Set yearly budgets based on quarterly "estimates"

[gregwanderson]

I'm not sure where you may have gotten the impression in late 2010 (or any other time, for that matter) that there was any emphasis on quarterly budgeting. I've just reviewed the communications sent out with the CUBS transition that took place then, and nothing talked about quarterly budgeting. Yes, budget allocations would arrive quarterly, but that had been happening for years before that.

Obviously, my example was someone who was not a very experienced ward finance clerk who obviously misunderstood the communications sent out with the CUBS transition. The fact is, the instructions made it seem like switching to quarterly budget tracking was a big deal and, therefore, he passed that "big deal" on to the rest of the auxiliary leaders. But it really wasn't a big deal and it was only relevant to the financial clerk or (in case they really wanted to get into the nitty-gritty) members of the Bishopric. In the example I gave, this caused a lot of unnecessary complications.

(I can't speak for how it worked throughout the rest of the church, but I can observe what happened within my field of view... and this is one thing I was able to personally observe. It's easy to guess that, given the number of wards out there in the world, this wasn't the only ward that had a problem like this.)

[gregwanderson]

I would not, however, recommend using baseline budgeting, which is what you seem to be advocating. That has never been the policy of the Church, as far as I know. The expenses incurred by an organization in the previous year is not relevant to the budget that will be needed for the next year.

In my experience, when you ask the auxiliary leader about planning for next year's budget, the first question they ask is "What was our budget before?" Then they're the ones who come up with ideas about whether they want more or less than that. Otherwise, are we really asking them to start with a blank page and figure out the next year's budget?

[aebrown]

In my experience, when you ask the auxiliary leader about planning for next year's budget, the first question they ask is "What was our budget before?" Then they're the ones who come up with ideas about whether they want more or less than that. Otherwise, are we really asking them to start with a blank page and figure out the next year's budget?

I get asked that question, too, but I firmly believe that it is the wrong question to ask. Now it's not necessary to "start with a blank page"; we can and should learn from what we've done in the past. For example, if we've done a roller skating activity in the past, and we know that it cost $150, and you're doing that same activity next year, then by all means, use that information to help guide your request for that portion of the coming year's budget.

But unless you are repeating the exact same activities in the coming year as you did in the last year, the chances are slim that you will have the exact same budget needs as in the previous year. When an organization simply asks for the same budget they had last year, that's generally an indication that they are doing little if any planning of what the actual events are going to cost next year.

According to the Local Unit Budget Instructions, we are to "Ask organizations to estimate their budget needs in detail." Note that key phrase "in detail" -- they don't just give a number. And the only mention of the previous year is in the instruction to "Review the amounts spent during the previous year to make sure recurring expenses are considered"; this wise counsel, but applies only to recurring expenses.

P.S. The question about "what was my budget last year" is also a rather scary question; that could only be asked by someone who is new to the calling (in which case it's fine) or by someone who was not aware of and managing expenses to the budget throughout the year (which means they are neglecting an important responsibility).

[gregwanderson]

I'm not saying that the question "What was my budget before?" is a great question but it is usually the first one I get. My answer is to give them a detailed budget report to remind them exactly what they did. This can help them to plan whether to try the same things the next time. No need to scold them about neglecting their duties. After all, I'm supposed to be there to help them and if I'm the keeper of the official financial record, then... maybe it was a good question to ask me. [/pretending to still be finance clerk]

[Gary_Miller]

No disrespect, but that is an example of what I am talking about. There is policy and there is practicality. We are asking people who are not accountants to think like one. Many good people can not or will not do that.

I don't think its asking anyone to think like an accountant. Instead its asking the leaders to think about what activities they are going to do and what the estimated expenses will be.

[aebrown]

I'm not saying that the question "What was my budget before?" is a great question but it is usually the first one I get. My answer is to give them a detailed budget report to remind them exactly what they did. This can help them to plan whether to try the same things the next time. No need to scold them about neglecting their duties. After all, I'm supposed to be there to help them and if I'm the keeper of the official financial record, then... maybe it was a good question to ask me. [/pretending to still be finance clerk]

I certainly would never scold anyone about neglecting their duties, and I'm happy to give anyone a detailed budget report to remind them of the expenses for the year. After all, as I quoted above, planning for recurring expenses is an important part of the process.

