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s t . i 23G. 8 7 4
Summary of replies received i n answer to the Board*s letter St.Ul67 of
July 29, 1924, su bj ec t Expense Budget,
w
GENERAL SUMMARY
Sinc-e Jan . 1 , 1921
I Banks having some form of Budget Control:
In e f fec t
1. New York
2 . Cleveland
3 . Chicago
4 . Kansas City(partial)
Results
During last 2 years
I
Banks planning
t o
install Budget System:
January 1, 1925
As soon a s possible
B ig factor i n reducing
expenses.
Since July 1 , 1924 Too ear ly t o report.
(Operating Depts .: Jan. 1,1924 Has been a material
(Agent*s Dept.:
Foi .13
years, fac tor
i n
reducing
ex-
penses.
Sat i s factory f o r some
departments.
1 .
Richmond
2 . Minneapolis
I I Banks n o t operating under any form of Budget Control and which have made no plans
f o r instal l ing such a system;
1 . Boston
2 .
Philadelphia
3, Atlanta
4 . S t .
Louis
DETAILED SUMMARY
5 . Dallas
6, San Francisco
BOSTON
1. Has
never undertaken
t o
i n s t a l l
a
budget system.
2 . Budget might be established and lived up to in a few departments,
3 . Certain expenses cannot b e anticipated: Example - Note issuance and Fiscal
Agency.
4 . Operations i n such departments a a Discounts, Transit and Currency a r e more
, act ive a t certain t imes of the month and at certain seasons of the year
than a t others and force must be maintained t o handle peak loads.
5. Trend i f ' expenses h a a been downward during past two ye ar s: Expenses covering
f i r s t ha l f of 1924 ar e $80,000 less than f o r corresponding period in 1923.
NEW
YORK
1. Has operated under ejgpense budget since January 1, 1921.
2. Has
been
one of the
biggest factors
i n
reducing
t h e
operating expenses.
3. Plan i s a s follows:
a .
Detailed fi gu re s covering
t h e
principal i tems
of
expenditure during
the
past
two
years
a r e
submitted
to
department heads
t o
assist them
i n
making
estimates. Committee of three officers reviews these estimates and makes
report
to
Of f i ce r
1
s Council
and the
budget
i s
then submitted
to
directors
f o r
final approval.
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4636 ^375
b . A
monthly, dep art men tal expense r ep or t w it h c-croparative f ig u re s shows
whether expenses
a r e
run nin g wi th in budget
and
also whether they have
increased
o r
decreased over
t h e
same period
of the
year before.
4 . Supplementing t h e budget i s t h e following system of making purchases:
a . Every requisition must be signed b y o f f i c e r s i n charge of department
and i f in excess of 100 must b e approved by sen ior o f f i ce r a s well,
b . Requisition then goes to Planning Division, which passes on i t s necess i ty
and whether or not the a r t i c l e i s standard both f o r manufacturer and for
bank.
c . Deputy Governor then vises a l l purchase requisitions after which they a r e
made upon a str ict ly competi t ive basis ,
1 . Has no t pu t any departments on a budget*
2. In a few
in sta nc es r es tr ic te d appropriati ons have been made.
3 .
Cost
of
food
i n
c a f e t e r i a
i s
limited
t o
approximate receipts.
ELAND
1. Has jus t es tabl i shed a budget f o r t h e l as t s i x months of 1924,
2 . Budgeted t h e expense units a s now reported i n t h e Functional Expense Reports.
• 3* Too ea r ly to repor t r e su l t s .
Plan i s a s fol lows:
a . Furnished each o f f i c e r wit h a form showing cost f o r t h e f i r s t h a l f of
192k of the expense utoits under h i s supervision and requested a report on
t h e
probable expenses
f o r t h e
las t ha l f
of
year. Budget Commit
t e e r e -
viewed estimates
and
approved figures were reported back
to
off icers wi th
statement that
th e
amounts approved were
th e
maximum amounts that could
b e
expended
an d
even these should
be
further reduced
i f
poss ible ,
BI OSMOND
1. Has n ot y et i n operat ion a budget control b u t expects t o i n s t a l l one by
January 1, 1925.
