CUBS Concerns

[aebrown]

I think it would be nice if MLS stopped writing budget checks if the balance went negative.

This is definitely not planned, and I think it would not only be unnecessary but could potentially cause problems. I don't think the Church has any problem at all with some wards having a temporary negative budget balance; this can certainly happen when a ward is acting quite appropriately.

Consider a ward that is having a youth conference that is their biggest expense of the year. The payment for the conference might be due in the first quarter. I've seen youth conferences that cost more than one fourth of a ward's annual budget all by themselves, and of course there will be other expenses in Q1 as well. In the most common budget allocation scenarios, such a ward will then have a negative balance sometime in Q1. It might get positive in April, or perhaps it won't get and stay positive until October.

If MLS were to prohibit such a ward from writing checks, it would be a huge problem. Just because there are additional controls possible under the new system, doesn't mean it is wise to put them in place. There's no reason to change from the current procedure, where the bishop monitors finances at the ward level, and the stake president monitors finances for all the units in the stake. They counsel together to discuss any issues that may arise, and take prudent actions to make corrections only when necessary.

[mlh78]

This reminds me of two more nice features about the switch that hopefully will help. First, the SFS will be delivered electronically to the stake in PDF format, I assume similar to the CUFS. This means it arrives quicker and directly to you, allowing you to keep on top of ward expenses.

Second, and this is the one I hope I heard correctly, ward expenses will automatically be entered as expenses in the stake MLS. I assume this means that each ward will automatically exist as a sub category in your budget, and disbursements will automatically show up. That way you can monitor the status of the budget real time. Again, if i heard correctly, the finances are processed every time a send/receive is done. So the stake MLS shows real-time ward budget status. I think I'm going to check in on this to make sure...

This is wonderful news! Let's hope it happens. I wonder if having ward budgets as sub categories in the Stake's MLS would allow the Stake to tinker with the wards' budget category (i.e., will the Stake be able to use the transfer function to move funds between the ward subaccounts and its own budget account?) . I can't imagine that would be the case.

[mlh78]

If wards are allocated budget funds as a percentage of their attendance, I can see it being a huge temptation for wards to "bump up" their attendance figures knowing it will get them more money.

I think most wards (at least in my stake) already believe - and to some extent correctly - that their attendance directly impacts their allocation, so I wouldn't expect them to act any differently. I would hope that if wards have temptations to bump up their attendance figures they do it the old fashioned way by doing their missionary work and fellowshipping inactive membeers.

[mlh78]

But if they knew the checks stopped - well, that's a different story. (Although one could always use the emergency check writing procedure....)

Speaking of emergency procedures, I am sure we would see a sharp increase in mysterious other category subaccounts.

[russellhltn]

I don't think the Church has any problem at all with some wards having a temporary negative budget balance; this can certainly happen when a ward is acting quite appropriately.

Consider a ward that is having a youth conference that is their biggest expense of the year. The payment for the conference might be due in the first quarter. I've seen youth conferences that cost more than one fourth of a ward's annual budget all by themselves, and of course there will be other expenses in Q1 as well. In the most common budget allocation scenarios, such a ward will then have a negative balance sometime in Q1. It might get positive in April, or perhaps it won't get and stay positive until October.

Correct me if I'm wrong, but in the current system, does anyone above the stake level know if a ward goes in the red? I didn't think anyone above the stake knew what the ward's allocation is. They would only know if the stake as a whole goes negative. In your experience, does it happen that the stake goes negative, or is that covered by the stake's carry over from a prior year?

Here's my point(s): The new system may expose "a problem" that the stake previously had the power to ignore. Is there any guarantee that the new system will allow a ward to carry a negative balance?

[aebrown]

Correct me if I'm wrong, but in the current system, does anyone above the stake level know if a ward goes in the red? I didn't think anyone above the stake knew what the ward's allocation is. They would only know if the stake as a whole goes negative.

That is correct. Since no one outside the stake know what each ward's allocation is, they can't possibly know if a ward is in the red.

In your experience, does it happen that the stake goes negative, or is that covered by the stake's carry over from a prior year?

