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Sport Budgeting 101

Sport Budgeting 101. Class Outline. Introduction Budget Terms Budgeting Processes Types of Accounts Comprehension/Monitoring Creating a budget Question and Answer. Learning Objectives. The participant will:

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Sport Budgeting 101

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  1. Sport Budgeting 101

  2. Class Outline • Introduction • Budget Terms • Budgeting Processes • Types of Accounts • Comprehension/Monitoring • Creating a budget • Question and Answer

  3. Learning Objectives The participant will: • Be able to understand basic budgeting terms by matching terms and definitions on a worksheet • Become more knowledgeable about analyzing budget reports by identifying mistakes and inconsistencies on a sample budget report • Gain a better understanding of the differences between an auxiliary account, an agency account, and a university account by correctly identifying the differences between the three • Gain greater comprehension of the budgeting process by creating a sample auxiliary budget.

  4. Budgets • Working Definition -a plan detailing how a department proposes to secure and utilize financial resources over a specified time period -a financial plan that serves as an estimate of future cost, revenues, or both • Of course…

  5. Another Definition… “Your budget is not really a budget, it’s more like a guideline for spending.” -Chief Budget Officer at mid-size, 4-year public institution in the Midwest.

  6. Purpose of Budgeting • Plan • It’s strategic (and required) • Keep spending in line • Fast track on revenue • Goal-oriented

  7. Some Things You Should (Probably) Know About Your Budget • How much do you know about your (department’s) budget and the institution’s spending parameters? • Let’s find out…

  8. Budget Terminology How conversant are you in budget Terminology? Let’s find out…

  9. Budgeting Terms Revenue Variance Deferred Income Expense Supplies Reserve Fund Balance Cost Center Expense Reimbursements Encumbrance Debt Retirement Revision Equipment • Appendix B

  10. Budget Development Processes • Incremental • Zero-based • Performance • Formula • “Seat-of-the pants”

  11. Types of Accounts • Unrestricted “E&G” (university only) • Auxiliary • Agency • Plant • Foundation

  12. Unrestricted “E & G” • Most departments • Funding comes from “E & G” • Bottom-line oriented • Little built-in flexibility • Positive fund balance? • Advantages

  13. Auxiliary • Few departments • Funding from multiple sources • Bottom-line less an issue • Much flexibility • Positive fund balance? • Advantages

  14. Agency Account • Controlled by a department/division • Overseeing agency serves as “bank” • Bottom-line oriented • Account is very flexible • Positive fund balance? • Advantages

  15. Plant Account (Fund) • Controlled by a department/division • Funding from multiple sources • Bottom-line oriented • Flexibility is variable • Positive fund balance? • Advantages

  16. Foundation • Controlled by department/division • Funding is through fund-raising • Bottom-line flexibility • Much flexibility with unrestricted funds • Positive fund balance? • Advantages

  17. Comprehension • Types of budgets/accounts quiz

  18. Comprehension (The Sequel) • Variance The difference between _________ amounts and _________ amounts. • Demonstration of Knowledge, Appendix E (it’s unlabeled)

  19. Budget Monitoring Checking budget reports for accuracy • Importance • Common Errors • Finding Mistakes

  20. Common Errors • Spreadsheet formula errors • Transposed data • Data entry errors

  21. Finding Mistakes • Good accountant or business manager • Watch for unusual monthly variances • Column total vs. Row totals in reports

  22. Locate Spreadsheet Formula Error FY 2004 Revenues Through May 31, 2004 Budgeted Actual YTD % of Total Fee Income $3,948,000 $3,948,000 100.0% Non-Fee Income Sales $ 224,447 $ 216,879 96.6% Membership $ 702,341 $ 710,993 101.2% Programming $ 257,790 $ 256,872 99.6% Total Non-fee Income $1,184,578 $1,184,744 100.0% Total Revenue $5,132,578 $5,132,744 98.7%

  23. Circle Possible Errors

  24. Corrected • 1,100 1,250 1,400 130 3,880 • 1,000 8,500 500 0 10,000 • 1,234 1,234 1,234 1,234 4,936 • 200 240 190 755 • 0 300 1,200 1,900 • 3,859 11,184 3,674 2,754 21,471

  25. Creating a Sample Auxiliary Budget • Take FY 2004, and create FY 2005 • Assumptions

  26. References • Kent State University Policy Register. (2004). • Carviters & Orwig. (1982). Evolution of modern budgeting. NACUBO Journal, 24-59.

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