2 , Present system of expense control i s a t a l l times under the careful super-
v i s i o n of t he execut ive of f icers and i s designed t o maintain a rigid super-
vision over salaries of employees, promotions and t ransfers , te rminat ions and
replacements,
a s
well
a s a l l
purchases
of
supplies
and
equipment
a nd t h e d i s -
t r i b u t i o n of sup pli es from sto ck.
m a m
1, Has
never established
a
budget system.
2 ; Purchases a r e made on a competitive b id b a s i s and approved by Managing
Committee.
3 . Board of Directors reviews salaries of employees every 30 days.
4, .
CHICAGO
1 . Operating departments now working under budget plan f o r first year , al though
Agent's department h a s used budget f o r three years.
2 . Substant ial reduction h a s been effected i n operat ing force an d general ex-, 4*>
penses of bank and the establ ishment of the budget i s considered a material
fac tor ,
3 Plan is as fol lows:
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° 7 6
, 3
-
St.4236.
a .
Officers were furnished with forms showing detailed expenses
f o r
' 1922 and 1923 and asked f o r estimates f o r 1924-. Procedure Comnittee
reviewed estimates an d made necessary re vis io ns . Relation ship b e -
tween actual expense
and
budget
i s
shown
i n
monthly expense reports.
ST.
LOCJIS
1, Ho
budget system
i n
e f f e c t
a s
local procedure camiittee
h a s
been unable
t o
r see
wherein
a
benefit would
be
derived from
i t s
adoption.
2, I f
budget system
i s
establ ished,
i t
should
in no way
int erf ere wi th
t he
present policy of the bank regarding economy and efficiency, which has
been very succ.es sful*
MINNEAPOLIS
1. Has never established a budget system f o r t h e control of expenses,
2 .
Suggestion, however, appeals
t o
Governor
an d
such
a
system will
be put
i n
operation
a s
soon
a s
possible .
3 .
Points
o u t
that there
a r e
some departments,
f o r
example, Failed Banks
where
th e
budget system would
not be
applicable,
KANSAS CITY
1. Ho
regular budget system although such
a
system pa rt ia l l y
i n
operation
d u r -
i n g
l a s t
two
years,
2 .
Estimates
of
expenses made
a t
various periods
and if
actual expenses
ex -
ceed estimates,
a n
invest igat ion
i s
made.
3 .
At
present operating costs
a r e
being compared with expenses
f o r
correspond-
i n g period of 1923 said any increase will be immediately investigated.
b .
Believe
i n
budget system
as a
Whole
b u t
could
n o t
toaintain efficient
service
i f
kept within
a
cost
of
operation that
was
estimated during
a
previous period when conditions
may
have been quite d if f er e nt .
m m
1.
Budget
ha s no t
been established because
i t was
thought that
on
account
of the
size
of t he
organization
end the
character
of
work perfo rmed,
th e
expenses
could
b e
controlled
i n
other ways.
2. I f the
Board concludes, after
a
further study, that
th e
plan would work
t o
t h e
advantage
of a
bank
of
th is size
and
perf orming
the
character
of
operations
performed
by us we
would
be
glad
to
give further consideration
to the
matter.
SAN
FRANCISCO
'
1. Has no t adopted a budget system a s a means of controlling expenditures.
2 .
Functional expense reports have been
an
admirable means
of
detecting
any
material variat ion
i n t he
cost
of
conducting
t h e
different operating functions
of the bank. These re po rt s do n o t , however, provide th e essent ia l fac t s f o r
a n • i n t
srj9
i s t r i c t
-
x oqiaris
en .
t>fex penses.
3 .
Greatest help
we
could receive would
be a
visi t from
an
operating represent-
a t i v e ;
of
Board's Committee
to
determine whether
or not the
bank
i s
economically and efficiently conducting i t s various operations.