Chapter Four: Budgeting and Finance

by

David Agnew

Arkansas State University

Objectives

• 1. Define Budgeting. • 2. List the five major purposes of a budget.• 3. Compare and contrast various formats

and types of budgets.• 4. Compare and contrast the two major

approaches to budgeting• 5. List and describe the four phases of

developing a budget.

Objectives, Continued

• 6. Identify ways and means of augmenting the budget for the adult education program.

• 7. Identify the key points to writing winning grants.

Define Budgeting

• “A process of planning the future operations of an organization and systematically comparing the plans with the actual results.” Matkin 1985

• “A written document of what an individual or organization expects to do in the future expressed in quantitative or monetary terms.” Holmberg-Wright, 1982

Five Purposes of a Budget

• Planning

• Delegation

• Coordination

• Control

• Performance Review

Types of Budgets

• Course vs. Master Budgets– Course budgets are prepared at the lower level

by lower level personnel– Master budgets are made by upper level

administration with input from the lower levels

Formats of Budgets

• Program Budget Vs Line Item Budget– Program budgets -- generally include the

incomes and expenses grouped by program or projects. Costs for items like phones are divided across the different programs based on usage, number, and scope of the program.

– Line item -- No reference to where the cost occurs. Just a list of expenses and incomes.

Operating Vs. Capital Budgets

• Operating budgets -- deal with income and expenses in the day to day operation for a given period of time usually a fiscal year.

• Capital Budgets -- Cost of acquiring major items like equipment, and facilities or facility improvements that occur infrequently. Planning is not done on a yearly basis.

Four Phases of Budgeting

• 1. Setting financial goals

• 2. Formulating a plan

• 3. Preparing the budget document

• 4. Recording the implementation (income and expenditures).

Ways of Augmenting the Budget

• Subsidy from parent organization.• Participant fees• Auxiliary Enterprises, sales of publications, services,

etc…..• Grants and Contracts from foundations or other

organizations and agencies

• Profit from the educational unit -- program and activities sometimes provide the opportunity to generate income that can be used in the overall budget.

Summary Questions

• 1. Define Budgeting.

• 2. What is the purpose of having a budget?

• 3. What are the different kinds of budgets?

• 4. How is Traditional Budgeting different from Program Budgeting?

• 5. Describe the four phases that one would normally go through to build a budget.

Summary Questions, Continued….

• 6. How could one increase or offset the budget? How could one find more money?

• 7. What are some key points in writing winning grant proposals.

The End