Budget Chapter 10 in Guthrie Dr. Len Elovitz. Objectives TLWDTAT: Articulate a standard budget cycle Evaluate the merits of various budget models

BudgetChapter 10 in Guthrie

Dr. Len Elovitz

Objectives TLWDTAT:

Articulate a standard budget cycle

Evaluate the merits of various budget models

Discuss the impact of the political process on the budget process

What’s a Budget

A plan for acquiring and spending financial resources

Revenue & Expenditures

Balance

Line Item Budget Groups appropriations under major headings

Utilizes a cart of accounts

Most school districts utilize Generally Accepted Accounting Principles (GAAP)

NJ accounting history Fund Accounting POB GAAP

What does a budget look like

Bloomfield Budget 2012-13

See other district budgets at http://www.state.nj.us/education/finance/fp/ufb/2012/01.html

Program Budget

BUDGET CODES

Generally Accepted Accounting Principles

GAA vitz

GAAP

BUDGET CODES

FUND

XX

11

CURRENT EXPENSE

PROGRAM/PROJECT

XXX

190

REGULAR

BUDGET CODES FUNCTION

XXX

100

INSTRUCTION

OBJECT

XXX

610

SUPPLIES

BUDGET CODES Location

XX

41

MIDDLE SCHOOL

Program Area

XX

28

SOCIAL STUDIES

BUDGET CODES

MIDDLE SCHOOL SOCIAL STUDIES SUPPLIES

11.190.100.610.41.28

Fund.Program.Function.Object.Location.Program Area

Uniform Chart of Accounts

Budgeting Basic Concepts: Assumptions, Power, and Methods

Peabody College Series. Copyright © Allyn & Bacon 2009

Budgeting aligns resources with purposes Forges a link between planning and evaluation Shows more than how monies will be spent Involves political activity of give and take

Basic Budget Concepts


An instrument of control The budget translates into who has the power

and control It reflects the organization’s objectives and

goals

The Budget Cycle Planning for the needs of the district

Seeking Adequate Funding

Receiving and spending funds

Evaluating the process and results

Planning

The translation of educational needs into a financial plan

A management function that involves systemic determination of future resource allocation

Organizational Perspectives on planning, budgeting, and evaluation


There are three contrasting perspectives on the budgetary process Rational: assumes stakeholders work in a

logical fashion to improve student outcomes Bureaucratic: standard patterns of behaviors

based on the rules and regulations of a “top-down” hierarchy

Political: budgeting is a power play among actors seeking organizational rewards

Budget Planning Approaches

Rational Assumptions: development of an educational plan and budget that logically improves student outcomes

Planners have an appropriate knowledge and authority to develop a plan centered on student outcomes as a primary criterion

Planners operate with technical efficiency, which requires that those involved strive to produce a maximum level of outcomes with financial, organizational, and legal constraints

Bureaucratic Assumptions: planning focuses on sustaining or increasing previous year’s spending base

School or school district’s educational goals and objectives are secondary

Planners support existing organizational processes - status quo is maintained from one year to the next

Political Assumptions: budgeting is bargaining among self-interested individuals and groups

The development of the education plan and budget is a political activity. Student outcomes are seldom considered.

Conflict is seen as normalPower players develop goalsPlans are subjective without formal measures

19Peabody College Series. Copyright © Allyn & Bacon

2009

Budget Planning Process First step is planning how to plan

Who will be involved What is the planning time frame

Planning may be centralized or decentralized, depending on leadership style, involvement of the BOE, relationships with the community and/or organizational history.

Budget and Power:Budget control is organizational control


Centralized Top down Superintendent and

key district personnel Schools given a

specific amount and must account for spending

All students treated the same in the budget

Decentralized Site-based budgeting Participatory

budgeting process Lump sum given to

schools according to site-developed plan

Attends to individual student

In actuality there exists a continuum from centralized to decentralized

Fundamental Budgeting Assumptions:annularity, comprehensiveness, balanceAnnularity Comprehensiveness Balance

An agreed upon span of time over which resource allocation and financial administration can occur

Process encompasses all revenues received by and monies spent by an organization regardless of source or purpose

Assumes explicit organizational knowledge of resources and obligations with the two matching

Remains constant Can keep track of a variety of funds and accounts in a variety of ways

