Tackle Human Services fiscal challenges

July 14, 2017|Bridget Van Laanen

When you’re managing finances related to county governments, you need an in-depth understanding of the financial complexities within Human Services departments. Then take steps to effectively address these complexities.

Human Services departments have unique fiscal challenges that are incredibly complex. Staff within Human Services (including management, fiscal and program staff) must have a complete understanding of the funding mechanisms, program requirements and accounting expertise necessary to effectively manage and allocate costs to benefitting programs to maximize revenues.

This article is the first in a series that will highlight specific fiscal challenges faced by Human Services departments and opportunities to overcome them.

Breadth of Human Services programs contributes to complexity

One of the most notable but often unrecognized changes occurring during the last few decades is that the total number of separately funded programs has continued to increase. The average Human Services department has approximately 100 different programs, which are funded by local tax levies, state and federal grants, and various third-party revenues. Human Services departments that also oversee sub-departments, such as Aging, ADRC, Child Support or Public Health, may have closer to 150 programs.

Consider how you use spreadsheets

The number of programs has increased gradually over the years, yet many departments have continued to update and use spreadsheets to calculate and track their costs for budgeting, reporting and analysis purposes. Many times, these spreadsheets require tedious manual data entry, calculations and adjustments. The sheer number of programs, along with the inherent risk of errors embedded within these spreadsheets, have rendered them less effective and efficient than other solutions at many counties.

Although spreadsheets are still necessary for some very important tasks, they should not be used for summarizing and calculating state and federal grant claim amounts. Uniform Grant Guidance, CFR 200.302 - Financial Management, requires all federal awards expended to be identified in the accounts of the county's financial management system. The guidance further discusses the need to have “records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.”

Because most Human Services department funding in Wisconsin is a mix of state and federal funding, many state-issued grant program contracts piggyback on the federal guidance, which then applies to the majority—if not all—of a department’s programs. The most effective and efficient way to comply with these requirements is to segregate each program’s costs on the general ledger. This also allows you to provide more meaningful financial data to monitor and evaluate your operations.

An increased need for expertise

While this may sound reasonably simple and is likely the norm in other county departments, implementing this segregation is incredibly complicated because of the sheer number of programs, types of employees and costs, and the multiple and varied funding sources. Like other county departments, Human Services has direct, allocated and indirect costs, but is more likely to have multiple locations, contracted employees and multiple shared administrative costs pools that make allocating costs to over a hundred programs a nightmare. In addition, most department employees complete tasks for more than one program, and as a result, their direct and related allocated costs are eligible to be claimed under more than one program (which may or may not be allowed, depending on the programs).

Gathering the necessary information, deciding the program(s) under which costs are claimed, creating reasonable cost allocations and determining how to record these costs on the general ledger is an arduous process that can take on a life of its own. For this project to be successful, you may need to take steps to allocate staff time, obtain the technical knowledge and skills, and provide support to department fiscal staff. Then consider if you may need support to supplement your current resources.

For assistance with this kind of project, please contact Bridget Van Laanen at 920-455-4234 or any member of the Schenck Government & Not-for-profit team at 800-236-2246.

Bridget Van Laanen, CPA, is a human services specialist, who has over a decade of experience auditing and providing specialty services to counties.

Tags: Government