Budget & the Fiscal Year
It’s that time of the year where we start hearing the word “budget” more often. This is an area I have had to make some significant growth. Does anyone know what “zero-based” budgeting is? Over my career, I have had to lean on the business office to teach me some of this terminology and how it can help me. Do you know what the fiscal year is and when does it start?
Before we go any further maybe we should identify some terminology:
Zero Based budgeting – Zero-based budgeting is when your income minus your expenses equals zero. Every dollar that comes in has a purpose, a job, a goal.
Fiscal year – It can start on Jan. 1 and end on Dec. 31, not all fiscal years correspond with the calendar year.
Restricted account – The money must be used for a specific, stated purpose. Restricted current funds are those available for financing operations, but which are limited by donors or other external agencies to specific purposes, programs, departments, or schools.
Unrestricted accounts – Current funds include all funds received by the institution for which no stipulation was made by the donor or other external agency as to the purposes for which the funds should be expended.
Encumbered – means those funds that have been obligated during a given fiscal year by proper execution of a purchase order, or some other formal agreement that is enforceable as a contract for disbursement of those funds to disburse money.
Endowment – a gift of money that will provide an income for a college or university. An endowment may be used to fund capital improvements or build new buildings, or it may be used to fund special programs or ongoing expenses.
RFP – Request For Proposal. A document that tells vendors and service providers what type of service or products a company is attempting to purchase. An RFP is a solicitation for potential contractors to submit their bids in a competitive process.
Proposals – The offer by a party of what he has in view as to an intended business transaction, which, with acceptance, constitutes a contract.
Capital Campaign – is a targeted fundraising effort that takes place over a defined period of time.
Capital Project/ Equipment – financed by public funds often seeks to build, renovate, or buy equipment, property, or facilities.
I had to learn each of these definitions and how it applied to me and my department. Many times I would ask one of my assistants to join me in the budget meeting. Not only was this good professional development for them, but it helped me in an area where I was not as strong. Hopefully you have someone on your staff if this person is not you already who may be more familiar with this area. If you are already proficient in business finances, I encourage you to teach someone else.
The best advice I can give you is what someone gave me: If you don’t know something or how to do something, ask for help. Don’t get frustrated like I did on several occasions. Humility will go a long way in life. Try to remember there are people who love their jobs in the business office just as much as you love yours. Those professionals in the business office would appreciate the opportunity to sit down with and walk you through whatever it is that may be challenging to you.