Budgeting and Strategic Planning Paper (Essay Sample)

Budgeting and Strategic Planning Paper
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Introduction
Budgeting is a fundamental process especially for institutions of higher learning whether public or private since it gives them the opportunities to forecast their incomes and expenditures before the designated time of realizing them. Institutions have the chance to estimate the expected expenditures and analyze the possible sources of incomes to ensure that there is a picture of what awaits them in the next financial year. In this context, Widener University, a private institution is always determined to come up with financial budgets that reflect the sources of income and the areas that have been given priority for each academic/fiscal year. It is an institution that has been experiencing growth in the number of undergraduate students as well as other groups and as a result, it has had to increase the expenditures to serve their interests. In this report, there is going to be an analysis of the element of budgeting process of this institution, critique of its approach to budgeting, critique of how budgeting is linked and supports strategic planning compared to the book attached.
Understanding of the institution’s budgeting process
It has to be realized that Widener University is a non-profit institution whose mandate is to offer and facilitate higher education to is esteemed students. To achieve all its goals, there is the need for finances that allow it to meet its estimated expenditures and other related obligations. The institution has strategic plans that have to be undertaken within specified times and to realize all the objectives; there is the need for budgetary activities. The university normally has two distinct stages of budgeting where the first stage is going through the process in a preliminary context. The financial year of this university normally begins in July and runs to June of the next year. The university being not for profit implies that it has to depend on the tuition fees paid by the students after their enrollment (see Appendix A).
It is estimated that approximately 80% of the revenues of this university are obtained from the tuition fees charged. The budget committee normally starts off its preliminary budgeting process at the beginning of each fiscal year to plan for the next year. In September, the budgetary committee normally assesses the situation where the main determining factor is the expected enrollment number in each of the programs where they have both the undergraduate and the graduate programs. In October of each year, the preliminary budget is submitted to the board for scrutiny and preliminary analysis (see appendix B).
The board has the responsibility of scrutinizing the preliminary budget report with the view of establishing if it is aligned to the strategic plan of the university. If that is the case, then it is given the approval to move to the next stage. After the information gets to the board, all other relevant organs of the university get the opportunity to share the information and give their views regarding the contents and any other issues arising. Bess & Dee (2008) argue that the essence of sharing information with other departments is to ensure that their expenditure projections and interests are well documented and covered.
After this stage, the responsibility eventually falls to the officers in charge of the enrollment activities; the undergraduate enrollment committee is brought on board to report on the expected number of new students. All the deans of the graduate schools also come up with the number of enrollment in the programs that falls within their schools and departments. These numbers are given to the financial department where the financial obligations associated with these numbers are computed thoroughly.
The finance department is charged with the responsibility of coming up with other issues like the salaries and benefits to be given to the teaching and non-teaching staff among other expected costs in the incoming fiscal year. In doing this, the department eventually comes up with an income statement that is essential in the budgeting cycle. A planning meeting is then scheduled in December of each year where staff members drawn from the academic and administration faculties appear in the meeting. A total of 35 members driven from the academic, administration and finance department are always scheduled to attend the meeting where they analyze various issues surrounding their activities. The committee normally debates on the items included in the budget where they eventually take a vote on the priorities for the next year then the president is left to make the ultimate decision. After the approval, the budget can now be executed come July though there is room for adjustments that the budget committee and other stakeholders with the approval of the president that can be in accordance with the reality on the ground.
Analysis of the elements of budgeting process about Goldstein’s book
Budgeting process, as presented by Goldstein (2012), appear to be an elaborate process that requires the observation and undertaking of various activities between the formulations to the auditing stage. Sixteen distinct stages have to be undertaken to ensure that the budgeting process comes to an end. The essence of this the first element is to ensure that all the resources available to the institution are allocated according to the needs and objectives that have already been spelled out. The second element is ensuring that the prior fiscal year is closed out (Widener university statement of financial position 2013-2014). These elements aim at ensuring that no activities or allocations that were meant for the prior fiscal year are included in the current budget unless there is the need to incorporate the same.
The third stage involves the idea of analyzing the year-to-date results for the current year as well as the final results of the current year (Widener university statement of activities 2013-2014). The fourth step is to undertake project enrollment where an emphasis is laid on understanding the institution as a whole and taking it as a project that needs to be executed. The fifth step is where the institution’s budget committee has to establish the budget assumptions in a move that helps to facilitate the approval of the board (Widener university statement of cash flows 2013-2014). The sixth and seventh stages are concerned with the project central revenues and expenses respectively where the institution has to understand where it is obtaining the funds and how they have to be spent in a move that has to facilitate the attainment of the set objectives (Widener university income statement 2013-2014).
The eighth step in the budgeting process, as advocated by Goldstein (2012), is developing and distributing guidelines regarding the preparation of the budget proposals. The Widener University is very tuition dependent since 80% of its revenue is from tuition and fees, so it’s all about enrollment (See Appendix C). The University then comes up with the expected revenues and possible expenditures. Afterward, the ninth step is concerned with the development and submission of the budget proposals to the concerned committee so that members can get chances of scrutinizing and debating on some issues therein. After the submission of the proposals, the hearings are undertaken where the committee has to convince the members that the financial estimations are in line with the objectives of the institution. Then members then get the opportunities to scrutinize and analyze the budget properly before eventual consolidating it. Adjustments that are necessary according to the members can be undertaken to re-shape the budget in line with the realities surrounding the institution.
Approval of the budget by the board becomes the next item on the agenda where the budget committee having consulted widely and made necessary adjustment finally seeks the final word from the board. The approval stage sends the budget to the implementation stage that is undertaken at the begging o the new fiscal year according to the specifications of the institution in question. Evaluation and monitoring of the performance against the provided budget is undertaken where the departmental chairpersons and other administrators are tasked to analyze the progress throughout the fiscal period. At the end of the fiscal year, there is a last stage that encompasses the preparation of audited financial statements where both independent external auditors help analyze the use of finances.
Critique of the institution’s budgeting approach regarding its mission and core values
The essence of budgeting by any institution of higher learning must be geared towards the realization of its goals as well as objectives as well as ensuring that its mission and core values are observed and reflected thoroughly. Widener University’s mission statement is to lead by providing a unique combination of professional education and liberal arts in a challenging and culturally diverse academic community. The students are engaged in what has been described as diverse teaching and practical learning among other aspects where the objective is to inspire the learners to be responsible citizens in a move that can help to facilitate contribution to community development. The core values of this institution include delivering quality education and training, cultivating a culture of leadership and ensuring that it contributes to innovation and other societal obligations.
In line with the mission statement and core values of this institution, it can be realized that the approach to budgeting is quite well in the sense that there is a lot of time and numerous deliberations and consultations that are undertaken along the way. The fact that the budget commit...