PURPOSE AND USE OF BUDGET PLANNING MODELS

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PURPOSE AND USE OF BUDGET PLANNING MODELS
Donna Kidd, Associate Vice President George Mason
University dkidd1_at_gmu.edu Barbara Maddox,
Director of Budget Operations George Mason
University bmaddox_at_gmu.edu Southern Association
for Institutional Research Annual Forum/VAMAP
Budget Officers Track October 17, 2006
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• WHY IS A BUDGET PLANNING MODEL NECESSARY?
• WHAT IS ACHIEVED WITH A BUDGET PLANNING MODEL?

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• WHY IS A BUDGET PLANNING MODEL NECESSARY?
• Set priorities for the institution in pursuit of
  achieving goals
• Identify highest priorities to be accomplished
  with available funds

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• WHY IS A BUDGET PLANNING MODEL NECESSARY?
• Identify and plan for future programmatic needs
• Identify and plan for financial resources needed
  to support overall activity

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• WHY IS A BUDGET PLANNING MODEL NECESSARY?
• Identify and project financial resources
  available
• Identify and incorporate enrollment, staff,
  facility, and financial data into overall plan

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• WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL?
• Document all assumptions clearly
• Document assumptions for revenue and expenditures
  separately
• Review and update assumptions on a regular basis

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• WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL?
• Begin with two years of actual data to build plan
  data for future years
• Review and update data on a regular basis

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• WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL?
• Set a model that is flexible for easy changes for
  all key factors (salary increases, enrollment,
  etc.)
• Set a model that is flexible for easy modeling
  and what-ifs

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• WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL?
• Provide summary data for presentation to
  executive administration
• Provide back-up detail to address answers to
  specific questions as needed

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• WHAT IS NEEDED FOR A GOOD BUDGET PLANNING MODEL?
• Share the model on a regular basis with other
  audiences within the institution
• One of the most important things is to share the
  model on a regular basis with Board of Visitors
  or appropriate governing body

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Multi-Year (three to five years plan with two
  years actual)
• Develop separate models for Educational General
  and Auxiliary Enterprises activities

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Sources of funds by major category
• Uses of funds by major category

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Total enrollment by year (fte enrollment)
• Assumptions for in-state versus out-of-state
  enrollment

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• FTE staff by category by year
• Compensation increases by category by year

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Base funding by year
• Fixed cost increase requirements by year

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Inflationary costs by year
• Special programming needs by year

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Funding by source of funds state, tuition,
  other
• Expense by major category salaries, benefits,
  direct expenses

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Institutional funding set-aside for financial aid
  per year
• Projected tuition and fee rate increase per year

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• WHAT ARE COMPONENTS OF A GOOD BUDGET PLANNING
  MODEL?
• Revenue per fte student state, tuition/ other
  by year
• Expense per fte student total by year

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• A SAMPLE TEMPLATE FOR A BUDGET PLANNING MODEL

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• IMPORTANT THINGS TO REMEMBER
• SHARE THE BUDGET PLANNING MODEL ON A REGULAR
  BASIS SO OTHERS UNDERSTAND WHAT THE ASSUMPTIONS
  ARE
• ESPECIALLY IMPORTANT TO SHARE WITH GOVERNING BODY

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• IMPORTANT THINGS TO REMEMBER
• SHARING THE MODEL ON A REGULAR BASIS ENSURES A
  SMOOTHER APPROVAL OF ANNUAL BUDGETS AS THERE ARE
  FEWER SURPRISES

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• GOOD LUCK AND HAVE FUN AS YOU BUILD YOUR PLANNING
  MODEL!
• QUESTIONS?