Budget roll-overs and importance of deadlines

This deadline is not as important as it was in the past. I remember a lot of last-minute purchase decisions (to replace things like worn-out camping tents) in years past so that we wouldn't lose a lot of unspent budget money at the end of the year. But that's not necessary now that budget funds are carried over to the next year. Also, there is no need to process all 2011 donations before midnight on the 31st. So, again, I don't worry about this deadline anymore.

Admin note: This thread was broken off from the Financial cutoff Midnight on December 31 thread.

mrrad wrote:This deadline is not as important as it was in the past. I remember a lot of last-minute purchase decisions (to replace things like worn-out camping tents) in years past so that we wouldn't lose a lot of unspent budget money at the end of the year. But that's not necessary now that budget funds are carried over to the next year. Also, there is no need to process all 2011 donations before midnight on the 31st. So, again, I don't worry about this deadline anymore.

I'd be hesitant to say it isn't important as it was in the past. For us, I think it's just the opposite. We used to get an annual budget from the stake in mid-January that accounted for any surplus or shortage. Now that the stake can check the balances, I'd be worried that a below-budget ending would result in a substantial reduction in the quarterly allotment percentage. That is, rather than a "Set it and forget it" annual amount, the stake would consider the surplus, and "set it and forget it" at a lower quarterly amount.

mrrad wrote:This deadline is not as important as it was in the past.

Although I certainly agree that the financial cutoff is not as important as in the past, there are still reasons to take some care to record transactions in the correct year when possible:

• It gives a more accurate picture of how much was spent in each year. Not only does that potentially affect the stake's budget allocation strategy and tactics (as allenjpl noted), but it also helps the ward itself in its year-to-year planning. As the bishopric and clerks review year-end budget reports, they will be more helpful if they accurately reflect the expenses actually incurred in that calendar year.
• Specific auxiliaries have their individual budgets. If they are casual in submitting expense reimbursement requests, it will distort their annual budgets. For example, if the Young Men are allocated $1000 for their annual budget, and have activities that cost $1000 in 2011, but don't submit $400 worth of receipts until January 2012, it will look like they got along fine on $600 in 2011, and so $600 would be a reasonable budget amount for 2012, when really they will need $1400 in 2012 to maintain the same activity level. Yes, that $400 is still retained in the ward's total budget into 2012, but it is extra work to adjust the YM budget up to $1400 for 2012, and then that might lead you to budget $1400 for 2013 unless you pay special attention to the $400 of 2011 expenses that was recorded in 2012.

What you're discussing should have been taken care of before this week.

mrrad wrote:What you're discussing should have been taken care of before this week.

You won't get any argument from me that receipts should have been turned in promptly or that plans should have been better. (aebrown's example is actually not far off the mark. I cut a check a week ago to a member for reimbursements for YM for camping trips and other expenses ha made throughout the year.) But since last week was Christmas (no meetings other than sacrament, and no receipts turned in that day), and this coming Sunday is the new year, I'm okay with cutting the organizations a little slack.

aebrown wrote:
[*]Specific auxiliaries have their individual budgets. If they are casual in submitting expense reimbursement requests, it will distort their annual budgets. For example, if the Young Men are allocated $1000 for their annual budget, and have activities that cost $1000 in 2011, but don't submit $400 worth of receipts until January 2012, it will look like they got along fine on $600 in 2011, and so $600 would be a reasonable budget amount for 2012, when really they will need $1400 in 2012 to maintain the same activity level. Yes, that $400 is still retained in the ward's total budget into 2012, but it is extra work to adjust the YM budget up to $1400 for 2012, and then that might lead you to budget $1400 for 2013 unless you pay special attention to the $400 of 2011 expenses that was recorded in 2012.
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This is correct if you build your budget based of prevous expenses. However, this is a poor way to create a budget. A much better way is to create your budget based on estimated expenses for activties. That way you get a more accurate budget that reflects your true needs which makes for better more planned out activities, instead of one base on "here is some money now do what you want with it".

Gary_Miller wrote:This is correct if you build your budget based of prevous expenses. However, this is a poor way to create a budget.

I think you misunderstood what was being presented. The description aebrown provides is a situation where one year's budget is affected by the previous year's expenses. In this case an expense in 2011 being debited against the 2012 budget. He is not creating a budget based solely on the previous year's budget but rather accommodating the carryover debit amount.

