Discuss budget process any institution or organization
Introduction
The budgeting process in any institution or organization is basically an integral part of a sound
financial management. The process of budgeting in most organizations is subjected to intense
control processes than the actual budgeting exercise. The approval for budget entries is approved
by a number of budgeting officers or senior managers in the case of the Zero budgeting process
while the traditional budgeting bases its components from past budgetary allocations. Adequate
planning and accountability play a significant role in the budgeting process but the most critical
aspect is the control process (Robert and Lynch, 2004). Budgeting entails the allocation of finite
resources to approved prioritized needs of a company. In governments and most institutions the
budget literally means the powers or authority to spend money. The adoption or approval of a
budget implies that a number of decisions on the budget has been made by the governing body or
by the administrators of the organization and the resources available have been matched with the
organizations needs. The budget presents an evaluation tool for the control of the budgeted
resources (Rubin, 1990).
The most difficult item to control in the budget is the instruction expenditure which is the largest
expense in the budget. It accounted for 36.61% of the 2015 approved budget while in 2014 it
accounted for 37.85%. It’s followed closely by institutional support which accounted for 24.02%
and 27.16% in the approved budgets for 2014 and 2015 respectively. Institutional support also
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registered the largest deficit at 11.09%. San Antonio College receives the lion’s share in most
of the budgets (Alamo Community College District, 2014).
Instruction expense is difficult to budget as its expenses are fixed and not negotiable once a letter
of employment has been issued. Given its nature and importance, the instruction expense has to
be carefully budgeted and the rest of the expenditures have to give priority to the payments of the
instructional expenditure as it forms the basis of the institution survival.
To reduce the community colleges budget, the Alamo Community College District has to
strategize on how to implement the reductions and the sections that would be affected. The most
sensitive and which cannot escape reduction is the institutional expenditure. It forms the bulk of
the budget and its exclusion would mean that the budget would most likely not be affected by
most of the changes. As most companies have budgets that are justified, it’s difficult to cut down
budget expenditure without compromising the mission or purpose of the organization. Before
embarking on the budget reduction strategy it would be wise to understand why the budget is
being reduced. If the government is cutting down its funding then there is little option but to
effect the necessary options to comply and fit the company’s needs into the available resources.
But in case the budget reduction has been prompted by reduction in the student registration and
also a reduction in the demand of the institutional services then it would be easy as all the
affected sections would certainly have to reduce staffing and other support duties as per the
reduced revenues (Maddox, 1999). Targeted expenditure cuts may be directed towards San
Antonio College which has 123 faculty instructors, 31 other staffs and 4 administrators and a
total expenditure of $ 10,542,862 out of total of $21,758,637 budgeted instructional expenditure
for the community and its district coordination office. However, the community’s organizational
morale has to be factored in as the exercise may affect the objectives of the community’s core
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existence (Rubin, 1997). A participatory approach may entail the use of consultants to identify
the target areas and programs to be phased off or reduced substantially. The college may also
link most of its learning processes to technology hence a leaner and effective work force would
be able to effectively manage the institution.
Reducing the budget may not necessarily mean reducing the expenditure but implementing a
strong culture and discipline in managing the budget may result in positive outcome. It may also
require adoption of additional policies on cash control systems and procedures in order to reduce
spending and which is consistent with the available funds or resources in the budget. The
institutional expenditure may take a cut in its expenditure and all the hiring of more staff frozen
to achieve the budgeted cost reduction (Maddox, 1999).
The expenditures that may be difficult to control are the institutional support services. These
expenditures are very wide and they range from general institutional services like the insurance,
bad debts, audits and assessment fees to direct and indirect supports like student call centers,
institutional research and international programs.
To conclude, the challenges mentioned above can be controlled by hiring the services of an
expert to draw the control procedures that may be required to control the expenses. The
accountants can also adopt an accounting system that can execute and control the cash control
procedures that are necessary to control the budget. The variances between the actual
expenditure and the budgeted expenditure should also be evaluated and analyzed. Any
authorized expenditures must be accounted for and the responsible personnel reprimanded.
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References
Alamo Community College District (2014) Fiscal Year 2014-2015 Annual Budget, Texas
retrieved 21 January from :
http://www.alamo.edu/uploadedFiles/District/Employees/Departments/Fiscal_Ser
vices/Transparency_%E2%80%93_Financial_Information/2014/Fiscal-Year-
2014-2015-b.pdf
Maddox, D. (1999) Strategic Budget Cutting, The Grantsmanship Center, John Willey & Sons.
Robert W. S. and Lynch, T.D. (2004) Public Budgeting in America, 5th Edition. Pearson; Upper
Saddle River, New Jersey. 37.
Rubin, I. S. (1990) “Budget Theory and Budget Practice: How Good the Fit?” Public
Administration Review March/April 1990. 179-89.
Rubin, I. S. (1997) The Politics of Public Budgeting: Getting and Spending, Borrowing and
Balancing. Third Edition, Chatham House Publishers: Chatham, New Jersey.
Easton
