CPRP- Chapter 2- Budget and Finance Questions and Answers

Budget - Answer- a prepared plan for financing the work of an organization for a given period of time Who is responsible for monitoring a budget? - Answer- managers, CEO and board, but also employees and staff. A fiscally sound budget... - Answer- balances revenue and expenditures, is inclusive of all financial obligations, serves as a guide to decision making, and use of financial resources available to accomplish the goals of the agency. Three stages of the budget process - Answer- 1. Preparation 2. adoption or authorization 3. execution or implementation Budget documents vary from agency to agency but should detail... - Answer- anticipated revenues and expenditures for the fiscal year as well as make clear the agency goals and objectives to be achieved. Revenue - Answer- The money coming into the organization Revenues comes for five sources... - Answer- compulsory income, gratuitous income, earned income, investment income, and contractual receipts Expenditure - Answer- a disbursement, expense, or cost related to doing business Most agencies largest expense - Answer- Personnel most widely used budgeting system for P&R - Answer- line-item-based object classification system "object" in line-item-object classification means... - Answer- the item of financial cost such as personnel, supplies, and equipment. "Classification" in line-item-object classification means.. - Answer- refers to the uniform method of grouping like things together Cost control center - Answer- any organizational unit that is administered by a staff person who is responsible for the activities of that unit including its budget. Fees are set to... - Answer- recover costs, create new resources for other programs, establish value of the program offered, and to influence user behavior. differential pricing - Answer- charge different prices for the same activity based on the desirability of the facility used, its location, prime- or non-prime-time hours of service, and customer characteristics such as the ability to pay or age. pre-determined subsidy levels - Answer- different programs may be subsidized by a higher or lower percentage based on community need. Must be realistically achievable. To determine program costs - Answer- first project the minimum and maximum demand for a program- an educated guess. Second determine the fixed cost Fixed Cost - Answer- those that do not change with the number of participants and remain constant throughout the program direct fixed cost - Answer- the result of running a specific program. If the program does not take place, the cost is not incurred. Indirect fixed cost - Answer- commonly referred to as overhead costs. Each program is required to absorb a share of the costs associated with administration expenses. equal share allocation - Answer- each program area pays an equal share of the indirect costs percentage of budget approach - Answer- the program area pays the percentage of indirect costs that are equal to the percent of the overall budget the program area has. changing fixed costs - Answer- the costs that change by volume but not by the individual participants variable costs - Answer- the costs that result from actual operation of the program and are charged directly and proportionately to the number of people enrolled. Program Pricing Formula - Answer- P = (F + V) N P=Price F= all fixed costs V= Variable Costs N= The Demand for the program Forecasting Revenues and Expenditures - Answer- is an art and a science, science can be determined by history and know facts about the community, art is determined by the "gut reaction" of the programmer Capital Budget - Answer- planned and proposed expenditures for carrying out major, nonexpendable purchase and construction projects of a substantial and long-term nature. Generally costly items, governing bodies usually decide an amount, ex, if it is over $5000 it is a capital budget item Compulsory income - Answer- Taxes Real Property Tax - Answer- tax assessed on land and anything that is built or growing on it. This tax is appraised and is usually approximately 30-50% less than fair market value Tax rates can also be expressed in Mills - Answer- One dollar equals 1,000 mills and is 1/1000 of the assessed property value. Personal Property Taxes - Answer- allowed in 41 states, ta on tangible property such as cars, furniture, and intangible property such as stocks and bonds Sales Tax - Answer- assessed on the sale of many tangible goods Excise Tax - Answer- imposed on specific goods or services such as hotel/motel, car rental, and "sin" taxes for cigarettes and alcohol. Not unusual for these taxes to be used for specific purposes. Income Taxes - Answer- assessed on income earned Gratuitous Income - Answer- revenue received without expectation of return and is from such sources as grants, bequests, and sponsorships Grants - Answer- come from state, federal, and private foundations, but generally run out at some point, not infinite, be prepared to take over funding Bequests - Answer- funds received from individuals through wills, life insurance policies, and donations of land and property prior to or upon a person's death Sponsorships - Answer- generally obtained in the form of cash or in-kind services where companies donate needed supplies, equipment, or staff time/skill. The company then benefits with advertising, access to participants, ect. Earned Income - Answer- Generated through fees and charges. Program fees, admission charges, rental fees, user fees, surcharges, etc. Contractual Receipts - Answer- contact with private agencies to provide a service or sell merchandise. Generally the agency then receives a percentage of the revenues from the private company. Investment Income - Answer- derived from the interest gained from investing unneeded agency funds in money markets, stocks, and mutual funds. Each Department that receives cash payment should have... - Answer- Revenue collection policies and procedures Established procedures for each collection location Deposit procedures Petty Cash - Answer- designed for small, quick purchases that are most effectively made with cash rather than following the lengthier purchasing procedures. Price Quotes - Answer- the staff member details the specifications of the item needed and then distributes to a select number of vendors. Each vendor is quoting the same detailed project. The staff member is able to select the businesses it wishes to apply Formal Bid - Answer- Like a price quote, but more structured. a) an invitation for bid, vendors submit a sealed bid based on advertised specifications b) Request for Proposal (RFP)- a negotiated contract for goods and/or services where the vendor details waht they will do and at what cost c) Request for Quotation- Like an RFP, but it is not a binding contract or document. RFP - Answer- Request for Proposal- a negotiated contract for goods and/or services where the vendor details what they will do and at what cost Blanket Purchase Order - Answer- used to consolidate small continuous purchaes. Esentially it is an account that is billed once per month. For items bought regularly, this is a more efficient method. limited or departmental purchase orders - Answer- used by budget units of the agency for a one-time purchase of goods or sevices directly from a vendor. regular purchase orders - Answer- issued for a one time delivery of a specific good or service. When the good or service is delivered and paid in full, the order is complete. Procurement Card - Answer- Works like a credit card, with a spending limit. At the end of the month a bill is received where the items are detailed. The accounting department pays the credit card company. Review Progress Reports - Answer- typically required for submission by contractors, consultants, and concessionaries. Typically required for submission on a specific date covering a previously established time frame. Inspection - Answer- agencies should periodically inspect the work of contractors, consultants, and concessionaries with a rating instrument with the space to comment on quality and quantity of service Review of Complaints - Answer- review complaints of contracts, most dissatisfied people do not complain but seek alternative service providers, thus agencies must be vigilant in seeking out and addressing concerns. Review of end-user satisfaction - Answer- user or citizen survey. Users of services are most knowledgable of their own level of satsifaction Attendance Figures - Answer- knowing how many people attend events, programs, and facilities is necessary to predict future program participation. Room Counts - Answer- shows facility use patterns and can be done on a daily basis or as frequently as on an hourly basis.