Can borrow resources to construct long-lasting capacity

Usually set for a year, but not usually a calendar year

Tracks the input and output of resources to know where all monies are used

If what is spent exceeds what is received, the organization is out of control


Budgeting Methods


Each method provides structure for budget estimates and budget documents

Considerations for choosing a method Individual needs of the school or the district Legal restrictions Size of the district District financal condition School governance structure

Incremental Budgeting

Each budget line receives same increase or decrease

Gives little attention to how budget fits education plan

Incremental Budgeting at 4%

KEAN TOWNSHIP PUBLIC SCHOOLS

SCHOOL: 41 - MIDDLE

2008-2009 2009-2010 2010-2011 INCREASE

CODE EXPENDED BUDGETED PROPOSED (DECREASE)

FUND 11

Contracted Services 420 $106,908.17 107,300 111,592 4,292

Lease/Purchases 440 $23,336.84 29,000 30,160 1,160

Communication/Postage 530 $4,271.60 4,700 4,888 188

Travel/Conferences 580 $3,600.00 4,000 4,160 160

Supplies 610 $85,178.40 74,427 77,404 2,977

Textbooks 640 $20,673.97 22,508 23,408 900

Miscellaneous Expenses 890 $6,787.09 13,726 14,275 549

Sub-Total Fund 11 $250,756.07 255,661 265,887 10,226

FUND 12

Equipment, Instructional 731 $14,009.14 18,412 19,148 736

Equipment, Non-instructional 732 $6,321.36 7,324 7,617 293

Sub-Total Fund 12 $20,330.50 25,736 26,765 1,029

TOTAL $271,086.57 281,397 292,653 11,256

Line-Item Budgeting

Line-item is the basis for expenditure

Uses workload and inflationary increases with last year’s numbers


SCHOOL: 41 - MIDDLE

2008-2009 2009-2010 2010-2011 INCREASE


FUND 11


Lease/Purchases 440 $23,336.84 29,000 29,000 0



Supplies 610 $85,178.40 74,427 78,893 4,466

Textbooks 640 $20,673.97 22,508 23,858 1,350


Sub-Total Fund 11 $250,756.07 255,661 263,447 7,786

FUND 12

Equipment, Instructional 731 $14,009.14 18,412 19,148 736

0

Equipment, Non-instructional 732 $6,321.36 7,324 7,617 293

0

Sub-Total Fund 12 $20,330.50 25,736 26,765 1,029

0

0

TOTAL $271,086.57 281,397 290,213 8,816

Line Item Budgeting at 4% + 2% for Increased Enrollment

Formula Funding

Major functions budgeted centrally

Budget formula used for schools includes enrollment

Principal is not the decision maker


SCHOOL: 41 - MIDDLE

2008-2009 2009-2010 2010-2011 INCREASE


FUND 11


Lease/Purchases 440 $23,336.84 29,000 29,000 0



Supplies 610 $85,178.40 74,427 78,893 4,466

Textbooks 640 $20,673.97 22,508 23,858 1,350


Sub-Total Fund 11 $250,756.07 255,661 263,447 7,786

FUND 12

Equipment, Instructional 731 $14,009.14 18,412 16,571 (1,841)

0

Equipment, Non-instructional 732 $6,321.36 7,324 6,592 (732)

0

Sub-Total Fund 12 $20,330.50 25,736 23,162 (2,574)

0

0

TOTAL $271,086.57 281,397 286,610 5,213

Formula Budgeting at 4% + 2% for Increased Enrollment - 10% for Equipment

Programming, Planning & Budgeting Systems

Builds a budget to execute the educational plan

Budget reflects estimated costs of meeting objectives

Alternatives investigated

Last year’s numbers are only a guide

Proposed Budget

Zero-based Budgeting

Builds a budget with little regard to the previous year

No guarantees that an item continues from one year to the next

Forces careful consideration of priorities and goals

ZBB Steps

Define decision units – school, dept., etc. Develop decision packages to include:

Goals to be achieved Alternative means of meeting the goal Levels of effort needed to reach each alternative Cost & benefits of each alternative The technical & operational feasibility of each

alternative The consequences of not funding each alternative

Rank decision packets Approve and fund decision packets

School Based Budgeting

Decentralized process that involves various school personnel and the local community

School makes choices on most things except capital projects

Principal is given varying degrees of power over budget allocations

The most important aspect is power over staffing Total Student Load and NYC

Budgeting Methods

Incremental Budgeting

Line-Item Budgeting

Formula Funding

Programming, Planning & Budgeting Systems

Zero-based Budgeting

School Based Budgeting

Most common approach previous year builds budget

Commonly used with more specificity than incremental

Used by large districtsPerceived as fair and efficient

Builds a budget to execute the educational plan

Builds a budget with little regard to the previous year

Decentralized process that involves various school personnel and the local community

