Next page BUDGET METHODS AND PRACTICE Preparation of Agency Budget Requests Review of Budgets Balancing the Overall Spending Plan Managing Budget Execution Audit & Evaluation

Jump to first page PREPARATION OF REQUESTS I Budget Instructions or Guidance Main Goals of the Executive Forecasts of Critical Operating Conditions and Prescribed BASELINE A Prescribed FORMAT A Time Schedule MAXIMUM Increase

Jump to first page PREPARATION OF REQUESTS II Agency Proposals Narrative -- Current Commitments and Expected Results from New Initiatives Detail Schedules establishing Baselines Cumulative Schedules Showing Effects of New Initiatives (up or down) on Details and Revised Totals Description dominates numbers. Budgeting is logic, justification, and politics -- not accounting.

Jump to first page Spenders’ Budget Tactics: Ubiquitous I Cultivation of an active and influential (well-organized) clientele Media Demonstrate competence Deliver Explain -- show understanding and mastery of cost estimates Honesty

Jump to first page Spenders’ Budget Tactics: Ubiquitous II Price Changes Workload Changes Methods Improvement New Services Full Financing

Jump to first page Spenders’ Budget Tactics: Contingent I Avoiding Cuts: Propose a study Cut Popular programs Dire consequences All or nothing You pick We are the experts Seeking Bucks for the Base Round up Sprinkling Physical units Workload and backlog

Jump to first page Spenders’ Budget Tactics: Contingent II Seeking New Bucks: Old stuff Initial commitment It pays for itself Spend to save Crisis Mislabeling What they did makes us do it Mandates Matching the competition It’s so small

Jump to first page Budget Justification -- Or, Why the Numbers in Next Year’s Budget are Different from this Year’s Major Programmatic Changes/New Services -- Major Cutbacks of Service levels Price/Wage Changes Workload Changes Methods Improvements Full Financing of Activities Initiated in the Current Year Deferred maintenance and/or replacement of equipment

Jump to first page Estimates: Grouped by Organization; Task, Purpose, Function, or Activity, AND OE or Account Code Wages and Salaries Non-Wage Personnel Costs Non-personnel Costs (Cost Drivers) Volume or activity level x Unit Price Ratios to another OE Adjustment to Prior Year Cost Breakeven Analysis

Jump to first page BREAKEVEN ANALYSIS I

Jump to first page BREAKEVEN ANALYSIS II

Jump to first page BREAKEVEN ANALYSIS III

Jump to first page EXECUTIVE REVIEW I Policy Rationale/Conformity with Executive Priorities Conformity with Budget Guidance/Including all Required Supplemental Documents Arithmetic

Jump to first page EXECUTIVE REVIEW II Linkages Program Changes Omissions Ratios, Shares, Trends Clear Tradeoffs

Jump to first page BALANCING THE CONSOLIDATED BUDGET Budget Message Summary Schedules Detail Schedules Performance Targets Supplemental Data Many on the Assumptions Presented in the Budget Guidance and Trends

Jump to first page BUDGET EXECUTION I Preventive Controls Procurement Personnel Pre-audit Allotments Feed-forward Controls -- Diagnostic Tools, e.g. variance measures Feedback Controls -- affect Next Year’s Budget, Fig. 3.1

Jump to first page BUDGET EXECUTION II Internal Controls Personal Responsibility Personnel Qualifications & Rotation Segregate Responsibilities Separate Operations and Accounting Maintain Controlled Proofs and Security Record Transactions -- complete journal and general ledger

Jump to first page Thought Questions Some programs have an explicit revenue component and policy makers make decisions about revenues and program characteristics with the long term sustainability of the program in mind. For instance, unemployment insurance or Social Security and there are actuarial studies that give us an idea of where we need to be in 5, 10, 20, etc years both from a revenue and an expense perspective if the program is to be in balance. 1. Why don’t we look at all program commitments this way?

Jump to first page Thought Questions 2.Someone once told me the problem with government is that it is easy to spend someone else’s money. Do you think that is true?