It's a great question to ask for a detailed budget report; if that's what people mean when they ask "what was my budget last year," then that's great. If, on the other hand, they mean "what was my allocated budget amount for my organization last year," then that is a concern, since they should know that number very well, since they should be managing their expenses to fit within the approved budget. This is an indication that there is a breakdown in the process somewhere, and it's an opportunity for training and improvement. That breakdown could be in any number of places (clerks, leaders, secretaries, etc.). A financial clerk should be a helpful resource in helping those who spend Church funds to know how they are doing throughout the year, so it should never be a mystery what the budget number is and what the YTD expenses are.

[gregwanderson]

Well, there's always that guy who didn't submit receipts (maybe because of neglect or maybe because he wanted to be nice and "donate" the treats for those activities) or the guy who did submit a monster receipt after driving his biggest gas hog vehicle to scout camp. Even a careful Young Men president gets a few surprises that make it to the finance clerk's inbox and become expenses while the Young Men president wasn't looking.

[jasonfitt]

Now if someone can explain how we are supposed to set yearly budgets based on quarterly "estimates" i.e. "guesses," well, chaos can be avoided.

Since they changed the allocations from yearly to quarterly, the way I look at the budget hasn't really changed for me. I still look at the budget as a yearly thing. When we set our budgets each year (yes just once per year) we estimate how much we'll get each quarter based on our most recent sacrament meeting attendance (since that is how most of the allocation is calculated). Then I plug those numbers in to the budget and ta-da, we have our annual budget! As the year rolls on, yes the actual amounts will be a little different then our estimated amounts, but we estimate on the conservative side so it's never a huge difference.

After we have estimated the annual budget the bishop has a budget meeting with the auxiliary leadership to determine how much they will need. The sum total we assign to each organization/budget categories never exceeds our estimated yearly budget. Sometimes in the middle of the year we may move funds from one organization to another if one isn't spending as much, or another has more expenses then they planned. The budget is like a living, fluid thing. The great thing about MLS is that it's easy to adjust the budget any time it's necessary.

[TinMan]

Sometimes in the middle of the year we may move funds from one organization to another if one isn't spending as much, or another has more expenses then they planned. The budget is like a living, fluid thing. The great thing about MLS is that it's easy to adjust the budget any time it's necessary.

The problem with that is that some organizations save their budget and have more expenses at the end of the year. Some organizations want to save their money and carry it over to next year so they can have a bigger activity next year. At least that is the way it is in my ward.

And contrary to what has been said we SHOULD do, most of the organizations DO do the same activities from year to year. With minor variations. So using last years budget as a base line is quick and easy. At least for non-accountant types.

[jasonfitt]

Sometimes in the middle of the year we may move funds from one organization to another if one isn't spending as much, or another has more expenses then they planned. The budget is like a living, fluid thing. The great thing about MLS is that it's easy to adjust the budget any time it's necessary.

The problem with that is that some organizations save their budget and have more expenses at the end of the year. Some organizations want to save their money and carry it over to next year so they can have a bigger activity next year. At least that is the way it is in my ward.

And contrary to what has been said we SHOULD do, most of the organizations DO do the same activities from year to year. With minor variations. So using last years budget as a base line is quick and easy. At least for non-accountant types.

Actually there nothing wrong with that , and to clarify at the end of the year all the left over in each budget is added up in to a lump sum and carried over on to the next year. Each auxiliary budget is automatically zeroed out, so you have to manually go back and enter amounts for the new year. MLS does not carry the excess over and puts it back in each auxiliary budgets. And obviously we wouldn't take money out of a budget if they're still going to need those funds. Any changes, of course, are discussed with the auxiliary presidents first to make sure they have enough and are approved by the bishop. We just want to make sure everybody has what they need and we don't go over budget.