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Budgets

Budgets. Budget. Financial plan that outlines and forecasts the revenues and expenditures over a fiscal year. Some Terms. Fiscal year Allocated monies Expended monies Bu dget cycle Length of time required to prepare, administer & close out a single year budget. Budget Cycle.

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Budgets

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  1. Budgets

  2. Budget • Financial plan that outlines and forecasts the revenues and expenditures over a fiscal year

  3. Some Terms • Fiscal year • Allocated monies • Expended monies • Budget cycle • Length of time required to prepare, administer & close out a single year budget

  4. Budget Cycle Fiscal Year 2009 Fiscal Year 2010 Fiscal Year 2011 • National Park Service – 21 month cycle • 2010 is in progress • 2011 is under congress review • 2012 preparation is beginning

  5. Town of Queen Creek, AZ • November – January • Finance Dept examines revenues collected to date & projected revenues • Distribution of info, instructions and worksheets to depts. • February - April • Depts. prepare estimated budget expenditures & revenues. • The Finance Department compiles projections • The Budget Committee (including three Town Council members) reviews departmental budget estimates. • May - June • The Budget Committee reviews and revises dept budgets and prepares the tentative budget summary. • The Town Council reviews and adopts the tentative budget. • June - July • Tentative budget is published 1 a week for 2 consecutive weeks. • A public hearing held to discuss budget. • The Town Council convenes special meeting to adopt final budget. • The final budget is implemented

  6. Why do budgets?

  7. Why budget? • Prediction of resources • Prediction of a work schedule • Used to make decisions • Explains resource acquisition & expenditures to stakeholders • How goals are being met

  8. 2 types of budgets • Capital • Operating

  9. 2 types of budgets • Capital • Major purchases lasting 10+ years • Facilities, renovations, equipment • Developed independently of operating budgets • Covers 5-6 years (CIP) • Priorities are reviewed & shifted annually

  10. CIF = Capital Improvement Fund

  11. 2 types of budgets • Operating • Annual, routine activities • All revenues & expenditures for day to day operation

  12. Operating Budgets • Line item budgets • Object classification budgets • Program budgets • Performance budgets • Zero based budgets • Running budgets

  13. Line Item Budgets • Item • Specific item or object for which monies will need to be allocated • Postage, equipment • Line • Process of placing the items in a line so that all items appear on the budget sheet

  14. Line Item Budgets Process • List all revenues • Fees program 1 • Fees program 2 • Other sources • List all expenditures • Staff • Utilities • Office supplies • Determine costs of each item

  15. $1127/ $1130

  16. Line Item Budgets Advantages & Disadvantages?

  17. Line Item Budgets • Advantages • Flexibility • Add/delete items as needed • No coding system • Easy to administer • Doesn’t require ee to conform to a single system

  18. Line Item Budgets • Disadvantages • Easy to forget items, thus no $ allocated • Confusion in comparing between departments • Used most often in an informal situation

  19. Line Item Object Classification Budgets

  20. OCB • Most common form of budget, similar to line item budgets • Object - item for financial cost • Salaries, phone bills • Classification – uniform method of grouping the objects into certain categories & subcategories • Personnel, Contractual services, Commodities • See handout

  21. Example Classification Expenditure Classification by Object 2000: Services: Contractual 2100 Communication & Transportation 2110 Postage 2120 Telephone 2300 Printing, Binding, Advertising 2350 Advertising & Publication Notice Classifications Sub classifications Objects

  22. Advantages to OCB • Uniform & standardized • Categories are provided • Easy to set-up • Can compare line items across areas

  23. Disadvantages to OCB • May not be as flexible as needed • May not be able to find the category needed • Requires a lot of detailed cost estimates • Multiple items in a category • Repair to buildings • Advertising

  24. Making Purchases How do you make purchases??

  25. Making Purchases • Charge account • Petty cash • Procurement card • PO….

  26. Normal Amusements Address line 1 Address line 2 Purchase Order Date: _______________ PO #: 1234567 Vendor: ______________ Staff name: ___________ Requisition #: _________

