European Organisation for the Safety of Air Navigation

ITEM 7

AGENCY BUSINESS PLANNING:Budget Process and Functional Budget

Presented by the SCF ChairmanKurt LYKSTOFT LARSEN, DGCA Denmark

PC/29

9 May 2008

REVISED BUDGETARY PROCESS

1. BACKGROUND

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On the proposal of the SCF the Provisional Council adopted at its 18th Session the Agency Budget Process. Key elements were the setting of annual budgetary variation parameters and the presentation of an agreed set of financial information, including the Functional Budget presentation.

The Functional Budget Development Project aims to develop a framework for the allocation and apportionment of the Agency Budget between the Strategic Functions performed by producing a set of “prototype” reports. 

After 5 years of application the PC/28 (November 2007) invited the SCF to review the Budget Process and align it more closely to the economic development of the European Aviation system.

The initial elements of the work on budgetary processes were presented to the SCG Task Force dealing with the prioritisation of the CND Work programme. An update on developments regarding the Agency budgetary processes will be presented to SCG/8 on 14 May 2008.

REVISED BUDGETARY PROCESS

2. SCF BUDGET PROCESS TASK FORCE

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On the request of PC/28 (November 2007) the Standing Committee on Finance established the Budget Process Task Force with the following mandate:

To review the present budgetary process; 

To investigate whether this mechanism can be further refined to more closely align the budget baseline with the economic development of the European aviation system;

To enhance the alignment of the business planning and the budget cycle;

To explore ways for enhanced transparency of the Agency resource allocation;

To liaise with other EUROCONTROL advisory bodies on similar issues; 

To present final recommendations to SCF/11 (October 2008) so as to enable the SCF to present detailed proposals to PC/30 (12-13 November 2008). 

Representatives of 13 Member States participate to the work of the Task Force, including Agency, ANSB representatives and SCG Vice-Chair.

Parameter methodology to be differentiated in order to more precisely establish the budget envelope for the different parts (Parts I & IX and other Parts).

Parameters to be established in function of the « nature of the activity » i.e. traffic or non-traffic related.

Financing part of the budget (loans, VAT, pensions) to be examined and clarified where appropriate.

Strategic Objectives and Priorities to link-up with Business Planning and Budget Process – multi-annual budget planning and approval to be considered.

Specific financing and charging for those EUROCONTROL services provided to limited user groups i.e. no longer financed through the General Budget (Part I).

Main objective of the new Budget Process: sustain the stability of the Cost-Base & Contributions (Cash-flow)

REVISED BUDGETARY PROCESS

3. SCF-BP: MAIN ISSUES ADDRESSED

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Topics to be addressed:

Basis of the Agency Strategy: Agency Business Plan and the ensuing business plans at Directorate level.

Budget establishment based on the business plans of the Directorates.

The resulting « Functional Budget » reflects the Business Plan, including agreed support expenditure and depicts the allocation to Core business.

REVISED BUDGETARY PROCESS

4. STRATEGY

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Programmes/Projects:

Centrally guided activity prioritisation process, including all Stakeholders, for each Strategic Pillar within the envelope fixed by the Provisional Council.

Determine resource planning horizon (3 or 5 years).

Resource allocation to the agreed Main Programmes (> 1 year).

Funding:

Commitments of Members States on budget appropriations > 1 year.

Approval for the project/programme.

REVISED BUDGETARY PROCESS

5. PROGRAMMING

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SCF Budget Process Task Force:

16 May 2008: Progress Report to SCF/10

7 October 2008: Final Report to SCF/11

17 October 2008: PCC update

12-13 November 2008: SCF Report to PC/30, approval new Budget Process

Note: Possible changes to the current Agency Budget Process will also require Commission approval

REVISED BUDGETARY PROCESS

6. PLANNING & REPORTING

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