I've never seen a negative stake balance in my experience as a financial clerk in three different stakes. Each had a fairly large carryover, which easily cushioned the stake against any temporary issues. Of course that leaves over 2800 stakes unaccounted for, and I can't speak for them. But I would imagine it is extremely rare for a stake to go negative overall.

Here's my point(s): The new system may expose "a problem" that the stake previously had the power to ignore. Is there any guarantee that the new system will allow a ward to carry a negative balance?

There is no "guarantee." But the people on the CUBS team that Crislapi and I spoke with on Wednesday made it quite clear that this particular policy will not change under CUBS -- higher authorities will not raise any red flags unless an entire stake is in a deficit. As long as the stake overall has a positive balance, the stake president deals with any negative balances in any of his units. The system will certainly not prohibit a ward from having a negative balance. It won't even prohibit a stake from having a negative balance, but it was mentioned that such an event is likely to receive action in the form of a letter from some higher authority.

Allowing wards to have a negative balance makes a lot of sense. I can envision any number of scenarios where there will be temporary deficits in a unit. Some might simply be a result of wards being slow to process funds transferred from the stake. In fact, my guess is that a huge portion of the wards in the US will have a temporary deficit in the week they move to CUBS. Almost every single ward that writes a check on the first Sunday that CUBS is active will have a deficit, since the stake won't get its funds until that day, and will then have to cut checks to each ward and deliver them to the wards; the wards will then have to deposit those checks before they have a single penny in their Budget category. That's not likely to happen on the first Sunday, but writing a budget check on that Sunday is fairly likely, which will then create a negative budget balance.

[crislapi]

This is wonderful news! Let's hope it happens. I wonder if having ward budgets as sub categories in the Stake's MLS would allow the Stake to tinker with the wards' budget category (i.e., will the Stake be able to use the transfer function to move funds between the ward subaccounts and its own budget account?) . I can't imagine that would be the case.

We did ask. The transfer function would not work. Moving funds would have to be done by check. I suspect this is because the funds don't reside in the stake anymore, and that the stake MLS has no capability of entering financial transactions into the ward's MLS.

Correct me if I'm wrong, but in the current system, does anyone above the stake level know if a ward goes in the red? I didn't think anyone above the stake knew what the ward's allocation is. They would only know if the stake as a whole goes negative. In your experience, does it happen that the stake goes negative, or is that covered by the stake's carry over from a prior year?

Here's my point(s): The new system may expose "a problem" that the stake previously had the power to ignore. Is there any guarantee that the new system will allow a ward to carry a negative balance?

In the current system, no one outside the stake knows what the ward balances are. The stake has to monitor that. In the new system, we were told local negative balances are the stake's problem to deal with and letters would be sent only if the stake as a whole goes negative.

In my experience, it does happen that a stake goes negative. I became a Stake Clerk shortly after my stake as a whole had overspent our entire budget - OTA, tax return, carryover/surpluses, and the 4 quarterly disbursements - by about $13,000. We had a negative balance at the end of the year. That prompted a strongly worded letter to the stake president. That negative was our starting balance for the new year and most of the first disbursement was spent on putting the stake back in the black.

At this point, the only guarantee I can offer is what we were told in the meeting but yes, the new system will allow wards to carry negative balances.

[marianomarini]

We did ask. The transfer function would not work. Moving funds would have to be done by check.

Maybe we are moving over a new financial system as well?
Here in Italy the Church is setting up a procedure to tranfer money, and pay rembursements, through bank transfer.
So I'm thinkg that this procedure could be spread out to the world:).
Imagine. Italy as new financial procedures pioneer. A realy miracle from our (Italian) point of view!:D

[aebrown]

Maybe we are moving over a new financial system as well?

Yes, that is true. The US and Canada have been on one back-end financial system called CFAR, and the rest of the world on a system called LURBS. One of the goals of the CUBS project is to get the whole world on the same modern financial system.

The CUBS system has to accommodate a wide range of differences in policies and procedures for various countries' regulations and various banking systems. But once the project is completed, every unit in the Church will be using the same back-end financial system.

[lajackson]

So I'm thinking that this procedure could be spread out to the world:).
Imagine. Italy as new financial procedures pioneer. A real miracle from our (Italian) point of view!:D

Well, the very program we are discussing, MLS, originated outside of the US and Canada. After it was tested and functioning internationally, it was imported into North America.