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From Planning to Budgeting

Dr. William C. Crothers | posted 11/02/2007
This article provided by the Engstrom Institute

Until plans are funded, they are of little value. The following budgeting approach, outlined with colleges and institutions in mind, provides direct linkage with strategic planning, thereby giving real meaning to the planning process. This approach provides for base reallocation of funds or "growth by substitution" and can minimize the continuing need to raise costs for services.

A. Suggestions for Budget Development

1. Make sure there is a natural flow from planning into annual budgeting.
2. Allow the planning committee to have input in setting the institutional priorities for the next year based on the strategic plan and then use this as a guide in resource allocation.
3. Consider using the four levels of asset allocation deliberation explained below to assure funding of the strategic plan.
4. Seek lots of input, but reserve final decision-making for the CFO and the Board of Trustees.
5. Set the income side of the budget first based on actual revenue, not on projected growth; then keep eliminating requests for additional expense budgets until the budget is balanced.