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Maximizing Institutional Performance through Budget Planning Models

Discover the necessity and benefits of budget planning models. Learn key components and best practices to create an effective model for strategic financial management. Ensure transparency through regular sharing and updates. Good luck in building your planning model!

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Maximizing Institutional Performance through Budget Planning Models

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  1. PURPOSE AND USE OF BUDGET PLANNING MODELS Donna Kidd, Associate Vice President George Mason University dkidd1@gmu.edu Barbara Maddox, Director of Budget Operations George Mason University bmaddox@gmu.edu Southern Association for Institutional Research Annual Forum/VAMAP Budget Officers Track October 17, 2006

  2. WHY IS A BUDGET PLANNING MODEL NECESSARY? • WHAT IS ACHIEVED WITH A BUDGET PLANNING MODEL?

  3. WHY IS A BUDGET PLANNING MODEL NECESSARY? • Set priorities for the institution in pursuit of achieving goals • Identify highest priorities to be accomplished with available funds

  4. WHY IS A BUDGET PLANNING MODEL NECESSARY? • Identify and plan for future programmatic needs • Identify and plan for financial resources needed to support overall activity

  5. WHY IS A BUDGET PLANNING MODEL NECESSARY? • Identify and project financial resources available • Identify and incorporate enrollment, staff, facility, and financial data into overall plan

  6. WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL? • Document all assumptions clearly • Document assumptions for revenue and expenditures separately • Review and update assumptions on a regular basis

  7. WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL? • Begin with two years of actual data to build plan data for future years • Review and update data on a regular basis

  8. WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL? • Set a model that is flexible for easy changes for all key factors (salary increases, enrollment, etc.) • Set a model that is flexible for easy modeling and what-if’s

  9. WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL? • Provide summary data for presentation to executive administration • Provide back-up detail to address answers to specific questions as needed

  10. WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL? • Share the model on a regular basis with other audiences within the institution • One of the most important things is to share the model on a regular basis with Board of Visitors or appropriate governing body

  11. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Multi-Year (three to five years plan with two years actual) • Develop separate models for Educational & General and Auxiliary Enterprises activities

  12. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Sources of funds by major category • Uses of funds by major category

  13. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Total enrollment by year (fte enrollment) • Assumptions for in-state versus out-of-state enrollment

  14. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • FTE staff by category by year • Compensation increases by category by year

  15. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Base funding by year • Fixed cost increase requirements by year

  16. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Inflationary costs by year • Special programming needs by year

  17. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Funding by source of funds – state, tuition, other • Expense by major category – salaries, benefits, direct expenses

  18. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Institutional funding set-aside for financial aid per year • Projected tuition and fee rate increase per year

  19. WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING MODEL? • Revenue per fte student – state, tuition/ other by year • Expense per fte student – total by year

  20. A SAMPLE TEMPLATE FOR A BUDGET PLANNING MODEL

  21. IMPORTANT THINGS TO REMEMBER – • SHARE THE BUDGET PLANNING MODEL ON A REGULAR BASIS SO OTHERS UNDERSTAND WHAT THE ASSUMPTIONS ARE • ESPECIALLY IMPORTANT TO SHARE WITH GOVERNING BODY

  22. IMPORTANT THINGS TO REMEMBER – • SHARING THE MODEL ON A REGULAR BASIS ENSURES A SMOOTHER APPROVAL OF ANNUAL BUDGETS AS THERE ARE FEWER SURPRISES

  23. GOOD LUCK AND HAVE FUN AS YOU BUILD YOUR PLANNING MODEL! QUESTIONS?

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