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Budget allowance

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The Local Unit Budget Allowance (LUBA) program was implemented in 1989 to allow local units to fund their programs using funds supplied by the Church.

Principles

The fundamental principles of the Budget Allowance program are found in Handbook 1: Stake Presidents and Bishops [2010], 14.7.2:

  • All local unit activities are to be funded from the Budget Allowance
  • Members are not to pay any funds out of pocket to participate in activities (there are exceptions for funding a single camp for youth)
  • Members are to submit receipts for reimbursement for all expenses they incur as they serve in their callings
  • Activities are to be simplified to fit within the Budget Allowance

In 2004, the Budget Allowance was increased to fund activities more effectively and relieve the financial burden on families.[1] With this increase, units were instructed that fund-raising activities should be substantially reduced or eliminated.

Basis

The Church allocates funds to the stake for the next quarter, based on attendance figures from the previous quarter. For example, the allocation for the first quarter of 2011 is based on attendance reported on the Quarterly Report for the third quarter of 2010. The allocations are calculated on the following metrics:

  • Average Sacrament Meeting Attendance listed on the Quarterly Report (which comes from the last month of the quarter only).
  • Young Men and Young Women attending meetings, as reported on the Quarterly Report
  • Primary children ages 8-11 attending meetings. Since this exact figure is not available on the Quarterly Report, it is estimated by taking the percentage of Primary attendance from the Quarterly Report, and multiplying that percentage by the actual number of Primary children aged 8-11.
  • Young Single Adults attending meetings. Since this exact figure is not available on the Quarterly Report, it is estimated by taking the percentage of Sacrament Meeting attendance from the Quarterly Report, and multiplying that percentage by the actual number of Young Single Adults aged 18-30.

The Church sends a PDF letter to the stake at the beginning of each quarter in its Finance Statements option, detailing precisely what attendance figures were used to calculate the funding amount for each category for each ward.

Accounting

  • The stake administers Budget Allowance funds. The Church allocates funds to the stake, and then the stake president decides how those funds are allocated to each ward and to the stake.
    • The stake receives a quarterly report of the budget allocation, and precisely what attendance figures for each ward account for each component of that allocation.
    • The stake then decides how much to retain for the stake budget and how much is allocated to each ward. This could be as simple as the stake retaining a fixed percentage (perhaps 20%) and giving each ward 80% of the amount of the total allocation that comes from that ward's attendance. Any number of additional factors could be considered, depending on the particular needs of the wards in the stake. If the stake makes no change, the ward receives the same percentages as the previous quarter. If the ward has not transmitted its Quarterly Report, it receives no budget allowance.
  • Local units should track budget allocations and expenditures for each auxiliary using MLS.
  • Although MLS does not include a reconciliation of the Budget category, it is possible to reconcile the Budget category.
  • Budgets are to be set on an annual basis, but the Church allocates funds to the stake on a quarterly basis (in the U.S. and Canada), so some estimation of available funds in the latter part of the year is required.
    • Some stakes choose to allocate budget funds to the wards on an annual basis. This simplifies budgeting for the wards, but requires the stake to estimate the annual allowance before the beginning of the year and then absorb any changes in actual allowance amounts throughout the year.
    • Other stakes allocate budget funds to the wards on a quarterly basis, as actual budget allowance figures are sent to the stake by CHQ. This requires wards to estimate their annual allowance at the beginning of the year. For one approach to this estimation, see Budget allowance accounting.

Year-end issues

Among the decisions the stake president needs to make regarding the Budget Allowance is how to handle surpluses or deficits in ward budgets. Stakes carry forward the year-end budget allocation balance, but they decide how this issue is handled for wards. Stakes use various procedures, for example:

  • Ignore any surpluses or deficits, so wards begin the next year with their new allocation independent of the past year. Wards with deficits will be admonished to stay within their budget next year.
  • Carry forward any deficits, but all surpluses are essentially swept into the stake budget.
  • Carry forward any deficits or surpluses.
  • Carry forward any deficits or surpluses, but cap the surplus carryforward at some fixed maximum, such as $1000.

These approaches have various pros and cons:

  • Allowing wards to carry forward surpluses helps avoid the "use it or lose it" mentality that leads some wards to indiscriminately spend money at the end of the year.
  • Requiring wards to carry forward deficits encourages wards to be frugal in their spending, since they know that excess spending will lead to less budget being available next year.
  • Capping surpluses or not allowing surpluses to be carried forward at all encourages wards to use the funds to bless the lives of their members through activities that appropriately build unity and testimonies.
  • Ignoring surpluses and deficits simplifies accounting for wards and stakes.

Reporting

Ward and stake financial clerks should give regular budget reports to their priesthood leaders. When the clerk obtains the required signature for the monthly review of the Action Items, it is a good opportunity to review the current status of the Budget and other financial categories. The Summary version of the Budget Report in MLS is a helpful starting point for this discussion.

Auxiliary presidents and other leaders responsible for Budget subcategories should receive periodic reports of their year-to-date budget allowance, expenditures, and remaining balance. This is conveniently done in a ward or stake council meeting. Generally, the Detail version of the Budget Report in MLS provides the necessary information.

History

The Budget Allowance program was announced in 1989. Various areas have implemented the program at different times and have had different amounts and changes, depending on exchange rates and other factors.

Resources

  • Ward Budget.xls: A spreadsheet that summarizes all ward budget allowance and expense information for the year by subcategory and month.

References

  1. Official Communications, Local Unit Budget Allowance Increase [Apr. 6, 2004]
This page was last modified on 29 March 2011, at 08:16.

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