscal year<br />
forecasts and strategies to balance the multi-year<br />
budgets<br />
VBE should modify the budget process to account for anticipated<br />
Internally Appropriated Expenses prior to finalization of the<br />
Amended Budget to materially reduce the variance between the<br />
budget and actual results<br />
Section<br />
3.5<br />
The rest of this section outlines the full details on the analysis supporting the findings and<br />
recommendations.<br />
3.4 Budget process<br />
Management prepares and releases a series of financial documents that aid the Board and key<br />
stakeholders in assessing the anticipated financial performance of the school district. These financial<br />
documents include the following (each of which is described in greater detail below):<br />
►<br />
►<br />
►<br />
►<br />
Initial Preliminary Projections (IPP)<br />
Base Budget<br />
Preliminary Budget<br />
Amended Budget<br />
3.4.1 Budget compilation process and documents<br />
3.4.1.1 Initial preliminary projections (IPP)<br />
Management prepares and releases the Initial Preliminary Projections (IPP), (also referred to by the<br />
VBE as the “initial funding shortfall”), usually between October and December of the year prior to the<br />
start of the school year. The IPP are high-level estimates based on the probable and hypothetical<br />
assumptions as determined by Management. Management discloses that the projection should be<br />
considered as a range estimate rather than discrete numbers, and is subject to substantial amendment<br />
as the assumptions become more certain and decisions pertaining to future school years are<br />
crystallized.<br />
The IPP serve as the input module for the Base Budget and excludes recognition of prior year operating<br />
surpluses and current year budget priorities, which are mainly established as part of the Base Budget<br />
development process. As VBE develops the various projections and budgets (described below),<br />
different information becomes available and different assumptions are made. As illustrated below, we<br />
found the IPP to significantly overstate the operating deficit. During the past five years the difference<br />
between the IPP and Amended Budget was significant, with an operating deficit overstated in the range<br />
of $17.5M in SY2011/12 to $36.0M in SY2014/15.<br />
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