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PURPOSE AND USE OF BUDGET PLANNING MODELS

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

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PURPOSE AND USE OF 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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