Advanced Budgeting Course

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ADVANCED AMERICORPS BUDGETING
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AmeriCorps Specific Session
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Session Objectives

• Discuss Corporation rules and regulations that
  impact AmeriCorps budgets
• Review method within AmeriCorps rules to
• create effective budgets
• run an efficient program

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Topics of Discussion

• Key Budgeting Considerations
• Budgeting Basics
• Cost Types
• Key Budgeting Tips
• Budget Analysis Review
• Budgetary Controls
• Budget Exercise

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Why are budgets important?

• Corporation requirements
• All organizations required to submit a budget
• Budgets become part of the contractual obligation
• Financial blueprint to follow and establish
  realistic goals and objectives
• Method for an organization to effectively
  allocate scarce resources

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Key Budgetary Considerations

• Generating enough cash or in-kind contributions
  to meet minimum matching requirements
• Members support 15 minimum
• Operating expenses 33 minimum
• Identifying direct program costs
• Identifying administrative expenses and
  development of cost allocation plan

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Budgeting Basic

• Review program goals and objectives
• Estimate the cost of each goal or objective
• Gather historical information
• Include both program and fiscal staff who will be
  involved in performing the activities related to
  the above goals and objectives
• Estimate direct program cost
• Estimate supporting costs (i.e., administrative
  expenses that do not correlate to a specific
  program activity)

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Budgeting Basics - continued

• Estimate total income
• Estimate grant revenues
• Number of members that correlate to objectives
• Costs per member constraints
• Estimate cash contributions
• Estimate in-kind contributions
• Review the organizations cash reserves

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Factors for Determining Cash Reserves

• How predictable are the organizations revenues?
• How predictable are the organizations expenses?
• In case of an unexpected problem affecting
  revenue or expenses
• Will existing donors respond to an appeal for
  increased support?
• Are creditors willing to postpone or delay debt
  payments?
• Does the organization have an available line of
  credit?
• Could planned expenditures be reduced or deferred
  without long-term harm to the organization?

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Costs Types

• Why know the difference between the two kinds of
  administrative costs?
• Cost characteristics to properly classify
  expenses
• Cost Types
• Direct costs that correlate with the program and
  its objectives, such as
• Member support
• Training
• Indirect costs, also known as administrative
  costs, are costs to operate the organization-not
  directly or easily attributable to the
  program/project

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Administrative Costs

• Include Items such as
• Financial accounting, auditing, general legal
  service
• Costs for internal evaluation
• General liability insurance
• Salaries benefits related to general
  organizational management and support

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Administrative Costs

• Do Not Include Items such as
• Allowable direct charges for members
• Costs for staff who train, recruit or supervise
  members
• Costs for independent program evaluations

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Administrative Costs

• Two methods to recover administrative costs
• Organization has an approved federally negotiated
  indirect cost rate
• Requires approval from Federal Government
• Grantee share is limited to 5 of Corporations
  funds of actual expenses and the difference is
  allowable as match
• Organization uses fixed five percent rule
• Requires approval by Corporation
• Grantee share is limited to 5 or less of
  Corporations funds
• Grantee match for administrative funds may not
  exceed 10 of all direct expenditures

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Key Budgeting Tips

• The allocation between Corporation share and
  Grantee must be 67-33 for the total operational
  costs, not by individual line item
• Utilize maximum amount of Administrative costs as
  match
• Member recruitment retention directly affect
  administrative cost recovery

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Key Budgeting Tips

• Increasing in-kind match reduces cash that must
  be raised to meet matching requirements
• Per member costs maximum, currently 12,400
• Keep in mind the amount of documentation required
  to properly support expenditures, some expenses
  are more labor intensive to track than others
• Be aware of supporting documentation
  requirements. Service partners, may have good
  intentions but may not be able to obtain proper
  support for in-kind donations

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Key Budgeting Tips

• Utilize the maximum federal funds allowed to meet
  Section A costs (Member Support Cost)it reduces
  the organizations cash requirements
• Using other federal funds for healthcare match in
  Section A is allowable
• Identify In-kind donations prior to creating the
  budget--will facilitate allocation of funds
  between Corporation and Grantee
• Divide the annual budget into smaller segments
  i.e., quarterly, monthly for meaningful
  comparisons

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Budget Analysis and Review

• The budget process is like a journey The budget
  represents the roadmap During your journey you
  need to assess where you are in relationship to
  your ultimate goal.

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Budget Analysis and Review

• How do you determine where you are?
• Perform variance analyses
• Determine how budgeted expenditures are actually
  expended
• Evenly based on passage of time
• Varies based on activities
• Identify potential areas of over-runs and
  under-runs
• Develop method to forecast expected final result

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Basic Reminders

• Budget should be approved as part of a formalized
  process within your organization
• Approved Budget should be recorded in your
  accounting system (Recommended)
• The budget should be periodically reviewed
  against actual expenses, e.g. monthly, quarterly
• Categorize general ledger accounts to mirror
  budget categories

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BUDGETARY CONTROLS

• Serves to link programmatic and financial
  activities
• Prevents cost overruns if monitored on a regular
  basis
• Helps staff responsible for specific activities
  to maintain control over expenditures

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BUDGETARY CONTROLS

• According to the Corporation, programs must
  obtain prior approval for
• Changes to increase or reallocate funds for
  member support category
• Purchases of equipment over 5,000
• Changes in scope of program
• Cumulative transfers exceeding 10 of budget
• Note that State Commission or Parent
  Organizations may have more stringent Budgetary
  controls

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Budget Exercise
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Budget Exercise Discussion
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