Who is responsible for budget preparation

For example, schools that have authority over staffing decisions may be allocated funds for staff costs using the site-based budgeting approach. In contrast, school districts that make staffing decisions centrally may not allocate funds to the individual school site for staff costs. The main advantage of site-based budgeting is that those who best understand the needs of a particular organization are empowered to make resource allocation decisions.

This decentralization of budgetary authority may also increase local accountability. Another potential advantage of site-based budgeting is the increased level of participation of the public and staff in budget development. Many site-based budgeting systems create committees composed of staff and community members to determine budgetary allocations.

These committees give members a voice from the inception of the budget process, rather than merely when the budget is presented for public review and approval. Although site-based budgeting may provide substantial benefits, it also has limitations. First, organizations with limited resources may not be capable of granting a meaningful level of site-based budgetary authority.

Even if an organization does have discretionary resources, it may be difficult to determine the areas of the budget for which local decisionmakers should be held accountable. Finally, site-based budgeting may be burdensome to some local managers, may increase conflict between staff or departments, or may limit the organization's ability to ensure quality and sufficiency in the services it provides. These problems can be avoided somewhat through the careful design of site-based budgeting guidelines and through training for new budget stakeholders.

Outcome-Focused Budgeting Consistent with the evaluation objective, government budgeting is becoming increasingly outcome-focused. Fiscal austerity, coupled with intense competition for governmental resources, has precipitated an effort to ensure more effective use of resources at all levels of government.

Outcome-focused budgeting is the practice of linking the allocation of resources to the production of outcomes.

The objective is to allocate government's resources to those service providers or programs that use them most effectively. Outcome-focused budgeting is closely linked to the planning process in governments.

For a government entity to focus on outcomes, goals and objectives must be identified and tied to budget allocations for the achievement of those objectives. This premise argues that mission-driven synonymous with outcome-focused governments are superior to those that are rule-driven because they are more efficient, are more effective in producing desired results, are more innovative, are more flexible, and have higher employee morale Osborne and Gaebler In the context of increased governmental scrutiny of governmental costs, including schools, this model may receive more emphasis in the future.

The development of annual budgets is part of a continuing planning process. The advent of site-based decisionmaking in some states has increased the integration of planning and budgeting at the school level; however, state laws generally allow considerable district autonomy in budget preparation. The organizational structure of a district, including the size and complexity of its administration and the degree of centralization, will affect the budgetary approach, the budget development process, and the final budget document.

Beyond the requirements for federal and state programs, the budget preparation process and related responsibilities will largely be determined by the local school board and superintendent. The following chapter contains information related to the significant aspects, phases, and outputs of the school district budgeting process.

Although it is not meant to establish standards or requirements for districts, the chapter may be useful in the development of sound budgeting procedures. Given the diversity of budgetary and financial reporting found in the individual states, the process described here may be customized to conform to particular local and state requirements.

Additionally, the following discussion is typical of districts that use a site-based budgeting approach. Roles and Responsibilities The local school board and the superintendent should establish a meticulous budget preparation process and guidelines. Thus, the delegation of budget responsibilities among administrators districtwide and schools site-based should be deliberately designed to require consensus at the highest levels of management.

Because individuals may serve in a variety of roles in the budget development process, the division of duties may differ among districts. It is important, however, to clearly define the staff assignments and parameters if the budget development process is to operate efficiently.

With the advent of site-based decisionmaking, individuals lacking previous budget experience need clear direction in order to provide effective input.

Preparation of Budget Guidelines Budget preparation guidelines typically are prepared by the assistant superintendent for business and finance or by an employee with similar responsibilities, such as a chief business official or a budget administrator, with direction from the school board, the superintendent, and other district and school administrators. A presentation with subsequent board approval of the budget process, guidelines, and calendar may be legally required or may be a locally imposed procedure.

In addition to these elements, the preparation guidelines may also contain the following: Guidelines for estimating standard school resource allocations, which are determined by the budgetary approach used by the district and the availability of resources Guidelines for estimating the costs of specific expenditure categories, such as salaries and benefits, supplies, or fixed charges Instructions for submitting school budgets to the district office, including the number of copies, due dates, and personnel to contact for assistance Preparation of the Budget Calendar The budget calendar provides critical dates for the preparation, submission and review of school budgets.

It is prepared during the planning process by the district budget office. A variety of simple techniques may be used to build the calendar, beginning with the previous year's calendar and modifying it for the current year. Problems that occurred in the prior year's budget cycle should be identified for changes to the current year's calendar. Additionally, changes in the budget development process should be incorporated into the current year's calendar. If the process has been substantially altered, creating an entirely new calendar may be necessary.

