Fiscal PlanningBYP.N.VIJI, M.Sc(N)
LECTURER
StepsPlan Non-PlanZero BudgetingMid- term appraisalCapital & revenue
Limited role in determining resource allocation.Allowed only limited inputNursing as Non Income producing service
Overview of fiscal planning in nursing management
Nursing budgets generally account for the greatest share of the total expenses in healthcare institutions, participation in fiscal planning has become a fundamental and powerful tool for nursing
In 21st century….
Features of fiscal planning…
Most direct control or influence financial elements
Receive regular data reports
Reflects the philosophy, goals, and objectives of
the organization
Accountable for the financial results of the operating unit
Responsibility accounting
Active participation in unit budgeting
Characteristics ProactiveFlexibleClearly stated in measurable terms Short- and long-term planningInvolve as many people as feasible in the budgetary process Requires vision, creativity Thorough knowledge of the political, social, and economic forces that shape health care
Evaluation
Implementation
Develop a plan
Assess what needs to be covered
STEPS IN FISCAL PLANNING
Integrating Leadership Roles And Management Functions In Fiscal
Planning Understand fiscal terminologyAware of budgetary responsibilitiesMaintaining cost effective unitsensitivity to the organization’s
economic, social, and legislative climate is a high-level management function
Skillful in the monitoring aspects of budget control
Leadership skills……FlexibilityCreativityVision regarding future needsAnticipate budget constraintsAct proactivelyIdentifying alternativesCost containment does not jeopardize
patient safety
Components of expenditure
Plan Non- plan
Received funds
Plan funds Non plan funds Extra budgetaryresources
Zero based budgeting A method of budgeting in which all
expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.
Advantages of zero based
budgeting
Find costEffective
ways
Detects Inflated budgets Useful
for service departments
Efficient allocation
of resources
Increases Staff
motivation
EliminateWastefuloperation
Identifyopportunities
Identify mission
Increases Communication
&coordination
Disadvantages ofZero basedbudgeting
Difficult to define decision units
Forced to justify every detail
Necessary to train managers
Compressing may remove critically important details
Honesty of the managers must be reliable & uniform
Implementation of Zero based budgeting
The zero-based budgeting system puts the burden of proof on the manager, and demands that each manager justify the
entire budget in detail and prove why he or she should spend the organization's money in the
manner proposed. A "decision package“ must be developed by each manager for every project or activity, which includes an analysis of cost, purpose, alternative courses of action,
measures of performance, consequences of not performing the activity, and the benefits.
Each budget start with an assumed value
of 0.
Each budgeted item is started at last years level, and next period’s level is planned as an increment to that level
Zero based budgeting Incremental budgetingVs
A combination of zero-based
budgets with rolling budgets or
some other form of budgeting
Dysfunctional behavior in subordinatesSignificant levels of job related tensionsAdverse effects on peer and subordinate – superior relationship
Behavioral impacts of Zero
Based budgeting
Mid term appraisal MTA — which is an exercise carried out
during the middle of a Plan period to assess the direction in which the Plan is moving and to take corrective action wherever required — is slated to be much more than a review of how much money is going into various schemes and projects .
Capital budget Capital payments consist of capital
expenditure on acquisition of assets like land, buildings, machinery, equipment, as also investments in shares, etc., and loans and advances granted by Central Government to State and Union Territory Governments, Government companies, Corporations and other parties. Capital Budget also incorporates transactions in the Public Account.
Revenue budget The revenue budget consists of
revenue receipts of the government (revenues from tax and other sources) and the expenditure met from these revenues.
Hierarchy Of Budgets
Capital assets
vehiclesMachinery & production equipment
Store equipment & furnishing
Lab equipment
Office furniture & office equipment
Buildings
Large IT systems
Operating budget
Employee salaries
Utilities cost
Travel & training expenses
Telephone & internet services
Marketing communication
Outside consultant fees
India union budget• Revenue Budget: The revenue budget
primarily comprises Government revenue receipts like tax and expenditure met from the revenue. The tax revenues principally constitute yields of taxes and other duties imposed by the Government of India.
• Capital Budget: The capital budget primarily comprises capital receipts and payments.
Revenue Deficit Revenue deficit occurs when the actual
amount of expenditure and actual amount of received revenue do not tally with the anticipated expenditure and revenue figures
Recommendations and Advice by Experts
• precautionary measures to reduce revenue deficit level not less than 50% from the current level
• Recommends lowering the ratio of revenue deficit to fiscal deficit below 50 percent.