Each budget line receives same increase or decrease

Line-item proper basis for expenditure

Major functions budgeted centrally

Resource allocation is more complex

No guarantees that an item continues from one year to the next

More consistent with current research on productivity

Gives little attention to how budget fits ed. plan

Uses workload and inflationary increases with last year’s numbers

Budget formula used for schools includes enrollment

Budget reflects estimated costs of objectives, alternatives investigated

Forces careful consideration of priorities and goals

School makes choices on most things except capital projects

Focus on inputs Little attention to how budget fits ed plan

Principal is not the decision maker in this model

Used by large systems with capacity to use this method

Method is time consuming and expensive

Increased popularity with new accountability


Schroeder-Elovitz Method of Budgeting-schools1. Determine approximate increase percentage that

might fly2. Complete enrollment projections for each building

and each course at HS & MS3. Develop Building budget base for each building by

increasing this year’s base per student by the projected number of students

4. Provide principals with their base amounts and projected enrollments

5. Provide principals with program budget sheets6. Principals submit completed budget requests and

decision packets for expenditures beyond the base

7. Principals and other purchase center heads meet with supt, sba, asst. sups. To defend their budget requests (may bring dept heads)

8. Items inside the BBB are reviewed and approved

9. Decision packets are presented and approved or rejected

10. Approved appropriations are folded into the district proposed budget

Pesonnel1. Cost of guides are determined by moving

each staff member up a step on the appropriate guide.

2. If in negotiations, reasonable expected settlement is included

3. Known retirees are deducted and replaced with step 3 on the guide

4. Additions and RIF’s that are are determined at individual defenses are factored in

5. SBA determines benefit costs6. Appropriations are folded into the budget

Salaries Guides

Increments

Retirees Level Changes Don’t forget benefits

Physical Plant Needs Principals and facilities director submit project

requests to SBA SBA and facilities director tour the buildings

with principals SBA and facilities director prioritize list SBA and facilities director present list and

other building operation requests at budget defense

Appropriations are folded into the budget

Other CO administrators and supervisor present and defend program sheets

1. Transportation2. Curriculum & Instruction3. Technology4. Special Education5. Approved appropriations are folded into the

budget

Preliminary budget1. Developed from totaling the program sheets

into appropriate lines2. Presented to the Board per their request3. Modifications are made per Board direction4. Proposed budget presented at public hearing5. Board may modify again and approves for

presentation to NJDOE.6. Election

Budget Calendar

July – Fiscal year begins – closeout previous year Begin to administer current budget

October Enrollment projections Staff needs projection Facility needs projections

November Current budget revision Central office input on needs and changes Maintenance & operations requests

Budget Calendar

January Principal and Purchase center requests

February Compile budget draft Prioritize and adjust to reach desired level

March Present Budget to the BOE Revise as necessary

April Get state approval Budget hearing - Adoption Local approval or Appeal

Budget Calendar

May – Establish tax rate

July – Start again

Superintendents Role Evaluate economic climate - talk to the board Estimate other revenues Come up with an idea of what might fly in terms of percentage Translate into building budget base Consider enrollment projections Provide principals and other purchase center heads with their base

and budget planning forms Personnel Principal defense Compile budget Make adjustments Present to Board Get Board approval “sell” the budget Election/Board of School Estimate Pass/Fail

Selling the Budget Linden 2011-12 budget presentation

Cutting the Budget Determine the amount to be cut

Develop Decision Packets

Prioritize

Prepare list of cuts

Budget Reduction Methods similar to Budget development

Incremental – all lines reduced by same percentage Line Item – lines are reduced by determined

amounts that add up to reduction Formula – budget reductions based on formula

usually driven by enrollment PPBS – Objectives and their funding are delayed or

eliminated ZBB – Decision packets are prioritized into proposed

cuts SBB – Principal is given the amount and he/she

determines what will be cut

Line Budget Reduction

Summary


Although often considered as a concrete activity, budgeting is an area of school finance that is heavily influenced by the values and philosophies with which one approaches the endeavor.

Documents

Budget Chapter 10 in Guthrie Dr. Len Elovitz. Objectives TLWDTAT: Articulate a standard budget cycle Evaluate the merits of various budget models