Budgeting Budgeting is both a planning and controlling tool
Plan • Specific statement of anticipated results • i.e. Expected revenue and probable expenses • specific time period • basis for future budget
Tool of Control • Accountability • based upon dept. organization and goals • comparison to delegation of authority • permits comparison of planned with actual performance thus enhancing control
Budget Period is Predetermined • Capital equipment or improvement budget is a long period 3, 5, 10 years; or trust funds - one time large amount • Supplies, expenses and personnel costs - immediate fiscal year • Fiscal year - accounting period
Fiscal Year • May or may not correspond to a calendar year • 12 months - 13 equal periods of 28 days each • July 1- June 30 - cycle reflects the teaching year • Semesters - teaching loads and part time needs
Approaches to Budgeting • Incremental - financial data of the past is increased by a given %. A flat increase over last years allotment. • personnel 5% • capital 7% • supplies 4%
Incremental • Straightforward • object-oriented • Significant changes, shifting priorities or pressing needs may be overlooked
Planning Programming Budget System (PPBS) • Program outputs are assessed and resource allocation & funding are directly related to program goals • Zero based • Not a one year cycle
Planning Programming Budget System (PPBS) • Goals are difficult to make quantifiable with a specific amount attached • Presume that all alternatives are known and attainable • Questions whether programs are viable
Budgetary Process • Capital equipment • Major equipment $1000 with life expectancy of more than 5 years • Justifications should include composite depreciation rates, operating costs, and life expectancy • Supplies and other expenses
Budgetary Process • Personnel • Largest expense category (education) 85% of total budget • Position code • Position description • Budgeted full-time equivalents (FTEs) • #of personnel(hours per position) divided by hours per full time work week
Budgetary Process • Direct Costs • Salaries, services, contracts, dues& subscriptions, equipment and travel • Indirect Costs • Charged to department on a formula basis calculated by square footage: utilities, maintenance, housekeeping
Budget Justification • Support or explanatory documentation • Retain competition, projected patient usage, compatibility with existing equipment, guaranteed service contracts, availability, durability, enhance patient care, attract more patients to facility….
Development of Fee Schedule • Time unit system • 15 minute increments • Patient visits • Modality based system • Cost of service • Reviewed and Approved
Controls • How much do we have to spend? • How do these relate to educational outcomes? • Generate income? Offset cost of purchase? • Benchmarking? • Free training provided? • Associated costs?