Gary_Miller wrote:A much better way is to create your budget based on estimated expenses for activties.

And what better way than using the previous year budget as a starting point for the estimated expenses for the next. If the program in the previous year was successful with the budget allocated, then why not use that as a starting point for the follow-on year.

jdlessley wrote:I think you misunderstood what was being presented. The description aebrown provides is a situation where one year's budget is affected by the previous year's expenses.

No misunderstanding.

jdlessley wrote:In this case an expense in 2011 being debited against the 2012 budget. He is not creating a budget based solely on the previous year's budget but rather accommodating the carryover debit amount.

However, where is may have been for a 2011 activity the expense is against 2012 since thats when the receipt was turned in. All that is needed is to adjust the 2012 budget to reflect the expense as one being against a 2011 activity. This can be done by making a note in the purpose field when writing the check.

jdlessley wrote:And what better way than using the previous year budget as a starting point for the estimated expenses for the next. If the program in the previous year was successful with the budget allocated, then why not use that as a starting point for the follow-on year.

While it can be used as a starting point, far to often the entire budget mirrors last years expenses. There is no work involved when you build a budget that way.

I like to use the average of the last three years as my starting point, I feel like I get a better feel for what really happening that way. However, thats only a baseline, one would then have to take into consideration the current number of youth/children, where the YM/YW plan on going for the long term camps, and the option the bishop decides to use to fund the long term camps. Also you have to take into consideration any new activities the ward may want to have that they did not have last year.

I also think it important to distribute the whole budget amount all at once using estimates where needed for budget allowance, none of this holding funds back just incase. That way the ward leaders know exactly what their budget is for the year. Then each quarter when you get the actual allowance figures you can adjust accordingly.

Anyway I kind of got this off the orginal topic, but it seemed to be relevent for the discussion.

Gary_Miller wrote: However, where is may have been for a 2011 activity the expense is against 2012 since thats when the receipt was turned in. All that is needed is to adjust the 2012 budget to reflect the expense as one being against a 2011 activity. This can be done by making a note in the purpose field when writing the check.

Sounds great. What do you do when the stake president, without consulting you or delving too deeply into *how* you've accounted for a 2011 expense in 2012, spots the relatively large amount of budget you have remaining at the end of 2011 and decreases your quarterly allotment?

Not saying it will happen, or even that it's likely to happen. But, well, as a clerk I like to be prepared and head off any problems before they start. If I can help the ward fly under the stake's radar by making sure that all of 2011 expenses are taken care of in 2011, I'd rather take that route and avoid a conversation with the stake over how the ward has accounted for an expense. Plus, as aebrown mentioned, it's just easier to plot the budget when you don't have carryover. Sure, you can take the last 3 year average and look at the trendline and evaluate your projected expenses. All that is easier when you're sure that 2009's expenses actually reflect expenses incurred in 2009 and not, for example, the leftover expenses from 2008's scout camp.

Admin note: we're well down a side discussion, so I've broken this off to a new thread. Please carry on.

allenjpl wrote:Sounds great. What do you do when the stake president, without consulting you or delving too deeply into *how* you've accounted for a 2011 expense in 2012, spots the relatively large amount of budget you have remaining at the end of 2011 and decreases your quarterly allotment?

I think this ties into a related question: What should happen with unspent funds? In the past, the stake got it. By default, under the new system the ward keeps it. I'm sure if the ward keeps amassing funds, that it's going to translate into an adjustment by the stake at some point.

So what does a ward do? Do they plan a new overall ward budget based on the projections and the surplus? Or do they give the surplus back to the auxiliaries that saved it?

If you give the money to the groups that didn't spend it, they're not likely to spend it this year. (Elders Quorum?). But if you give it to another auxiliary, they may find their 2013 budget is reduced because there's no 2011 surplus to spend.

It may be a good idea to set the surplus aside for things like new equipment. That way the money is spent, and there's no expectations for the same budget come 2013.

The correct way is to use all the funds in the alloted year and not have a surplus or deficit.

The funds are there to bless the lives of members through activities that appropriately build unity and testimonies. You can't do this if your not using the funds provided for this purpose.

You can do it by helping Bishop and Organizations build an "Activity based budget" which ensures allocation of funds according to objectives and outcomes. https://tech.lds.org/wiki/Budget_allocation_methods

As clerks it our job to make sure the funds are being accounted for properly in the catagories so the Bishop and Organization leaders know where the funds are being used and how much they have remaining.

