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Budgeting

Budgeting. Budgeting is both a planning and controlling tool. Plan. Specific statement of anticipated results i.e. Expected revenue and probable expenses specific time period basis for future budget. Tool of Control. Accountability based upon dept. organization and goals

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Budgeting

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  1. Budgeting Budgeting is both a planning and controlling tool

  2. Plan • Specific statement of anticipated results • i.e. Expected revenue and probable expenses • specific time period • basis for future budget

  3. Tool of Control • Accountability • based upon dept. organization and goals • comparison to delegation of authority • permits comparison of planned with actual performance thus enhancing control

  4. Budget Period is Predetermined • Capital equipment or improvement budget is a long period 3, 5, 10 years; or trust funds - one time large amount • Supplies, expenses and personnel costs - immediate fiscal year • Fiscal year - accounting period

  5. Fiscal Year • May or may not correspond to a calendar year • 12 months - 13 equal periods of 28 days each • July 1- June 30 - cycle reflects the teaching year • Semesters - teaching loads and part time needs

  6. Approaches to Budgeting • Incremental - financial data of the past is increased by a given %. A flat increase over last years allotment. • personnel 5% • capital 7% • supplies 4%

  7. Incremental • Straightforward • object-oriented • Significant changes, shifting priorities or pressing needs may be overlooked

  8. Planning Programming Budget System (PPBS) • Program outputs are assessed and resource allocation & funding are directly related to program goals • Zero based • Not a one year cycle

  9. Planning Programming Budget System (PPBS) • Goals are difficult to make quantifiable with a specific amount attached • Presume that all alternatives are known and attainable • Questions whether programs are viable

  10. Budgetary Process • Capital equipment • Major equipment $1000 with life expectancy of more than 5 years • Justifications should include composite depreciation rates, operating costs, and life expectancy • Supplies and other expenses

  11. Budgetary Process • Personnel • Largest expense category (education) 85% of total budget • Position code • Position description • Budgeted full-time equivalents (FTEs) • #of personnel(hours per position) divided by hours per full time work week

  12. Budgetary Process • Direct Costs • Salaries, services, contracts, dues& subscriptions, equipment and travel • Indirect Costs • Charged to department on a formula basis calculated by square footage: utilities, maintenance, housekeeping

  13. Budget Justification • Support or explanatory documentation • Retain competition, projected patient usage, compatibility with existing equipment, guaranteed service contracts, availability, durability, enhance patient care, attract more patients to facility….

  14. Development of Fee Schedule • Time unit system • 15 minute increments • Patient visits • Modality based system • Cost of service • Reviewed and Approved

  15. Controls • How much do we have to spend? • How do these relate to educational outcomes? • Generate income? Offset cost of purchase? • Benchmarking? • Free training provided? • Associated costs?

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