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		Learning About the Budgeting Process/Practical Exercises to Help you Learn By Lynn Riker, Director of Residence Life New Jersey Institute of Technology When I think about presenting our annual budget request, I always think about how we can spend our money (the fun part). But a better place to begin is to consider revenue streams, decide on goals and priorities and then bring it all together for the final budget. Getting Started To begin with identify where the revenue is coming from (rooms, summer conferences, vending, etc.)? How did we do this year versus what was projected? What are the projections for next year for each of these sources of revenue? Are there any new revenue sources? What is occupancy going to look like? What are the admissions numbers looking like? Any significant increase or decrease in the numbers? Any changes in student characteristics? What about the return rate for continuing students? What does the historical data look like? Before going any further with the budget numbers, review or create a vision (or continue to implement the plan you have been working on) with input and assistance from staff and students (and discussions with those you collaborate with and of course your supervisor). Talk and think about goals, priorities, student and staff satisfaction and the five-year plan. Review the institutional, divisional and departmental mission statement and goals and talk about them with staff and students. Also examine assessment or benchmarking outcomes and plan for needed changes. Look at your actual expenditures for the year. Did anything cost more than you had planned? Did you spend money on things that you hadn’t planned too? Will this be a trend? Prioritizing Next comes the process of prioritizing. What are the most important items that you want to accomplish and in what order. How much will each item cost? Does an item need to be done all at once or can it be done over a period of time. What can we give up, not do or do differently to accomplish our goals? You also need to plan for increases in salaries/benefits, chargebacks, etc. Room Rate Considerations The other piece of information that can be helpful - what if any increase in room rates is acceptable to the institution. In special situations, you can present a case for a more significant increase that can and will be supported with a strong case. If you need to ask for a larger increase than may be "on the table," build your budget proposal using institutional, divisional and/or departmental goals, assessment outcomes and benchmarking information. Utilize relationships to create alliances (this could be a department collaborating on projects, students presenting requests, etc.) as appropriate. As with many things in environment, timing is important. Many times patience and persistence will be one of the best assets available. No matter what, present your budget request clearly and concisely. Below are two "exercises" you can do. The first is a quiz (the answers are below the case study) and the second is a case study. Budget Terms Quiz Terms Definitions ______ 1. Auxiliary A Funds set aside and kept for later usage. Can be for specific or contingency use. ______ 2. Revenue B Services operated by colleges and universities. Often funded by special students fees or sales. ______ 3. Chargebacks C Combined salaries and fringe benefits for faculty and staff. ______ 4. Reserve D Insurance premiums, provision for retirement, tuition remission, use of recreational facilities ______ 5. Balanced Budget E External charges for expenses occurred e.g. utilities maintenance ______ 6. Fringe Benefits F Income to colleges and universities from any source. ______ 7. Variable Costs G Those funds used in connection with the payments of institutional debt. ______ 8. Plant Fund H A financial plan in which income is equal to or exceeds all resource consumption, including depreciation, and does not defer expenses to future budget periods. ______ 9. Income/Expense Activity I The cost of operating a program that varies with the program’s volume of activity. ______ 10. Debt Service J Funds specifically designated for decorative ferns. ______ 11. Compensation K The ebb and flow of funds; designed to be self-supporting, can produce revenue. Special thanks to Peter Galloway of West Chester University for creating this quiz. Your School Budget Case Study You’re the director of your department. Below are your budget, priorities and basic facts. What would you do? Budget for 2006-07 YOUR RESIDENCE LIFE PROGRAM             Revenue   5,000,000       Expenses           Professional Staff Salary 213,000   Student Salary 268,000   Fringe Benefits     Full Time 23% 49,000   Part Time 9% 24,000         General Operating           Equipment 11,000   Consumable Goods 23,000   Travel 6,000   Other (prgm./trng., etc.) 75,000         Physical Plant Utilities/Services     Telephone 7,000   Maintenance 1,200,000   Custodial 251,000   Security 483,000   Tech Fees 41,000         Student Aid     Room Grant 204,000   Board Grant 45,000         Debt Service 2,100,000         Total Expenses 5,000,000         Variance   0 These are your priorities and the basic facts: a. Occupancy will be projected at 98% for the year 2006-07. b. You can only raise room rates by 3% (in other words you have a $150,000 to allocate). c. Things you would like to do:   1. Programmatically:______________________   2. Fully fund RA meal plan – right now you fund 50% (if you were to full fund the meals plans it would cost $45,000)   3. Increase student salaries by $.25 – right now they receive $6.00 an hour (this will cost $11,000)   4. Increase travel – you know you will need to hire at least one staff member (your current budget includes $1,200 for five people and $1,000 for RA Conference, Live-In Conference)   5. You need to replace at least 5 computers and a laser printer in the department (how much do you want/need to spend)   6. Professional staff salaries – must increase by 2% (remember fringes will go up too – this salary will cost $4,300 and fringes will go up by $1,000 - this does not include an increase in student fringe yet – which would be $1,000)   7. Physical Plant Utilities/Services – must increase by 2% (this will be $40,000) Answers to the Budget Terms Quiz: 1. B 2. F 3. E 4. A 5. H 6. D 7. I 8. J 9. K 10. G 11. C If you have further questions, feedback or would like to discuss any of this information, please contact me at lynn.m.riker@njit.edu or 973.596.3039.