Closeout balances To: "DC - All District Chiefs" cc: "A - Division Chief and Staff", "AO - All Administrative Officers", "Janice M Biggar, Financial Analyst, Reston, VA" , "Michele L O'Meara, Financial Specialist, Reston, VA" , "Susan K Clark, Budget & Financial Specialist, Reston, VA" , "Richard W Cecchetti, Budget & Financial Specialist, Reston, VA" , "Amy C Cornwell, Accounting Technician, Reston, VA" Subject: Closeout balances Date: Wed, 23 Oct 1996 09:40:57 -0400 From: "Alice A Sabatini, Administrative Officer, Reston, VA" I have had a number of recent conversations with regional and district personnel expressing alarm over the Division's request that no cost center close with a negative balance unless prior notification and approval has been given by the Division. Many of the districts are stating that this has never been a requirement before and that they feel they have done the best job that they can with closing their cost centers. Why is the Division enforcing a requirement now during the adjustment period, when there is nothing in writing requiring that a cost center not close in the "red"? During the past several years, we have made a number of changes in our accounting practices and financial systems to allow cost centers a tremendous amount of control and flexibility over their funding and expenditures. These changes have also been accompanied by a large decrease in reimbursable income and an uncertain appropropriation environment. We recognize that all of these changes have converged to result in a year that has been most difficult to manage. This difficulty exists not only at the cost center level, but also at the division level. During September and October, cost centers reduced their unmatched and OFA funding by $5.5 million. This results in a loss of technical support income of $605 thousand and an increased bureau-level shortfall (also funded by technical support income) of about $250 thousand for a total loss of $855 thousand. This was $855 thousand that had already been allocated to Headquarters and Regional cost centers and most of it spent. We are struggling through this closeout adjustment period to cover this loss. When a cost center closes with a negative balance, they are assuming that another cost center will close with a positive one to offset them. We have agreed to make most of the funding reductions that cost centers have requested because we know how important that funding is to your FY 1997 programs and that there may be no legal basis for billing the customer. In order to do this, we must ask that each cost center reevaluate their negative balances and make adjustments to bring the balance in the positive if possible. If you have questions on how to do this or the legality of the changes you might need to make, please call either me, Kelly Bradley or your Regional Administrative Officer. We appreciate your cooperation and understanding. We need, now more than ever, to work as a team. We will issue guidance during fiscal year 1997 to clarify the cost center closing balance requirements and to reemphasize the timeframes for the completion of federal allocations and the submission of final funding totals.