Developing a Basic Program Budget Harkmore Lee, CALCASA.

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Developing a Basic Program Budget Harkmore Lee, CALCASA

Learning Objectives 1) Understand the role of managers as good stewards of money (“Big Picture”) 2) Understand the reasons why we budget 3) Learn a process of developing a program budget 4) Practice formulating a budget (tied in with your homework from yesterday)

ACTUAL%BUDGETVARIANCEPRIOR YRACTUAL%BUDGETVARIANCEPRIOR YR Contributions: General \$ -0.00% \$ 11,000.00 \$ (11,000.00) \$ 5,179.26 \$ 11,516.030.31% \$ 124,500.00 \$(112,983.97) \$ 145,965.94 Restricted \$ 27,968.177.24% \$ 8,000.00 \$ 19,968.17 \$ 2,444.06 \$ 94,059.452.53% \$ 29,000.00 \$ 65,059.45 \$ 44,985.73 Grants \$ 3,690.000.95% \$ - \$ 3,690.00 \$ - \$ 38,727.661.04% \$ 33,750.00 \$ 4,977.66 \$ 14,903.00 Custodial \$ 2,350.000.61% \$ 1,100.00 \$ 1,250.00 \$ 2,620.00 \$ 10,750.000.29% \$ 11,000.00 \$ (250.00) \$ 12,200.00 Other \$ -0.00% \$ 200.00 \$ (200.00) \$ - 0.00% \$ 2,200.00 \$ (2,200.00) \$ - Special Events \$ -0.00% \$ 3,400.00 \$ (3,400.00) \$ 700.00 \$ 105,714.602.85% \$ 125,770.00 \$ (20,055.40) \$ 96,720.99 Membership Dues \$218,751.6656.61% \$209,468.00 \$ 9,283.66 \$208,683.16 \$2,177,928.3158.63% \$2,064,176.00 \$ 113,752.31 \$1,881,032.90 Program Service Fees \$139,474.7336.09% \$155,166.00 \$ (15,691.27) \$133,634.40 \$1,346,398.0136.25% \$1,546,386.00 \$(199,987.99) \$1,417,194.60 Gross income \$392,234.56101.51% \$388,334.00 \$ 3,900.56 \$353,260.88 \$3,785,094.06101.90% \$3,936,782.00 \$(151,687.94) \$3,613,003.16 Financial Assistance and Discounts \$ (16,449.04)-4.26% \$ (9,354.00) \$ (7,095.04) \$ (13,573.67) \$ (153,056.06)-4.12% \$ (89,641.00) \$ (63,415.06) \$ (101,443.70) Insufficient funds \$ 1,114.400.29% \$ (2,100.00) \$ 3,214.40 \$ 1,760.65 \$ (3,093.21)-0.08% \$ (21,000.00) \$ 17,906.79 \$ (9,383.68) Total operating income \$376,899.9297.54% \$376,880.00 \$ 19.92 \$341,447.86 \$3,628,944.7997.69% \$3,826,141.00 \$(197,196.21) \$3,502,175.78 Interest and Dividend income \$ 2,922.370.76% \$ 200.00 \$ 2,722.37 \$ 3,563.33 \$ 20,143.770.54% \$ 2,000.00 \$ 18,143.77 \$ 16,559.34 Unrealized Gain (loss) Investments \$ 6,415.661.66% \$ 1,200.00 \$ 5,215.66 \$ 14,335.47 \$ 36,278.260.98% \$ 12,000.00 \$ 24,278.26 \$ 35,686.99 Realized Gain (loss) Investments \$ -0.00% \$ - \$ 13,000.000.35% \$ - \$ 13,000.00 \$ - Other income \$ 178.380.05% \$ 1,500.00 \$ (1,321.62) \$ 205.72 \$ 16,280.690.44% \$ 15,000.00 \$ 1,280.69 \$ 25,531.99 Total income \$386,416.33100.00% \$379,780.00 \$ 6,636.33 \$359,552.38 \$3,714,647.51100.00% \$3,855,141.00 \$(140,493.49) \$3,579,954.10 Salaries \$178,964.4446.31% \$196,654.00 \$ 17,689.56 \$168,185.28 \$1,872,880.0450.42% \$1,985,040.00 \$ 112,159.96 \$1,729,567.21 Salaries - Capital Campaign \$ 871.130.23% \$ - \$ (871.13) \$ - \$ 3,450.010.09% \$ - \$ (3,450.01) \$ - Retirement \$ 4,686.251.21% \$ 6,252.00 \$ 1,565.75 \$ 4,854.17 \$ 53,396.071.44% \$ 60,180.00 \$ 6,783.93 \$ 45,666.46

FINANCE DIRECTOR

What about money? Money is a powerful. How it is managed and controlled can result in positive and negative ways. Must be good stewards of funds. Budget is tool to help us be good stewards and help us accomplish our objectives

Why do we budget? Resource allocation: Budget is a “spending plan,” and is principal mechanism for deciding priorities between programs. Financial control: One of the principal mechanisms for assuring resources are spent as decided by an agency’s Board of Directors.

Why do we budget? Management control: Use budget to help improve efficiency and effectiveness. Planning tool: Budget can be connected to the strategic plan. “The budget can be thought of as the continuous improvement plan translated into a performance plan.” Keuren (2002)

Why do we budget? Communications device: Budget can be used to communicate goals and objectives of an organization, and how resources are allocated to meet this objectives.

