Greggo wrote:I'm curious. How do you manage the surpluses at the stake level? Am I assuming correctly that the stake budget is decreased for the following year when ward surpluses are carried-over?
The stake is allowed to carry forward the net of all its surpluses. So the stake may have an overall surplus, but that doesn't necessarily decrease the stake budget itself, since the stake budget should reflect what the stake needs to spend, not the total.
Perhaps a concrete hypothetical example will illustrate. I'll use a system of annual ward allocations to simplify the example, although quarterly allocations would require a few adjustments to the procedure.
Suppose our stake began 2008 with $22,000 in surplus. We have three wards. Ward1 ended 2007 with a $1000 deficit, Ward2 had a $500 surplus, and Ward3 had a $2500 surplus. We have a policy of capping big surpluses, so we'll let Ward3 carry forward $1500, and the remainder goes back into the general stake surplus. So of the $22,000 total surplus, we allocate $1000 (-$1000 + $500 + $1500) to the wards, leaving $21,000 surplus for the stake.
For each ward budget, we use whatever formula we would normally use to determine their budget allocation, independent of any surplus or deficit. Suppose that is $11,000 for Ward1, $12,000 for Ward2, and $13,000 for Ward3. Then we add in any surplus or deficit, resulting in a net annual allocation for the wards of $10,000, $12,500, and $14,500, respectively.
For the stake, we simply determine the budget (based on our anticipated spending needs and our estimate of the budget allowance). That becomes the budget. Suppose we expect to allocate $25,000 of the total budget allowance to the stake budget. We expect expenses this year to be $27,000. So we are essentially allocating $2,000 of that net surplus to the stake, leaving $19,000 extra surplus.
We simply hold the $19,000 in reserve, to help us manage differences in the quarterly allocations from our estimates, unanticipated extra spending this year, or saving for the big stake youth conference expenditure we know is coming next year.
So that was a long answer, but I hope it explains how it may well be the case that allowing wards to carry forward their surpluses might not really affect the stake budget. But if a stake chooses not to let wards carry forward their surpluses, then the stake is essentially getting a windfall at the beginning of each year, which distorts their budget in a different direction.
There are a lot of ways to handle this -- I simply gave one example that is fairly close to how our stake has chosen to do it. It may sound complicated, but really it's just a matter of plugging a few values in a spreadsheet we already have, so it's pretty easy.
:):)
