Introduction In February 2013, the State of Oklahoma (State) Office of Management and Enterprise Services (OMES) engaged ISG Public Sector to provide business and technical consulting services for the assessment of implementing Oracle Hyperion Public Sector Planning and Budgeting. This report describes the State’s current processes for budget development and CAFR production, and then sets forth a proposed new business process using the Hyperion toolset. Background The of Oklahoma acquired the Oracle Hyperion software in May 2012 to replace PeopleSoft EPM and other tools, and to provide a modern more comprehensive toolset for strategy management, budget development and adjustment, and the Comprehensive Annual Financial Report (CAFR). For enterprise financial, human resources and budgeting administration, the State currently uses PeopleSoft Financials and Supply Chain Management (FSCM) version 8.9, PeopleSoft Human Capital Management (HCM) version 9.0 and PeopleSoft Enterprise Performance Management (EPM) version 8.8, in addition to a number of tools. When the Hyperion tool is fully implemented, the State plans to retire PeopleSoft EPM. The State has licensed the following Hyperion modules in preparation for this deployment: Hyperion Planning Plus Hyperion Public Sector Planning and Budgeting Hyperion Financial Management Plus Hyperion Financial Data Quality Management Hyperion Financial Data Quality Management Adapter Suite Hyperion Financial Data Quality Management Adapter for Financial Management Oracle Essbase Plus Oracle Scorecard and Strategy Management Current Strategy Management and Budgeting Overview The State of Oklahoma’s annual budget process, like most state governments, can be characterized as traditional incremental budgeting. Under this process, budgets are developed and reviewed in the context of the previous year’s budget with funding decision-making primarily focusing on the incremental change to the budget. Trial
Submission of Executive Budget to Legislature January to February Agency Submissions, Revenue Estimate, Agency Hearings The Executive budget and associated Historical budget are developed using Microsoft Office. Executive Budget, Historical Budget Governor/OMES Agencies Resubmit Agency Revenue Estimates February to March Agency No standard tool. Agencies submit via emails, etc. Guidance to OMES Agencies/OMES Equalization Board Revised Estimate February to March Economic data The equalization receives input from OSU economists and develops estimates internally using Forecast Pro, Excel and other tools. Revised approved for Legislative Appropriations & Governor’s Action Oklahoma Tax Commission, OMES, Equalization Board Legislative Reviews and Appropriation Recommendations (Including Veto Override) February to May Legislative Authority, Statutes, Equalization Board Guidance Microsoft Office is used to manage appropriation bills, language, etc. Appropriations Bills Legislature Governor’s Action on Appropriation Bills (Including Veto) February to May Governor’s Authority, Statutes, Equalization Board Guidance Microsoft Office is used to manage appropriation bills, language, etc. Signed Appropriations Bills Governor/OMES Equalization Board Meeting – Revenue & Expenditure Authority Adjusted to Incorporate Statute Changes June – July Statute Changes, Legislative and OMES analysis The equalization board certifies law changes that affect revenue. Certification of Balanced Budget Equalization Board By Line Developed May – July Signed Appropriation Bills OMES develops by line on appropriations using Excel Guidance an Reconciliation for Agency Budget Work Programs OMES
Agencies Submit Budget Work Programs May – July OMES guidance, Agency Authority PeopleSoft EPM is used to create budget work program. Additional documentation from agencies received outside EPM. Electronic Submission to OMES Agencies OMES review and approval of Agency Budget Work Programs May – July Appropriations, Equalization Board Guidance, Statutes, Governor’s Authority PeopleSoft EPM is used to review and approved agency work programs. Feed to PeopleSoft Budget Control OMES Input/Upload of “Limits” June Statutes and policy guidance on ceiling spending thresholds for specific purposes Limits are developed in Excel and uploaded to PeopleSoft EPM Compliance reporting for agency budget work program OMES Budget Adjustments July – June State policies, carryover requirements, operational needs. PeopleSoft EPM is used to make budget adjustments adjust PeopleSoft budget control levels Approved budget adjustments affected in PeopleSoft budget control. Agencies, OMES Currently Oklahoma does not have a comprehensive strategy management (strategic planning and performance management) process or tools. It is envisioned this will be addressed as part of this project. As previously noted, currently strategy management is limited to collecting agency goals, measures, etc. as part of the budget process. Additionally, some agencies have their own internal strategic planning and performance management processes and tools. Current Strategy Management and Budgeting Challenges Oklahoma’s current budgeting tools and processes produce many challenges as Oklahoma endeavors to improve its budgeting process and align toward a Budgeting for Results approach. These challenges include: Disparate Budgeting Applications – The current collection of disparate budgeting tools produces rampant inefficiencies with substantial and repeated data re-entry, manipulation,
CAFR GAAP Conversion July – cash August – AP Sept–Litigation Oct–Medicaid Completed agency workbooks Excel PeopleSoft journal entries in separate ledger (“Mod Accrual”) for modified accrual basis Comptroller CAFR Compilation September – October (Higher ed comes in Oct. 31) Mod Accrual ledger nVision, Word Reports for CAFR, narrative and text for CAFR Comptroller Preliminary Auditor Review October – November CAFR reports and narrative Excel, Word Audited reports and text State Auditor CAFR Book Assembly December (complete book by Dec. 20) Audited reports and text Word CAFR Report Book Comptroller Final Auditor Review December CAFR Report Book Word Final CAFR Report Book, GFOA Packet State Auditor Current CAFR Challenges Oklahoma’s current CAFR process and reporting toolset provide many challenges as the State attempts to improve a manual and labor intensive process with an efficient process that leads to a shorter production lead time and drastic reduction in man-hours. Some of these challenges include: Numerous data sources – The State’s current process requires the collection, compilation and organization of data from many sources such as PeopleSoft, GAAP conversion forms, agency’s audited financial statements, budget data, and statistical data; Data rekeyed into disparate collection systems – As data is gathered from various sources, much of the data is rekeyed into various systems such as PeopleSoft, Excel, and Word; and Manual assembly of the CAFR report – The assembly of the CAFR report is entirely a manual process, which requires the difficult task of merging large amounts of narrative text, financial data and statistical data into a single report format. Last minute updates often results in cascading changes throughout the report that require great effort to manually update, introducing increased risk of report errors.
