Budget roll-overs and importance of deadlines

Discuss questions around local unit policies for budgeting, reconciling, etc. This forum should not contain specific financial or membership information.
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gregwanderson
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Budget roll-overs and importance of deadlines

Postby gregwanderson » Fri Dec 30, 2011 7:49 pm

This deadline is not as important as it was in the past. I remember a lot of last-minute purchase decisions (to replace things like worn-out camping tents) in years past so that we wouldn't lose a lot of unspent budget money at the end of the year. But that's not necessary now that budget funds are carried over to the next year. Also, there is no need to process all 2011 donations before midnight on the 31st. So, again, I don't worry about this deadline anymore.

Admin note: This thread was broken off from the Financial cutoff Midnight on December 31 thread.

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Postby allenjpl » Sat Dec 31, 2011 12:58 am

mrrad wrote:This deadline is not as important as it was in the past. I remember a lot of last-minute purchase decisions (to replace things like worn-out camping tents) in years past so that we wouldn't lose a lot of unspent budget money at the end of the year. But that's not necessary now that budget funds are carried over to the next year. Also, there is no need to process all 2011 donations before midnight on the 31st. So, again, I don't worry about this deadline anymore.


I'd be hesitant to say it isn't important as it was in the past. For us, I think it's just the opposite. We used to get an annual budget from the stake in mid-January that accounted for any surplus or shortage. Now that the stake can check the balances, I'd be worried that a below-budget ending would result in a substantial reduction in the quarterly allotment percentage. That is, rather than a "Set it and forget it" annual amount, the stake would consider the surplus, and "set it and forget it" at a lower quarterly amount.

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Postby aebrown » Sat Dec 31, 2011 6:02 am

mrrad wrote:This deadline is not as important as it was in the past.


Although I certainly agree that the financial cutoff is not as important as in the past, there are still reasons to take some care to record transactions in the correct year when possible:

  • It gives a more accurate picture of how much was spent in each year. Not only does that potentially affect the stake's budget allocation strategy and tactics (as allenjpl noted), but it also helps the ward itself in its year-to-year planning. As the bishopric and clerks review year-end budget reports, they will be more helpful if they accurately reflect the expenses actually incurred in that calendar year.
  • Specific auxiliaries have their individual budgets. If they are casual in submitting expense reimbursement requests, it will distort their annual budgets. For example, if the Young Men are allocated $1000 for their annual budget, and have activities that cost $1000 in 2011, but don't submit $400 worth of receipts until January 2012, it will look like they got along fine on $600 in 2011, and so $600 would be a reasonable budget amount for 2012, when really they will need $1400 in 2012 to maintain the same activity level. Yes, that $400 is still retained in the ward's total budget into 2012, but it is extra work to adjust the YM budget up to $1400 for 2012, and then that might lead you to budget $1400 for 2013 unless you pay special attention to the $400 of 2011 expenses that was recorded in 2012.
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Postby gregwanderson » Sat Dec 31, 2011 8:58 am

What you're discussing should have been taken care of before this week.

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Postby allenjpl » Sat Dec 31, 2011 9:15 am

mrrad wrote:What you're discussing should have been taken care of before this week.


You won't get any argument from me that receipts should have been turned in promptly or that plans should have been better. (aebrown's example is actually not far off the mark. I cut a check a week ago to a member for reimbursements for YM for camping trips and other expenses ha made throughout the year.) But since last week was Christmas (no meetings other than sacrament, and no receipts turned in that day), and this coming Sunday is the new year, I'm okay with cutting the organizations a little slack.

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Building Budgets

Postby Gary_Miller » Mon Jan 02, 2012 1:35 pm

aebrown wrote:
[*]Specific auxiliaries have their individual budgets. If they are casual in submitting expense reimbursement requests, it will distort their annual budgets. For example, if the Young Men are allocated $1000 for their annual budget, and have activities that cost $1000 in 2011, but don't submit $400 worth of receipts until January 2012, it will look like they got along fine on $600 in 2011, and so $600 would be a reasonable budget amount for 2012, when really they will need $1400 in 2012 to maintain the same activity level. Yes, that $400 is still retained in the ward's total budget into 2012, but it is extra work to adjust the YM budget up to $1400 for 2012, and then that might lead you to budget $1400 for 2013 unless you pay special attention to the $400 of 2011 expenses that was recorded in 2012.
[/LIST]


This is correct if you build your budget based of prevous expenses. However, this is a poor way to create a budget. A much better way is to create your budget based on estimated expenses for activties. That way you get a more accurate budget that reflects your true needs which makes for better more planned out activities, instead of one base on "here is some money now do what you want with it".

