Don't need to take notes on this. Good explanations in texts (public in Rapp & Poertner; private in Dropkin & Latouche). Public process 12-15 months Private process around 3-6 months [Program-planning & budgeting cycle handout]
Fiscal year is not the only record keeping period in an agency but it is the central one which governs annual financial operations such as annual reports, audits, etc. When organizations are lucky, the fiscal year corresponds to the agency's or programs' funding cycles. The governemental fiscal year in October 1- September 30. Agency fiscal years may be the same, although many follow the calendar year. Academic fiscal years are usually July 1-June 30.
Personnel expenses = salaries & fringe benefits Fringe benefits are either statutory: Social security (6.2%) Medicare (1.45%) FUTA (0.2% credit varies by state & has a salary cap of approx $7000) SUTA (0.4% salary cap same as fed) Workers comp or voluntary: Medical, dental insurance Pension, retirement plan Life insurance Accidental death & dismemberment Average fringe benefits rate 20-30%
Functional budgets are similar to line-item budgets. In functional budgets, line items are summarized by functional expense categories such as personnel, office space, supplies, travel, etc. In line item budgets, expense data for an entire agency or budget entity is summarized in a single line item.
This discussion of the budgeting process assumes 1) that board & management have agreed on the organization/program basics for the upcoming year (e.g., will all programs be continued; what guidelines will be given to staff to guide budgeting process, etc.) 2) that roles, responsibilities & timelines have been established for program & financial staff, as well as the board.
Provides better control over program revenues & expenses. Most likely necessary to receive funding. Consolidating program budgets builds organization-wide budget. Sometimes used interchangeably by really difference: Function: sets of activities (e.g., fundraising, training) Program: interrelated functions pertain to a designated set of objectives
Zero-based budgeting necessary for new programs for which no historical data is available. Also used to objectively assesses priorities & relevant costs for programs & allow for reallocation of resources in more effective & efficient ways. In ZBB all activities, costs, & benefits are analyzed in context of possible alternatives. (p. 25-27 in text) Incremental budgeting begins with previous year's budget or actual expenses & adjusts for inflation or other known items (previous year x Z%). Alternative activities, costs, & benefits are not considered. Previous year's activities & programs are assumed to be essential and continued.
Income often lags behind expenditures. Positive cash flow = cash surplus (invest) Negative cash flow = cash deficit (possible program interruption) [USE EXAMPLE IN CHPT 20 (DROPKIN & LATOUCHE) & BRAINSTORM HOW TO ADDRESS CASH SHORTFALLS]