I was just put in as the Finance Clerk at the beginning of December and it quickly came to my attention the funds was not bing accounted for in the the correct categories. When I told the Bishop that he had a large surplus of funds (2.8K) he was surprised. What makes this especially disturbing was parents were asked to provide money for YM/YW camps last year when there was plenty of funds available to cover the expenses.

This all could have been avoided if two things were happening:

1. The budget was an "Activity base budget" instead of the "Traditional method"

2. The Clerk provided the Bishop a monthly "Budget Allowance Summary Report" and Organizational leaders a monthly "Budget Allowance Detail Report".

Gary_Miller wrote:The correct way is to use all the funds in the alloted year and not have a surplus or deficit.

Well, that statement is far too categorical. There are very wise reasons upon occasion to reserve some funds in one year so that more funds can be spent in the following year. For example, a ward youth conference may be held every other year, and that may be a very good reason to spend different amounts in alternating years. I believe that priesthood leaders acting under inspiration will choose the correct method for their wards and stakes, and that may very well not match your opinion.

Gary_Miller wrote:1. The budget was an "Activity base budget" instead of the "Traditional method"

What do you think is the "traditional method"? In our stake, activity-based budgeting is the traditional method.

Gary_Miller wrote:As clerks it our job to make sure the funds are being accounted for properly in the catagories so the Bishop and Organization leaders know where the funds are being used and how much they have remaining.

Not to go too far off topic, but the easiest method of doing this is to put the onus back on the organizations, where it belongs. If it comes out of Scouts, have them say so. If there's a question, ask the bishop. If the organizations approve every expense, my experience is that they have a pretty good idea of how much they have left even without me reminding them.

I was just put in as the Finance Clerk at the beginning of December and it quickly came to my attention the funds was not bing accounted for in the the correct categories. When I told the Bishop that he had a large surplus of funds (2.8K) he was surprised.

No reason for the bishop to ever be surprised about anything financially-related. Every expense report (printed after every check is cut) shows the amount of budget funds remaining.

2. The Clerk provided the Bishop a monthly "Budget Allowance Summary Report" and Organizational leaders a monthly "Budget Allowance Detail Report".

I don't know how it's done in other wards, but I've always made sure the Ward Council had these reports at least once a month. Just seemed to make sense to keep them updated.

aebrown wrote: What do you think is the "traditional method"? In our stake, activity-based budgeting is the traditional method.

I think he's referring to the wiki, which identifies two different methods of budgeting: "traditional" and "activity-based."

Oh, and welcome to the forums, Gary_Miller. You have my sympathies for coming into your calling during Tithing Settlement, but I assume you got through that okay. I love being the ward finance clerk. Best calling in the church.

allenjpl wrote:I think he's referring to the wiki, which identifies two different methods of budgeting: "traditional" and "activity-based."

Correct.

allenjpl wrote:Oh, and welcome to the forums, Gary_Miller. You have my sympathies for coming into your calling during Tithing Settlement, but I assume you got through that okay. I love being the ward finance clerk. Best calling in the church.

Since I had been a Finance Clerk then Ward Clerk in a military ward it was not much of a problem. My biggest hurdle was just learning the MLS program system, unless your an old clerk you don't know how good you have it.

I was the Ward Clerk when the Budget Allowance program first came out, I still have a copy of the original instructions. I also was responsible for implementing the MIS and FIS in our ward when they first came out and was an option for wards, back then the wards had to purchase their own computer.

These forms and the Wiki are great. I wish we had them when I was first called as a clerk, they would have saved me allot of headaches. Being able to discuss problems one might be having, get others take on guidelines, or just find out whats working best is just great.

allenjpl wrote:I think he's referring to the wiki, which identifies two different methods of budgeting: "traditional" and "activity-based."

I guess I hadn't paid much attention to the Budget allocation methods article. To my thinking, it's totally an opinion piece someone wrote a few years ago. The author's point of view is clearly that the activity-based method is superior, and so he characterizes a different method as "traditional," with no justification for the claim that it is truly traditional. Personally, I don't think the term "traditional" is accurate or helpful. I would call that "baseline" budgeting. In fact, I'll go edit the article right now to make that improvement.

aebrown wrote:Well, that statement is far too categorical. There are very wise reasons upon occasion to reserve some funds in one year so that more funds can be spent in the following year. For example, a ward youth conference may be held every other year, and that may be a very good reason to spend different amounts in alternating years.

