NONCOMMISSIONED OFFICER ACADEMY Prepare a Budget Concrete Experience Scenario You have decided to buy a new car since your current car has been giving you problems After deciding on a car to buy you estimate that you will incur an additional 700yr in expenses for the insurance and pr ID: 682490
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U.S. ARMY SOLDIER SUPPORT INSTITUTE
NONCOMMISSIONED OFFICER ACADEMY
Prepare a BudgetSlide2
Concrete Experience
Scenario:
You have decided to buy a new car, since your current car has been giving you problems. After deciding on a car to buy, you estimate that you will incur an additional $700/yr in expenses for the insurance and property taxes and will have a $500 monthly car payment; your current car is paid off. You make some calculations on your budget and conclude that it is viable to purchase the new car, but only if you make cuts to discretionary expenses, such as cable.What is the purpose of a budget?
How is this scenario related to the DA’s budgeting process?Who has experienced something similar to the scenario?Break up into groups and take 10 minutes to discuss the questions in regards to the scenario.Slide3
Learning Objective
ACTION:
Prepare a BudgetCONDITIONS: Mid-grade FM Leaders in a classroom environment working individually and as a member of a small group, using doctrinal and administrative publications, practical exercise, personal experience, handouts, and discussion with an awareness of the Operational Environment (OE) variables and actors.
STANDARD: Application includes:Identify the process of budget developmentIdentify key personnel in the budgeting processIdentify the six budgeting steps
Identify the purpose of the decrement and unfinanced requirement list.Identify phasing requirementsSlide4
Ask It BasketSlide5
Problems with Financial Resources
There never seems to be enough.
Many restrictions and directives attached to the use of public funds:
Cannot exceed ceilings, limitations, targets, etc.
Cannot shift funds between programs.Cannot use an appropriation for other than its stated purpose.Slide6
Installation Financial Management
Constrained Resources
Mission RequirementsSlide7
Budget
A formal, written, detailed statement of resources required and activities planned for the entire command to accomplish its mission.Slide8
Ways of Looking at a Budget
Series of goals with price tags.
Plan of work for the budget year(s).
Instrument for insuring efficiency comparing plan work with actual execution data.
Contract with the boss - i.e., “This is what I will accomplish with allocated resources.”Expectation - the budget is only an estimate of resources allotted to the activity.
Precedent - use historical data to develop the budget estimate, figuring in inflation.Slide9
Developing the Installation Command Budget Estimate (CBE)
CDR
DRMHQDA
PBACPBG
ACOMBMG
MADsDRM
MADsMADs
PBAC
CDR
ACOM
DRM
ACTIVITIES
INSTALLATION CBESlide10
Activity Chief
Limited scope/responsibility.
One program/BASOPS account.
No budget expert.Slide11
Major Activity Director (MAD)
Broader scope/responsibilities.
Generally more than one program or BASOPS account.
DRM provides assistance through budget analyst.
Competing for resources with other diverse missions.Slide12
Financial Management Levels
FSD
LIBRARY
PHYSICAL ACTIVITIES
CRD
DPCA
DPTM
DPW
TMP
HHG
TRANS DIV
SUPPLY
DOL
CDR
MAD
ACTIVITY
SUB ACTIVITYSlide13
DPCA Accounts
AMS CODE
ACTIVITY
208018.33
814731.225878751.11
87875.32
879732951214
ADMINISTRATIVE CENTER
INSTITUTE FOR ADMINISTRATION
HQDA INTERN TRAINING
ACOM
AND ACTIVITY EXECUTIVE PGRM
ARMY CONTINUING EDUCATION
PUBLIC AFFAIRS
BASE OPNS:
815796.G1
.G2
.G3
.G9
.N1
.N3
.N5
CHAPLAIN ACTIVITIES
COMMAND INFORMATION
ALCOHOL AND DRUG ABUSE
REENLISTMENT ACTIVITIES
COMPTROLLER SERVICES/FAO
INSTALLATION HQ ADMINISTRATION
PERSONNEL MANAGEMENTSlide14
Budgeting Process
1. Receive guidance.
2. Determine total requirements by Commitment
Items (CIs).
3. Determine financed requirements.4. Prioritize unfinanced requirements and develop
decrement list.5. Phasing.
6. Prepare supporting schedules.Slide15
Step 1: Receive Guidance
Dollar Guidance.
Manpower Guidance.
Workload Guidance.
Administrative Guidance.Slide16
Dollar Guidance
Tentative dollar amount the installation can expect to receive.
Must budget within this dollar amount.
Consider funding limitations.
Specific purpose.Floors.
Fences.Slide17
Manpower Guidance
Limitations on number, grade, and type of personnel authorized.
Military labor expense is not budgeted by the installation.Slide18
Workload Guidance
Estimate of the amount of work performance expected by the installation, major activities,
and activities.Slide19
Administrative Guidance
Budget format.
Rounding instructions.
Special schedule preparations.Slide20
Step 2: Determine Total Requirements by
CIs
Commitment Item (CI)
:
A code for classifying the type of services, goods, or other items being procured or consumed according to its nature rather than its purpose.Slide21
Sample Commitment Items
1100 Personnel Compensation
1200 Personnel Benefits
2100 Travel & Transportation of Persons
2200 Transportation of Things2300 Rent, Communications, Utilities
2400 Printing & Reproduction2500 Contractual Services
2600 Supplies & Materials3100 Supplies & Materials- Equipment
4300 Interest & DividendsSlide22
Two Methods to Determine
CI 1100, Personnel Compensation
Salary table.
