Copyright © 1998 NLThomas
All Rights Reserved

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Cherokee Nation Memo:
Four Significant Recommendations for Cherokee
Nation's Financial and Cash Flow Situation

from Screech Owl
Friday, 2 January 1998

Copyright © 1998 Screech Owl
All Rights Reserved

CHEROKEE NATION MEMO

To: Executive Directors, Program Directors,
Program Managers
From: George Thomas, Chief of Staff
Subject: Principal Chief and Executive and
Finance Committee Recommendations

Date: December 2, 1997

On Thursday, November 13, 1997, the Principal Chief and the Executive and Finance Committee agreed to implement four significant "Recommendations for Cherokee Nation's Financial and Cash Flow Situation." The following is a discussion of those agreed to recommendations.

IT WAS AGREED:

(1) (TO) USE (THE) SELF GOVERNANCE RESERVE CONTINGENCY FUNDS ($1,000,000) FOR ALLOWABLE GENERAL FUND BUDGETED ITEMS.

(a) In the 1997 budget process the Council set aside $500,000 from the BIA Self Governance and $500,000 from IHS Self Governance as a reserve Contingency Fund. It was agree that in 1998 this $1,000,000 may be budgeted by programs that are now funded with General Fund dollars. However, only those programs that meet the criteria (allowable) for Self Governance may budget these funds. In effect, this will ease the demand on the General Fund by paying operational expenses through a source other than tribal funds. This action will have a substantial positive effect on tribal cash flow.

(b) The key word in Recommendation 1 is "allowable." The Administration and the Tribal Council under Self Governance Compacts have flexibility to redesign programs and services consistent with the purposes of Self Governance Compact to maximize services for constituents. in the 1998 Budget appropriation process, the Administration and the Council will utilize funds originally set aside as a Reserve Contingency in Fiscal Year 1995.

(c) It is anticipated that Executive Directors, Directors and Managers will not be asked to take any specific actions related to this recommendation. The only impact to a specific program would be that the funding source of revenues to cover certain program's expenditures for FY 1998 would be identified as coming from the Self Governance Reserve Contingency Fund.

(2) (TO) GET ACTUAL DOLLARS IDENTIFIED FOR THE 1998 BUDGET BY REVENUE SOURCE AND ENSURE BUDGETS ARE APPROPRIATED AROUND THOSE NUMBERS.

(a) The key word in this agreed upon recommendation is "actual." This requires a change in the FY 1998 Budget process. Expenditures that may be budgeted from tribally generated sources will be based on an analysis of the actual tribal revenues from the most recent year for which there is a complete record. In the past, all projected revenues from tribal sources have been budgeted. However, the 1998 budget will be based on what we are relatively "certain" of receiving - rather than on mere estimates _that are not actual and certain._ Examples of revenues that are considered certain for purposes of the 1998 budgeting process include the dividends from CNE, space rental and land leases.

(b) Executive Directors, Program Directors and Managers whose budget are derived from grants and contracts are charged with the responsibility to

(1) ensure the certainty of funding from the awarding agency,

(2) ensure that 1998 proposed budget are within the awarded amount _that is certain to be received_ and verify these funding amounts with the awarding agency.

(3) (THAT ALL DIRECTORS WILL CONTROL EXPENDITURES AND ENSURE ADHERENCE TO BUDGETS.

(a) As always, Executive Directors, Program Directors and Managers are charged with this responsibility. However, because of current funding and cash flow concerns, we must all exercise greater diligence and ensure that budgets are not exceeded. Expenditures in excess of the approved budget have an adverse impact on the Tribe's ability to meet its cash flow requirements. Therefore, Executive Directors, Program Managers and Directors are directed to closely monitor budget activities and ensure adherence to program budgets. Exceeding budgetary limits may result in administrative disciplinary action.

(b) Departmental and Accounting budget staffs are directed to closely monitor program activities to ensure compliance with approved budgets.

(4) (THAT) ALL DIRECTORS WILL CONTROL SPECIAL RUN REQUESTS AND HELP ENSURE CASH IS AVAILABLE FOR THEIR PROGRAMS IF A SPECIAL RUN IS REQUIRED.

(a) It is not uncommon for checks issued through a special run to exceed the number processed through the normal payment process. It is evident that many of these requests are unnecessary because the invoices dates indicate that they have simply not been processed in a timely manner. The handling cost of issuing a check through special run often will exceed the amount of the check requested. Therefore, all Executive Directors, Program Directors and Managers are directed to plan program expenditures in a manner that will minimize the number of _"special run requests"_ Additionally, all payment requests from programs should be planned to abide by the cut off schedules. This is necessary to ensure adequate time to perform draw down tasks and have cash available when the check is issued. Observing cut off schedules for processing payments for Accounts Payable and Payroll items increases staff efficiency of those involved in issuing payments. It is more cost effective to issue checks in batches rather than one (or a few) at a time.

(b) All Executive Directors, Program Directors and Managers are directed to work with Accounting to ensure cash is available from the funding sources prior to or consistent with the time of incurring large expenditures.