Steps to Developing a Program Budget: 1) Determine timeline to complete the program budget. 2) Identify program’s key objectives or target goals. 3) Determine the program’s outcomes and the strategies/tasks needed to achieve the outcomes 4) Identify the budget format your agency utilizes for its fiscal year. 5) Identify the expenses associated with these tasks and estimate the values over the course of the fiscal year. 6) Identify potential funds to cover these program costs and estimate the amounts available. 7) Seek preliminary approval by Executive Director and await final decision by Board of Directors. 8) YEA! Board approves. Be ready to execute and monitor program budget.

People you will work closely with during the budget development process: Executive Director Finance Director or Manager Other program managers or directors

Helpful tips during budgeting process: Have a very clear, written vision of what your program will look like and what it will accomplish. Familiar with key financial terms Know Microsoft Excel Do not be intimidated. Utilize the opportunity to be a good steward of money and help advocate and empower survivors and your program staff.

Step 1: Determine timeline to complete the program budget. Executive Director, Finance Director and the Board of Directors will determine when the Agency budget must be approved for the next fiscal year. Then calendar backwards 4 – 6 months and schedule key meetings and deadlines. Program budgets will feed

December/January Begin discussions regarding next fiscal year’s programs and identify key objectives, outcomes, and strategies. Budget development schedule sent to program managers. General budget guidelines & directions are given to program staff. Program staff begin work. May Staff completes final draft of budget Finance Committee reviews final version and approves it. Prepares for final Board approval. March First draft of agency budget is completed. February Program Managers continue to work on their individual program budgets. Meet with Finance staff to estimate revenues and expenses. First draft of program budgets are done. April Finance Committee review first budget draft and makes preliminary recommendations and changes. Send it back to staff. June Board of Directors reviews and approved final budget for upcoming fiscal year. July 1st Fiscal year begins. New agency budget in place. Programs can begin work for new fiscal year. Sample Budget Development Timeline For a July 1 st Fiscal Year (F)

Why a Budget Development Timeline or Calendar is important It improves planning and budget preparation by providing advance notice of when particular information is required and who is responsible for obtaining the information. It facilitates gathering opinions/data from key staff, board members, etc. by providing clear timeline on when decisions have to be made. Helps to assure that legal dates/requirements of the budget process are met. Facilitates informing staff about the process, and provides staff an opportunity to give input.

Step 2: Identify program’s key objectives or target goals. Now that you have developed your timeline, begin to identify key objectives of your new program. Utilize Logic Model Framework sheet Keep it simple: 2 -3 key objectives

Step 3: Determine the program’s outcomes and the strategies/tasks needed to achieve the outcomes Utilizing Logic Model Framework, identify the key outcomes wish to achieve for each objective. Outcomes must be measurable. Be specific and quantify (e.g. the Hotline Program will provide support to 10 survivors each month) Keep it simple: 2 -4 key measurable outcomes for each objective or target. Be realistic. Specifically identify the strategies and tasks need to achieve outcomes (e.g. Program staff will conduct outreach meetings with four different first responders in the area and provide information about the Hotline Program).

Step 4: Identify the budget format and approach your agency utilized during the fiscal year. Two common ones: 1) Line Item This is a more traditional method of developing a budget using the previous year's budget as a base and will then require a justification for any increase that is requested for the ensuing year.

Step 4: Identify the budget format and approach your agency utilized during the fiscal year. 2) Zero-based The zero based budget is a procedure and system based on a justification for all expenditures of an organization at the time the budget is formulated as it allows management to, in effect, start over and not be influenced by previous budgets. Example: If you have \$300 to budget, you might budget \$150 to food, \$100 to clothing, \$35 to toiletries, and \$15 to entertainment. You now have zero dollars left to later spend. If you decide you want \$25 for entertainment, then you had better pull \$10 from one of those other categories. It provides an effective means of tracking the effectiveness and impact of a particular expenditure and allows for adjustment based on the analysis.

Step 5: Identify the expenses associated with these tasks and estimate the values over the course of the fiscal year. Determine staffing needs and other program related costs (e.g. material costs, trainings, etc. Utilize samples Direct vs. Indirect Costs Reasonable, Allocable, and Allowable Costs

March 2006 Determining Chargeable Costs Ordinary and necessary Support operation Contribute to performance Tied to certain types of costs Proportional Allowability determined by specific Federal and State Guidelines & grant provisions “Reasonable” “Allocable” “Allowable”

Step 6: Identify potential funds to cover these program costs and estimate the amounts available. What funds are available to cover these costs (e.g. grants, in-kind donations, etc.) Work closely with Finance Department. They – along with Executive Director - help determine funding for your program.

Step 7: Seek preliminary approval by Executive Director and await final decision by Board of Directors. Make your case to your Executive Director, so she/he can make the case to the Board of Directors. If you did your homework, you can make a strong case. Ultimately, it’s the Executive Director and Board of Directors final decision to approve the entire operating budget of the agency.

Step 8: YEA! Board approves. Be ready to execute and monitor program budget. Be prepared to inform our entire program staff of program budget approval. Closely monitor your budget by working closely with the Finance Department. REMEMBER: Your program budget is a powerful tool which empowers you to be a good steward of funds and – ultimately – to help support the survivors in your community throughout the year.

QUESTIONS???

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