Designing a Budget

Making it work without working too hard

1

Overview

• Federal & State Regulations• Planning for your budget– Essential items & services– Secondary items & services– Resources

• Using your budget– Checking progress– Looking for problems– Thinking ahead

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Overview

• Federal & State Regulations• Planning for your budget– Essential items & services– Secondary items & services– Resources

• Using your budget– Checking progress– Looking for problems– Thinking ahead

3

Federal & State Regulations

• Allocable to the project• Necessary and Reasonable• Administrative Cost Limits • Supplement not Supplant• Indirect Cost Rates• Matching & Other Funds• Put it in writing

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Regulations: Allocable to the Project

(What you are allowed “purchase”)

Example: Instructor salaries – what hours can you pay with ABE funds?

NOT Allocable teaching college calculus 101

IS Allocable teaching ABE math class

5

Regulations: Necessary & Reasonable

(How much you are allowed to spend)

Necessary, not Reasonable500 math students 1,000 math textbooks

Reasonable, not Necessary 500 math students 500 reading

textbooks

Necessary AND Reasonable500 math students 500 math textbooks 6

Regulations : Administrative Cost Limits

(How much you can spend on administration*)

No more than 5% on:• Planning • Administration• Personnel development• Interagency coordination

*Federal Funds only7

When you can replace a state or local $ with a federal $.

•Reoccurring, fixed (salaries, rent)

Supplant

•One-time, variable (travel, textbooks)

Supplement

Regulations: Supplementing & Supplanting

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FTPs – What they are:

FT – full time = 2080 hours per year. P – position = duties, activities, responsibilities

FTPs – Why they matter:

Supplanting is based on duties, not on people

Regulations: Supplementing & Supplanting.

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Regulations: Matching & Other Funds

What are the requirements for your school?

MatchingMatching levels are recorded for the State only, not locally.

Other Funds Local programs should still be supported by their institution and these funds should be reported.

10

Regulations: Indirect Cost Rates

(How much can you pay of your school’s general expenses?)

0%11

It isn’t official if it isn’t in writing.

Telephone, email Not official

Hard copy, letterhead Official

Regulations: Put it in Writing

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Overview

• Federal & State Regulations• Planning for your budget– Essential items & services– Secondary items & services– Resources

• Using your budget– Checking progress– Looking for problems– Thinking ahead

13

Overview

• Federal & State Regulations• Planning for your budget– Essential items & services– Secondary items & services– Resources

• Using your budget– Checking progress– Looking for problems– Thinking ahead

14

Essential Items & Services

1. “What need are we meeting based on the data & our target population?”

2. “What is our estimated level of service to meet this need?”

3. “What is the bare minimum we require to provide those services?”

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Examples: • Class schedule• Facilities• Instructors• Compliance items

Essential Items & Services

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An Example Core Budget Plan

Total estimated for Essential = $5,500Salaries - $3,000Facilities - $1,500Travel - $ 500Supplies - $ 500

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Overview

• Federal & State Regulations• Planning for your budget– Essential items & services– Secondary items & services– Resources

• Using your budget– Checking progress– Looking for problems– Thinking ahead

18

Secondary Items & Services

Secondary Items and Services should: • Support a need or strategy• Be well planned • Be prioritized

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Examples:• New Computers• Pilot Project for a new curriculum• Additional training• Expanding the class schedule• New class locations

Secondary Items & Services

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An Example Budget Plan

Total estimated for Essential = $5,500Salaries - $3,000Facilities - $1,500Travel - $ 500Supplies - $ 500

Total estimated for Secondary=$2,0001. Pilot Curriculum Project - $1,0002. New Computers - $ 5003. Additional Training - $ 500

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Overview

• Federal & State Regulations• Planning for your budget– Essential items & services– Secondary items & services– Resources

• Using your budget– Checking progress– Looking for problems– Thinking ahead

22

Resources - $6,500Total estimated for Essential = $5,500 Salaries - $3,000Facilities - $1,500Travel - $ 500Supplies - $ 500

Remaining - $1,000

Total estimated for Secondary=$2,0001. Pilot Curriculum Project - $1,0002. New Computers - $ 5003. Additional Training - $ 500

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Overview

• Federal & State Regulations• Planning for your budget– Essential items & services– Secondary items & services– Resources

• Using your budget– Checking progress– Looking for problems– Thinking ahead

24

Checking ProgressLook at your reimbursement requests each month and ask yourself:

•Are we spending our money the way we planned?

•Will we have too little, too much, or just enough?

•What does this tell us about our plan? 25

Identify ProblemsAfter you’ve evaluated your progress, ask yourself:

•Has our actual spending differed from our budget plan, and if so, how?

•Will we run out of money in any area? End up with excess?

•Will we need to make adjustments to keep on track?

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Thinking AheadYou can use the previous year’s budget plan if you do the following:

•Evaluate how well the plan worked•Identify specific problems•Address those problems•Incorporate changes

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ConclusionA well designed budget helps you:

• Effectively target your resources to your needs

• Understand your progress during the year

• Evaluate and learn for the future28