  27. Budgets Program Performance

  28. Program & Performance Budgets • Based on a performance outcome model….

  29. Performance Outcome Model Inputs Programs Outputs Outcomes Resources dedicated to the programs and services Financial Human Technological Physical Programs, products & services offered Seniors in organized golf activity Creative art experience for parent & child City beautification Volume of work produced or the number of people served Number of senior golf leagues, # of sr. golfers served # of Parent/child art classes offered; # of art projects done together # of flowers planted Benefits received from participation in the program or service or from buying the product Social interaction with other seniors; improved BMI or health New appreciation for each other’s interests; exposure to different mediums; increased art appreciation Decreased vandalism in landscaped areas; increased property values Adapted from: Measuring Program Outcomes: A Practical Approach (1996)

  30. Program & Performance Budgets • Program budgets – outcomes based • Performance budget – outputs based • Performance/Program Budgets – outputs & outcomes based

  31. Program Budgets (Outcomes) • Focuses on outcomes (end results, g & o) rather than inputs (LIB, OCB) • Focuses on explaining why expenditures are required & tied to agency mission, goals & objectives • Emphasis on effectiveness rather than efficiency of spending • Not used at federal level • Increasing in public, NPOs, commercial

  32. Company: Backroads Bike Tours • Program Budget: New York Wine Country Bike Tour • Program Dates: October 2-7 • Program Length: 6 days • # of participants: 20 • Description: • This bike tour starts in Skaneateles, NY and tours the wine country in the Finger Lake area. Riders stay at unique inns and B & B’s along the 300 mile route. Trip fee includes 5 nights lodging, 10 meals, beverages and snacks, van support & expert & experienced guides.

  33. Goals: • 1. Gain appreciation of the wine country in the Finger Lakes area. • 2. Meet and interact with riders from all over the country. • 3. Develop a program that will help fight obesity • Objectives: • 1. Each rider will be given cue sheets describing the attractions and points of interest along the bike route each day • 2. The trip will be advertised nationally to attract a wide variety of riders. • 3. Riders will be given a training schedule to begin six months prior to the tour dates in order to achieve a needed level of physical fitness. Why use Program Budgeting???

  34. Advantages • Narrative budget description rather than cost only • Highlights value & uniqueness of the program • Forces in depth examination of the outcomes

  35. Disadvantages • Potential of “overselling” a program • Limited budget-cost detailed information • Requires the use of another budget system to determine costs

  36. Performance Budgets (Outputs) • Based on results oriented mgt • Used by federal government since 1997 • More visibility of outcomes to public • Improved decision making • Accountability • Efficiency • Budgeting is more closely tied to service provision

  37. Performance Budgets • Goal to allocate $$ to accomplish specific units of performance • Set performance indicators for each program • Workload outputs • Efficiency measures • Effectiveness measures….

  38. Performance Budgets • Workload outputs (program size or volume indicators) • Number of • parks managed • conferences held • programs offered • worker hours • teams in the league • season tickets sold

  39. Performance Budgets • Efficiency measures • Acres mowed per hour • Cost per person served • Hotel capacity rates • Effectiveness measures • How well the program achieves its goals or meets a need • % satisfaction on program evaluation

  40. Performance Budgets • Advantages • Accountability of expenditures • Difficult to hide money • Disadvantages • #’s driven • Not everything in rec is quantifiable

  41. Performance/Program Budgets (P/PB)

  42. P/PB Budgets • Newest form of budgeting • Focus on outputs & outcomes • Links objectives & end results • Shows relationship between inputs, outputs & outcomes

  43. Questions on types of budgets??

  44. Budget Prep Philosophies & Issues

  45. Budget Preparation Philosophies • Zero based budgeting • Open ended budget • Alternative budgets • Historical analysis • Fixed ceiling budget

  46. Zero Based Budgeting • Start with no previous budget • Examine effectiveness & value • Objectives • Outcomes • Develop & rank budget packages • Top x # of programs funded • Used more in the commercial sector

  47. ZBB- Advantages • All programs have equal opportunity for funding • More detailed info is generated to justify program • Objectives & priorities are examined regularly • Eliminates waste by eliminating programs not meeting objectives

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