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Postby jdlessley » Mon Jan 02, 2012 3:11 pm

Gary_Miller wrote:This is correct if you build your budget based of prevous expenses. However, this is a poor way to create a budget.
I think you misunderstood what was being presented. The description aebrown provides is a situation where one year's budget is affected by the previous year's expenses. In this case an expense in 2011 being debited against the 2012 budget. He is not creating a budget based solely on the previous year's budget but rather accommodating the carryover debit amount.

Gary_Miller wrote:A much better way is to create your budget based on estimated expenses for activties.
And what better way than using the previous year budget as a starting point for the estimated expenses for the next. If the program in the previous year was successful with the budget allocated, then why not use that as a starting point for the follow-on year.
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Postby Gary_Miller » Tue Jan 03, 2012 3:57 pm

jdlessley wrote:I think you misunderstood what was being presented. The description aebrown provides is a situation where one year's budget is affected by the previous year's expenses.


No misunderstanding.

jdlessley wrote:In this case an expense in 2011 being debited against the 2012 budget. He is not creating a budget based solely on the previous year's budget but rather accommodating the carryover debit amount.


However, where is may have been for a 2011 activity the expense is against 2012 since thats when the receipt was turned in. All that is needed is to adjust the 2012 budget to reflect the expense as one being against a 2011 activity. This can be done by making a note in the purpose field when writing the check.

jdlessley wrote:And what better way than using the previous year budget as a starting point for the estimated expenses for the next. If the program in the previous year was successful with the budget allocated, then why not use that as a starting point for the follow-on year.


While it can be used as a starting point, far to often the entire budget mirrors last years expenses. There is no work involved when you build a budget that way.

I like to use the average of the last three years as my starting point, I feel like I get a better feel for what really happening that way. However, thats only a baseline, one would then have to take into consideration the current number of youth/children, where the YM/YW plan on going for the long term camps, and the option the bishop decides to use to fund the long term camps. Also you have to take into consideration any new activities the ward may want to have that they did not have last year.

I also think it important to distribute the whole budget amount all at once using estimates where needed for budget allowance, none of this holding funds back just incase. That way the ward leaders know exactly what their budget is for the year. Then each quarter when you get the actual allowance figures you can adjust accordingly.

Anyway I kind of got this off the orginal topic, but it seemed to be relevent for the discussion.

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Postby allenjpl » Tue Jan 03, 2012 4:42 pm

Gary_Miller wrote:However, where is may have been for a 2011 activity the expense is against 2012 since thats when the receipt was turned in. All that is needed is to adjust the 2012 budget to reflect the expense as one being against a 2011 activity. This can be done by making a note in the purpose field when writing the check.


Sounds great. What do you do when the stake president, without consulting you or delving too deeply into *how* you've accounted for a 2011 expense in 2012, spots the relatively large amount of budget you have remaining at the end of 2011 and decreases your quarterly allotment?

Not saying it will happen, or even that it's likely to happen. But, well, as a clerk I like to be prepared and head off any problems before they start. If I can help the ward fly under the stake's radar by making sure that all of 2011 expenses are taken care of in 2011, I'd rather take that route and avoid a conversation with the stake over how the ward has accounted for an expense. Plus, as aebrown mentioned, it's just easier to plot the budget when you don't have carryover. Sure, you can take the last 3 year average and look at the trendline and evaluate your projected expenses. All that is easier when you're sure that 2009's expenses actually reflect expenses incurred in 2009 and not, for example, the leftover expenses from 2008's scout camp.

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Postby russellhltn » Tue Jan 03, 2012 5:25 pm

Admin note: we're well down a side discussion, so I've broken this off to a new thread. Please carry on.

allenjpl wrote:Sounds great. What do you do when the stake president, without consulting you or delving too deeply into *how* you've accounted for a 2011 expense in 2012, spots the relatively large amount of budget you have remaining at the end of 2011 and decreases your quarterly allotment?


I think this ties into a related question: What should happen with unspent funds? In the past, the stake got it. By default, under the new system the ward keeps it. I'm sure if the ward keeps amassing funds, that it's going to translate into an adjustment by the stake at some point.

So what does a ward do? Do they plan a new overall ward budget based on the projections and the surplus? Or do they give the surplus back to the auxiliaries that saved it?

If you give the money to the groups that didn't spend it, they're not likely to spend it this year. (Elders Quorum?). But if you give it to another auxiliary, they may find their 2013 budget is reduced because there's no 2011 surplus to spend.

It may be a good idea to set the surplus aside for things like new equipment. That way the money is spent, and there's no expectations for the same budget come 2013.
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