In addition to supporting the operating budget development, Hyperion will support the State’s new Capital Budgeting process and current budget adjustments. Further, Hyperion will be configured to integrate each of these sub-processes into the operating budgeting including the ability for position budgeting. The new end-to-end integrated planning, budgeting, and managing for results process is detailed in table 2. Future Integrated Planning, Budgeting, Managing for Results Tools Hyperion: Planning, Public Sector Planning & Budgeting (PSPB) Personnel cost planning Composite Form Definitions (Estimated 12-15 composite forms) Base Budget (Estimated 2 composite forms) Funding Supplement/Adjustment Form (Estimated 1-2 decision packages) Capital (Estimated 2 composite forms, New and Existing) Central Forms (Estimated 4-5 composite forms: Revenue, By Line, Limits, Revenue) Budget Execution (Estimated 3-4 composite forms: Budget adjustment, monthly plan, plan update) Reporting and Ad Hoc Analysis (Estimated 40 medium to complex reports) Hyperion Financial Management - Publication of Executive Budget, Historical Budget, Capital Budget (New, to be defined) Hyperion Strategy Management - Strategic Planning and Performance Management Statewide strategic plan reports, and dashboards (process and related configurations to be defined as part of project) – Provide for development and update of hierarchical mission, goals, objectives, initiatives, programs, performance metrics and target, etc. Agency strategic plan reports, and dashboards (process and related configurations to be defined as part of project) – Provide for development and update of agency (or lower level) strategic plans which integrate to the statewide strategic plan for reporting. Agency performance management forms, reports and dashboards (process and related configurations to be defined as part of project) for collection actual
performance information (e.g. how many lane miles of resurfacing were performed in the prior month). Microsoft Office – Will continue to be used by legislature as they do not plan to access the system at this time. Additionally, tools may be used for offline analysis, etc. However, the use of Microsoft Office tools will be significantly reduced and replaced by online Hyperion tools. Statistical Applications – The Equalization will continue to use its own tools for statewide revenue estimates. However, this data will be entered or uploaded into Hyperion to support reporting and analysis once available. Note Hyperion Essbase and Financial Data Quality Management will be utilized for data storage and integration but not by end users. Future Integrated Planning, Budgeting, and Managing for Results of accounts In addition to the current PeopleSoft budgeting dimensions, it is anticipated that the State will need to adopt at least two additional dimensions, where applicable, in the PeopleSoft and Hyperion solutions: Program – This hierarchical dimension will be used to track cross-organizational and/or cross-funding programs. These programs will be parent to services provided by each program. Project – Currently there are multiple ways of tracking project funding in PeopleSoft. A common definition of project and related work breakdown structures will be essential to managing the State’s new Capital Budget process. Future Integrated Planning, Budgeting, Managing for Results Process Overview The following table provides an end-to-end overview of the future integrated process at the State of Oklahoma. Table 3: To Be Budgeting for Results End-to-End Process Budget Stage Dates Input Tool Output Owner
Development of Statewide Strategic Plan (Developed on five-year and updated in even years) Through July Public, Executive Leadership, Legislature Hyperion Strategy Management Statewide strategic plan Governor, OMES Agencies Objectives and Performance Measures Updated (Updated in Even Years) Through July Public, Governor, Legislature, Agency Leadership Hyperion Strategy Management Departmental strategic plans Agencies Agency Capital Budget Request May - July Guidance from DCAM/OMES Hyperion Planning & PSPB Agency Capital Plan Agencies, DCAM/OMES Capital Budget Review May – July Agency Submissions, Executive Policy Guidance, Available Funding Hyperion Planning & PSPB Capital Program Plan document DCAM/OMES Agency Internal Budget Request July - October OMES guidance Hyperion Planning & PSPB Data for into Budget Request System Agencies Agency Budget Request Submissions September – October Agency internal budgets Hyperion Planning & PSPB Agency Electronic Submission to OMES, Submissions to and Senate (report-only access to Hyperion) Agencies Multi-Year Trend Analysis October – November Historical data and policy Excel upload to Hyperion Planning & PSPB Statutory revenue and expenditure reporting OMES OMES Review & Hearings with Agencies – Legislature Also Conducts Hearings October – December Agency Submissions, Governor’s Policy Guidance, Statutory Compliance Hyperion Planning & PSPB Summary Sheets for Hearings, Executive Budget Book Content OMES year