There are alway exceptions, in the 1995 guidelines Specific planned activities or checks waiting to be cleared was the only reason given for a stake to keep surplus funds. Any other surplus was to be returned to Church Headquarters. While this is no longer required, I feel the spirit of the law is still the same..

aebrown wrote:I believe that priesthood leaders acting under inspiration will choose the correct method for their wards and stakes,

Yep that is their stewardship.

aebrown wrote: and that may very well not match your opinion.

Please understand this is not my opinion, its the guidelines, and has been from the beginning of the "Budget Allowance Program".

aebrown wrote:What do you think is the "traditional method"? In our stake, activity-based budgeting is the traditional method.

The "Traditional Method" is one of the methods discussed in Wiki article "Budget Allocation Methods" See the link above.

Gary_Miller wrote:The "Traditional Method" is one of the methods discussed in Wiki article "Budget Allocation Methods" See the link above.

Not anymore.

RussellHltn wrote:Not anymore.

Baseline Budgeting is the correct term, so it was a good change.

Gary_Miller wrote:

aebrown wrote:Well, that statement is far too categorical. There are very wise reasons upon occasion to reserve some funds in one year so that more funds can be spent in the following year. For example, a ward youth conference may be held every other year, and that may be a very good reason to spend different amounts in alternating years.

There are alway exceptions, in the 1995 guidelines Specific planned activities or checks waiting to be cleared was the only reason given for a stake to keep surplus funds. Any other surplus was to be returned to Church Headquarters. While this is no longer required, I feel the spirit of the law is still the same..

We're certainly in agreement. I was simply pointing out that you made a blanket statement with no allowance for exceptions. I noted an exception (I even said "on occasion"), which is entirely within the letter and spirit of the law. Since you noted the possibility of an exception, you clearly understand this as well.

By the way, I would recommend that you discard any policies from 1995 and focus on the current Handbook. The general guideline you mentioned is still in Handbook 1, Section 14.7.2, so your point is certainly backed up by current policy.

aebrown wrote:By the way, I would recommend that you discard any policies from 1995 and focus on the current Handbook. The general guideline you mentioned is still in Handbook 1, Section 14.7.2, so your point is certainly backed up by current policy.

I only quoted from the 1995 policies in order to show that the current guidelines in Handbook 1 has not changed from the beginning of the budget allowance program. I did this because it seems that some individuals feel since the surplus is not automatically pulled and the MLS now shows a carryover that its OK to hold funds back even if there is no "Specific planned activities or checks waiting to be cleared.

I only focus on the current Handbooks and guidelines, I just happened to have a copy of the 1995 policies stuffed in the back of old organizer that I no longer use but keep around because of the information I have in it.

aebrown wrote:By the way, I would recommend that you discard any policies from 1995 and focus on the current Handbook. The general guideline you mentioned is still in Handbook 1, Section 14.7.2, so your point is certainly backed up by current policy.

I only quoted from the 1995 policies in order to show that the current guidelines in Handbook 1 has not changed from the beginning of the budget allowance program. I did this because it seems that some individuals feel since the surplus is not automatically pulled and the MLS now shows a carryover that its OK to hold funds back even if there is no "Specific planned activities or checks waiting to be cleared.

I only focus on the current Handbook, I just happened to have a copy of the 1995 policies stuffed in the back of old organizer that I no longer use but keep around because of the information I have in it.

Gary_Miller wrote:I only quoted from the 1995 policies in order to show that the current guidelines in Handbook 1 has not changed from the beginning of the budget allowance program.

Fair enough, but since you only mentioned 1995 policy and not current policy, I thought it was important to cite the policy from the current Handbook.

Gary_Miller wrote:I did this because it seems that some individuals feel since the surplus is not automatically pulled and the MLS now shows a carryover that its OK to hold funds back even if there is no "Specific planned activities or checks waiting to be cleared.

That's certainly a good reminder (although the part about "checks waiting to be cleared" is now irrelevant, since MLS/CUBS charges expenses on the date the check is written and transmitted). The policy on surplus funds has not changed, even though the technical implementation is a bit different now.