The following steps may be used to prepare a new budget calendar: Determine the necessary level of detail. If several calendars are used with varying levels of detail, they should be summarized in a master calendar to ensure that all activities and dates are consistent and compatible. Identify all activities that must be included in the calendar and arrange them chronologically. Assign completion dates to each activity. Although some districts may assign only completion dates, others may also assign suggested or mandatory start dates for certain activities to ensure their timely completion.

Financial forecasting is the practice of projecting the quantitative impact of trends and changes in an operating environment on future operations. Therefore, it is an integral part of all ongoing planning efforts. Thus, budgetary priorities may be evaluated on the basis of their long-term impacts. Forecasting clarifies trends, needs, and issues that must be addressed and evaluated in the preparation of budgets. For example, enrollment forecasting may reveal growing student populations and focus attention on the need for increased resource allocations for staff, facilities, or both.

Forecasting enhances decisionmaking at all levels of administration. Forecasts provide valuable insight into future issues, which allows administrators to be proactive.

It creates the framework for anticipatory management. Although financial forecasting should be a continuing process, it is most important as a component of budget development.

Forecasts of projected enrollments, property tax base and revenues, costs associated with salary adjustments, and so on, are important elements in setting baseline budgetary guidelines and creating the basis for the assumptions used to prepare budgets. Additionally, forecasting provides fiscal impact analysis that may be integrated into the budget development process. Thus, current budgetary decisions may be evaluated for their long-term results.

When used before forecasts are prepared, several action steps may increase the reliability of the forecasts: Clarify the intended purpose of the forecast. The prospective audience may require a certain set of data and related assumptions. Match the time frame with the purpose of the forecast. Time frames for forecasts will vary according to the purpose i. Ensure the accuracy of basic data. Original source data should be used rather than extrapolated or summarized versions.

Sources should be documented and verified if questions concerning data validity arise. Specify the underlying assumptions. Assumptions should be explicit in the forecasts with proper documentation based on actual data. Be consistent in calculations. Spreadsheet programs are recommended for preparing forecasts to ensure the accuracy and consistency of calculations. Examine data critically. A scan of the data may reveal anomalies or errors that may adversely affect forecasts.

Further, a comparison of initial values and forecasted values should be completed to ensure the reasonableness of forecasted values. Recognize that forecasting requires insight and intuition. Some variables or forecasting assumptions will always be a best guess. However, experience provides a basis for this type of estimation Miller and McClure.

A variety of financial and related forecasts are necessary to the preparation of a comprehensive budget. These include, but are not limited to, student enrollment projections, revenue and expenditure projections, cash flow projections, assessed property value projections, and debt service cost projections.

Cash Forecasts. Cash forecasting is also necessary for activities or programs that extend to multiple operating periods, such as major facilities construction and acquisition. Mid-level department managers participate in the budgeting process through the information they provide to the accounting team. As front-line managers, they report departmental expenses and revenue contributions to both the accounting department and their own managers, providing the fundamental information necessary to project future income and expenses.

Department managers also make personal recommendations or requests for their departmental budgets based on their experiences on the front line. A sales manager may request additional funds for staff training resources, for example, while an accounting manager may request a payroll budget increase to hire additional collections specialists. Corporate accounting teams manage companies' payrolls, accounts payable, accounts receivable and bookkeeping system.

Senior accountants can be given a range of duties in the budgeting process, such as creating sales and payroll reports to inform executives' forecasts or analyzing input-cost trends for the year. Small private corporations may outsource their accounting needs, in which case an accounting firm provides all of the information requested by company executives.

In larger corporations, senior accountants delegate the range of tasks required for these reports to different members of their staff. For example, the senior accountant may ask one clerk to audit the expense reports for the year to spot any discrepancies with the accounting records and may ask another to create monthly departmental expense reports for the year.

Corporate executives lead different aspects of a business at the top management level. These managers are directly accountable to the board of directors, and are responsible for presenting final budget proposals to the board for official approval. The chief financial officer, controller or equivalent executive is ultimately responsible for managing the company's finances, including top-level budgets. In terms of fiscal management, the City Manager has the following responsibilities: Develop policy guidelines for City Council review and adoption.

Prepare and submit an annual operating budget and a five-year Capital Improvement Budget premised upon Council guidelines and goals and major performance objectives.

Ensure the adopted budget is properly administered. Supervise the performance of all contracts for work to be done by the City. Authorize and direct the purchase of all supplies and materials used by the City. Keep Council fully advised on financial conditions of the City. Make financial reports available to City Council by the 10th of the month following the close of the preceding month. Establish rules for conduct of fiscal operations for which he is responsible. Finance Department The Finance Department becomes an extension of the City Manager's Office for purposes of performing the delegated responsibilities.

The responsibilities of the Finance Department include the following: Administer the approved budget on a day-to-day basis to see that funds are being expended for the purposes approved and that all claims are supported by proper documentation. Supervise sale of bond issues. Administer centralized payroll system. Administer decentralized purchase order system.