Equalization Board Produces Revenue Estimate December Economic data, OSU economist input Econometric modeling (Forecast Pro or replacement), Hyperion Planning & PSPB (entered or uploaded to reflect Revenue estimate) Approved basis for Executive Budget (statutory limits based on this estimate) Oklahoma Tax Commission, OMES, Equalization Board Submission of Executive Budget to Legislature January to February Agency Submissions, Revenue Estimate, Agency Hearings Hyperion Planning & PSPB, Hyperion Financial Close Management Executive Budget, Historical Budget Governor/OMES Agencies Resubmit Agency Revenue Estimates January Agency Hyperion Planning & PSPB Submission to OMES Agencies/OMES Equalization Revised Estimate February Economic data, OSU economist input Econometric modeling tools (Forecast Pro or replacement), Hyperion Planning & PSPB (entered or uploaded to reflect Revenue estimate) Revised approved basis for Legislative Appropriations & Governor’s Action Oklahoma Tax Commission, OMES, Equalization Legislative Reviews and Appropriation Recommendations (Including Veto Override) February to May Legislative Authority, Statutes, Equalization Board Guidance Microsoft Office is used to manage appropriation bills, language, etc. Appropriations Bills Legislature Governor’s Action on Appropriation Bills (Including Veto) February to May Governor’s Authority, Statutes, Equalization Guidance Microsoft Office is used to manage appropriation language, etc. Signed Appropriations Governor/OMES Equalization Board Meeting – Revenue & Expenditure Authority Adjusted to Incorporate Statute Changes June – July Statute Changes, Legislative and OMES analysis The equalization certifies law changes that affect revenue. Certification of Balanced Budget Equalization Board Trial
By Line Developed June – July Signed Appropriation Bills Hyperion Planning & PSPB Guidance an Reconciliation for Agency Budget Work Programs OMES Agencies Submit Budget Work Programs May – July OMES guidance, Agency Authority Hyperion Planning & PSPB Electronic Submission to OMES Agencies OMES review and approval of Agency Budget Work Programs May – July Appropriations, Equalization Board Guidance, Statutes, Governor’s Authority Hyperion Planning & PSPB Feed to PeopleSoft Budget Control OMES Input/Upload of “Limits” June Statutes and policy guidance on ceiling spending thresholds for specific purposes Hyperion Planning & PSPB Compliance reporting for agency budget work program OMES Budget Adjustments July – June State policies, carryover requirements, operational needs. Hyperion Planning & PSPB Approved budget adjustments affected in PeopleSoft budget control. Agencies, OMES Monthly Forecasts and Monthly/ Quarterly Updates (to Year End) July – June Actual expenditure and revenues to date, business requirements Hyperion Planning & PSPB Updated forecasts Agencies, OMES Performance Management (actuals) July – June Various data sources holding supporting data Hyperion Strategy Management Monitor plan vs actual performance Agencies collect data, OMES reviews/reports Benefits to Integrated Planning, Budgeting, and Managing for Results The State’s new ‘to be’ budgeting process and tools will provide substantial benefits to the state over the current process and tools including: Efficiency: Data manipulation and reconciliation will be substantially reduced. Budget book publishing will be automated.
Future CAFR for Results Process Overview The following table provides an end-to-end overview of the future CAFR process at the State of Oklahoma. Table 4: To Be CAFR for Results End-to-End Process CAFR Stage Dates Input Tool Output Owner GAAP Packages 1st GAAP Package due to July 30th, 2nd GAAP Package August 13th, and 3rd GAAP Package October 8th PeopleSoft accounting data or data as appropriate. input forms created in Hyperion PSPB and available for agencies input Agencies input to forms, attached Excel, Word, which is saved in Essbase Agencies Combining Balance (CTB) August 30th PeopleSoft accounting data from “Actuals” ledger Cash basis data exported from PeopleSoft to Hyperion PSPB using Hyperion Financial Data Quality Management; “Cash Basis” data input into Essbase via Hyperion PSPB Comptroller Audited Agencies (mostly Component Units) Audit Deadline November 16th for Component Unit Financial Statements Audited agency annual financial reports in Excel, Word, and PDF Collected using Hyperion PSPB Forms. Component Unit Financial Statements generated using Hyperion Financial Reporting Agencies to forms, attached Excel, Word, which save in Essbase Component Unit Financial Statements Agencies State Comptroller Fund Statements Audit Deadline November 16th for Fund Financials Data stored in Essbase Generated Hyperion Financial Reporting Fund Statements – General Fund, Proprietary Funds, and Fiduciary Funds Comptroller Entity-Wide Statements Audit Deadline for December 1st for Statements Data stored in Essbase Hyperion Financial Reporting Statements stored in CAFR repository State Comptroller