‘Tis the Season for Budgets

A good friend and colleague pointed out this morning that it’s been nearly a month since my last post. This last month has just flown by, working on our ERP implementation and everyone’s favorite…the budget.

Less than a week ago I submitted the IT budget proposal for the 2010-11 fiscal year, and in doing so, felt like a huge weight had lifted off my shoulders. I don’t know why — there will be some amount of review and revision, I would presume, and we won’t actually have an approved budget until, well, I’m not really sure when. But just thinking through (hopefully) every aspect of IT for next year, from the “base” costs to those associated with the projects we want to accomplish to support our strategic plan, was physically and mentally draining.

See, I actually started from a zero base budget and built the budget from the ground up. It really was needed, since I took over mid-budget year and needed to rationalize expenses in all categories. But our budgeting process *really* is not designed for “starting from scratch,” which made fitting my zero base budget into it somewhat challenging. Silly me, for thinking outside the box. 🙂

This is not an indictment of my current institution. Many (most? all?) institutions utilize an incremental budgeting process. Take what you did last year, adjust line items up or down, and resubmit. Our process asked for adjustments to be submitted in a separate document, with each line item detailed out and the added expense justified. The implication? Your needs don’t change much year-to-year, so adjust and go.

Maybe this works for some institutions or in some departments. I don’t really know. But it seems to me that it discourages truly innovative thinking about, and potential restructuring of, one’s area. In my area it’s a must — we have to dramatically rethink how we deliver services and support to meet the needs of the institution. But it’s dangerous to submit a zero based budget proposal into an incremental process. Budget dependencies and, quite frankly, value provided can get lost in this type of planning.

Of course, zero base budgeting has its own issues and pitfalls. It’s time consuming, for one, and there’s always more need than funds. So how does one decide who to fund, and for what?

Perhaps the best budgeting process is a combination of the two — every “x” years a department reviews itself, its mission, and its cost centers and budgets from the ground up, and then operates incrementally for the next period of time. This doesn’t resolve the potential problem of available funding, but would at least provide a mechanism for a dramatic re-budgeting into the existing process.

Or, you can do what I did, and shoehorn it in, anyway. 🙂

2 Responses to “‘Tis the Season for Budgets”

  1. 1 michael berman May 10, 2010 at 11:39 pm

    Zero-based THINKING is a good mental exercise, but since most of us can’t do zero-based STAFFING – and the bulk of the budget is staffing – we really can’t do true zero-based budgeting. (Nor would we want to do zero-based staffing, although some greater staffing flexibility would be desirable to many of us.)

  2. 2 Rae May 11, 2010 at 5:18 am

    Good point, Michael! While we can’t always change the staffing, doing a zero-based budget can validate your current staffing levels, distribution of positions, etc. You may not be able to make changes overnight, but if change is warranted, at least it gives you a good sense of where you want shifts to occur. With incremental budgeting, you may know you need to grow in a particular area, but oftentimes this just leads to expanding in that area (budget permitting), and not to a review of other areas that might be (or should be) contracting.

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