(Planning and Budgeting Process)

Session will provide participants an

introduction to the planning and budgeting
process. At the end of the session,
participants will understand a typical
institutional planning process, the role of
budgeting in the overall planning process,
and how to manage your unit’s budget.
Why Do We Need to Plan?
Purpose of Planning

• To assist the entity in designing and then achieving

its mission, goals and objectives.
• To identify and allocate the resources needed to
achieve our goals, and to help us avoid risks.
Benefits of a Well-Structured Planning Process

• Clearer direction and purpose

• Increased accountability (taking ownership of
actions & outcomes)
• Tool to measure success
• Ability to deal with change and unknowns
Strategic Planning

• Clearly defining the mission and vision statement

for the organization
• Identifies where we are going and how we will get
there
• Strategic plans are long term, flexible, and involve
many levels of the organization.
Operational Planning

• Operational plans are short term and narrow in

scope, dealing with the operational activities of the
organization.
• Annual operating budgets are derived during the
operational planning phase.
What is Budgeting?
"A budget is just a method of worrying before
you spend money, as well as afterward."
— Unknown
What is Budgeting?

• The continuous cycle of planning and evaluation used

by an entity in order to achieve the stated goals and
objectives of the organization.
• The process of allocating a finite amount of resources
to the prioritized needs of the organization.
• A tool we use to control spending decisions.
Why is Budgeting Important to the Entity?

• A comprehensive planning process is vital due to the

scope and diversity of operations conducted in higher
education.
• Budgeting improves decision making by delegating
spending authority and providing accountability.
• Budgeting allows management to monitor where the
organization is by tracking and evaluating spending
decisions.
 Board of Directors

Budget Committee

Budget Director, Budget Office

Vice Presidents, Deans

Directors, Managers, Other Unit

Leaders
 Capital Budget Operating Budget Cash Budgets

•Requests for large •Revenues and •An estimation of the

assets which create expenses for the cash inflows and
major demands on an various cost centers outflows for a specific
entity’s cash flow within the organization period of time.
•Buildings, renovations, •Budgeted amounts •Used to assess whether
automobiles, software divided into major the entity has sufficient
systems, furniture categories such as cash to fulfill regular
•Purpose to allocate revenues, salaries, operations
funds, control risks in benefits, and non- •Identifies whether too
decision making, and salary expenses. much cash is being left
set priorities •Encompasses in unproductive
supporting information capacities
such as staffing and
head counts
 Establish Program
Planning Communication
Objectives

Budget Committee
Compilation and Develop Detailed
Review and
Revision Budget
Approval

Implementation
Board Approval
and Management
 Not establishing Preparing a budget Over-estimating
program objectives that is based solely revenues or under-
prior to building the on prior year estimating
budget numbers expenditures

Spreading Not budgeting for

Not planning for
expenditures evenly reserves (auxiliary
one–time expenses
over the fiscal year operations)

Ignoring a well-
prepared budget
 “It is always better to know
where your money is supposed
to go rather than asking where
it went.”
— Unknown
The budget is done…What do
we do next?
Financial Reporting

The process of providing information to assist users

in comparing planned revenue and expenses to
actual revenue and expenses.
Financial Monitoring

Review and analysis of

the financial statements
to determine whether
resources were used in
accordance with the
adopted budget and
whether the unit was
effective in obtaining the
stated goals and
objectives.
Responsible Financial Management

• Be knowledgeable of your budget. If you don’t build

your own budget, make sure you understand what
assumptions were used.
• Use a budget worksheet or the available financial
statements to monitor your revenues and
expenditures
• Identify potential risks to your budget as early as
possible. Keep your supervisors informed.
Responsible Financial Management

 You are a steward of the university’s

resources, so handle your unit’s budget as
if it were your own checkbook.
 Recession Humor
Disclaimer: This is not our travel policy!
Due to the current financial situation, changes will be made to the Business
Travel standards and Procedures Manual. Effective Monday, the following
revised procedures apply:

Lodging
All employees are encouraged to stay with relatives and friends while on
business travel. If weather permits, public areas such as parks should be
used as temporary lodging sites. Bus terminals, train stations, and office
lobbies may provide shelter in periods of inclement weather.

Transportation
Hitchhiking is the preferred mode of travel in lieu of commercial transport.
Luminescent safety vests will be issued to all employees prior to their
departure on business trips. Bus transportation will be used only when work
schedules require such travel. Airline tickets will be authorized in extreme
circumstances and the lowest fares will be used. For example, if a meeting is
scheduled in Seattle, but the lower fare can be obtained by traveling to
Detroit, then travel to Detroit will be substituted for travel to Seattle.
Meals
Expenditures for meals will be limited to an absolute minimum. It should be
noted that certain grocery and specialty chains such as Costco and Sams
stores often provide free samples of promotional items. Entire meals can be
obtained in this manner. Travelers should also be familiar with indigenous
roots, berries, and other protein sources available at their destinations. If
restaurants must be utilized, travelers should use "all you can eat" salad bars.
This is especially effective for employees traveling together as one plate can
be used to feed the entire group.

Miscellaneous
All employees are encouraged to devise innovative techniques in effort to save
company dollars. One enterprising individual has already suggested that
money could be raised during airport layover periods which could be used to
defray travel expenses. In support of this idea, red caps will be issued to all
employees prior to their departure so that they may earn tips by helping
others with their luggage. Small plastic roses and ball point pens will also be
available to employees so that sales may be made as time permits.
 Fred Nesler, Creighton University Budget Director
 Ron Rael, “Creating Great Budgets: A Review of Budget Basics”
(an AICPA CPE Express Course)
 NonProfits Assistance Fund: NAF Financial Foundations