Sport Budgeting 101

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Sport Budgeting 101
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Class Outline

• Introduction
• Budget Terms
• Budgeting Processes
• Types of Accounts
• Comprehension/Monitoring
• Creating a budget
• Question and Answer

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Learning Objectives

• The participant will
• Be able to understand basic budgeting terms by
  matching terms and definitions on a worksheet
• Become more knowledgeable about analyzing budget
  reports by identifying mistakes and
  inconsistencies on a sample budget report
• Gain a better understanding of the differences
  between an auxiliary account, an agency account,
  and a university account by correctly identifying
  the differences between the three
• Gain greater comprehension of the budgeting
  process by creating a sample auxiliary budget.

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Budgets

• Working Definition
• -a plan detailing how a department
• proposes to secure and utilize financial
• resources over a specified time period
• -a financial plan that serves as an estimate
  of future cost, revenues, or both
• Of course

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Another Definition

• Your budget is not really a budget, its more
  like a guideline for spending.
• -Chief Budget Officer at mid-size, 4-year public
  institution in the Midwest.

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Purpose of Budgeting

• Plan
• Its strategic (and required)
• Keep spending in line
• Fast track on revenue
• Goal-oriented

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Some Things You Should (Probably) Know About Your
Budget

• How much do you know about your (departments)
  budget and the institutions spending parameters?
• Lets find out

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Budget Terminology

• How conversant are you
• in budget
• Terminology?
• Lets find out

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Budgeting Terms

• Revenue Variance
• Deferred Income Expense
• Supplies Reserve
• Fund Balance Cost Center
• Expense Reimbursements Encumbrance
• Debt Retirement Revision
• Equipment
• Appendix B

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Budget Development Processes

• Incremental
• Zero-based
• Performance
• Formula
• Seat-of-the pants

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Types of Accounts

• Unrestricted EG (university only)
• Auxiliary
• Agency
• Plant
• Foundation

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Unrestricted E G

• Most departments
• Funding comes from E G
• Bottom-line oriented
• Little built-in flexibility
• Positive fund balance?
• Advantages

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Auxiliary

• Few departments
• Funding from multiple sources
• Bottom-line less an issue
• Much flexibility
• Positive fund balance?
• Advantages

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Agency Account

• Controlled by a department/division
• Overseeing agency serves as bank
• Bottom-line oriented
• Account is very flexible
• Positive fund balance?
• Advantages

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Plant Account (Fund)

• Controlled by a department/division
• Funding from multiple sources
• Bottom-line oriented
• Flexibility is variable
• Positive fund balance?
• Advantages

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Foundation

• Controlled by department/division
• Funding is through fund-raising
• Bottom-line flexibility
• Much flexibility with unrestricted funds
• Positive fund balance?
• Advantages

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Comprehension

• Types of budgets/accounts quiz

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Comprehension (The Sequel)

• Variance
• The difference between _________
• amounts and _________ amounts.
• Demonstration of Knowledge, Appendix E (its
  unlabeled)

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Budget Monitoring

• Checking budget reports for accuracy
• Importance
• Common Errors
• Finding Mistakes

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Common Errors

• Spreadsheet formula errors
• Transposed data
• Data entry errors

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Finding Mistakes

• Good accountant or business manager
• Watch for unusual monthly variances
• Column total vs. Row totals in reports

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Locate Spreadsheet Formula Error

• FY 2004 Revenues
• Through May 31, 2004
• Budgeted Actual YTD of
• Total
• Fee Income 3,948,000 3,948,000 100.0
• Non-Fee Income
• Sales 224,447 216,879 96.6
• Membership 702,341 710,993 101.2
• Programming 257,790 256,872 99.6
• Total Non-fee Income 1,184,578 1,184,744 100.0
• Total Revenue 5,132,578 5,132,744 98.7

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Circle Possible Errors
Line Area July Aug. Sept. Oct. Total
1600 Students 1,100 1,250 1,400 130 3,750
4000 Supplies 1,000 8,500 500 0 10,000
5100 Telephone 1,234 1,234 1,234 1,243 3,702
5200 Postage 125 200 240 190 565
6000 Travel 400 0 300 1,200 700
Total 3,859 11,184 3,674 2,763 18,717
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Corrected
Line Area July Aug. Sept. Oct. Total
1600 Employees
4000 Supplies
5100 Telephone
5200 Postage
6000 Travel
Total

• 1,100 1,250 1,400 130
  3,880
• 1,000 8,500 500 0
  10,000
• 1,234 1,234 1,234 1,234
  4,936
• 200 240 190
  755
• 0 300 1,200
  1,900
• 3,859 11,184 3,674 2,754
  21,471

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Creating a Sample Auxiliary Budget

• Take FY 2004, and create FY 2005
• Assumptions

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References

• Kent State University Policy Register. (2004).
• Carviters Orwig. (1982). Evolution of modern
  budgeting. NACUBO Journal, 24-59.