Average.Slide23
Salary Table
TDA
JOB
HRANN
LINE/PARATITLESERIES
GRADE
STEPRATE
RATE
010A 00
P&B DIV
010A 01
BUD OFF
GS560
12
6
010A 02
BUD ANA
GS560
11
1
010A 03
BUD TEC
GS560
07
2
010B 00
FORCE M
010B 01
MGT ANA
GS343
12
3
010B 02
SUPV
GS343
12
3
010B 03
MPR DEV
75Z
E7
010B 04
TOE INST
71L
E6
010B 05
MGT ANA
GS343
11
1Slide24
Average Method
Current year
CI costs:
$240,000Divided by the number of employees
12Equals average cost per employee
$ 20,000Budget year cost estimate for CI
1100: 11 Employees times average cost Equals
$220,000
Estimated base pay cost used for budget
Estimated premium pay would be addedSlide25
Computation of
CI 1200, Personnel Benefits
Base pay times (x) a stated percentage.
Example: $220,000 X 15% = $33,000.Slide26
Four CornersSlide27
Computation of
CI 2100, Travel of Persons - TDY
To determine the total costs for CI 2100, determine the cost of each individual TDY trip planned.
For each trip, you need the following information:Number of personnel traveling.
Place traveling to (per diem rate).Number of days TDY.
Estimated cost of travel (airfare, POV...).Slide28
Computation of Other
CIs
Base figures on historical data plus known changes for CIs:
2300 - Rent, Utilities, Communication2400 - Printing, Reproduction
2500 - Contracts2600 - Supplies and Materials
3100 - EquipmentSlide29
Step 3: Determine the Financed Requirements
First, finance the directed requirements.
Then, prioritize the remaining requirements using the following as guidelines:
-Mission essential requirements.
-The training plan. -Any new initiatives. -Less important requirements should be financed last.Slide30
When Determining Financed Requirements:
Is this subjective?
Who acts as the honest broker?
DRMSlide31
Step 4: Prioritize Requirements
Unfinanced requirements:-Establish priorities for the unfinancedrequirements.- When total requirements exceeds dollar guidance, there are unfinanced requirements (UFRs).
Financed requirements:- If there is a funding shortfall, go to the decrement list to determine what gets cut.Slide32
Guidance $$ vs.
Total Requirements
Relationship between total requirements, dollar guidance (financed requirements) and unfinanced requirements (UFRs):
Total Requirements- $$ Guidance (financed requirements) = UFRs = Funding Shortfall = Less Important Remaining RequirementsSlide33
Unfinanced
Requirements (UFR) List
List of those total requirements which remain unfinanced due to the limited amount of dollar guidance.
Unfinanced requirement list is prioritized from most important to least important.Supported by impact statements.Slide34
Decrement List
List of financed requirements which will be eliminated if the activity’s funding is reduced.
Decrement lists are prioritized from least important to most important.
Usually a percentage of the total dollar guidance.Slide35
Decrement List and UFR List Relationship
Budget Decrement List
T #1 5th on list (Highest Priority)O #2 4th on listT #3 3rd on listA #4 2nd on listL #5 1st on
list-------------------------------Funding Line ---------------------------------UFRs List
R #6 1st on listQ #7 2nd on listT #8 3rd on listS #9 4th on list (Lowest Priority)Slide36
Considerations When Developing
UFRs and Decrement Lists
Regulatory requirements.
Command directives and special interests.Major activity directors’ priorities and special interests.
Mission of the installation, major activity, and activity. Slide37
Step 5: Phasing
Purpose of phasing: To accurately identify when funds must be available to meet obligations.
Financed requirements:
-Phased into quarterly increments.
-Phased cumulatively.Slide38
Phasing
CI 1100 and 1200
Phase based on paid days, i.e., the number of days in each quarter that the civilian employees will be paid (includes holidays and leave). Slide39
Civilians Paid for
260 Days per Year
65/260=
65+64/260=
1ST
QTR
2ND
QTR
3RD
QTR
4TH
QTR
TOTAL
65
64
65
66
260
25%
49.6%
74.6%
100%
100%
DAYS
% CUMSlide40
Phasing
CI 2100, TDY
Based on when travel is scheduled to begin according to the information submitted by the activity chief.Slide41
Phasing
CI 2500, Other Contracts
Phase based on the contractual requirements for the payment.Slide42
Phasing
CI 2600, Supplies
Can be phased different ways, such as:
-Productive (work) days. -Workload.
-Calendar days. Slide43
Productive Days
ROUND TO THE NEAREST 10Slide44
Workload Historical/ Seasonal DataSlide45
Phasing
CI 3100, Equipment
Phase based on replacement schedules and known requirements for new equipment, using the quarter in which the equipment will be issued or back ordered. Slide46
Step 6: Prepare Supporting
Schedules
Activity budget schedule.
UFR lists.Decrement lists.
Supply requirements schedules.Schedule of Contracts.
Phasing.Slide47
Steps in Consolidation of a Major Activity Budget (MAB)
Accuracy - mathematical.
Balance - between CIs.
Completeness - adherence to guidance.
Validity - bonafide need for budget year (BY).Slide48
PRACTICAL EXERCISESlide49
Ask It BasketSlide50
QUESTIONS?Slide51
Learning Objective
ACTION:
Prepare a BudgetCONDITIONS: Mid-grade FM Leaders in a classroom environment working individually and as a member of a small group, using doctrinal and administrative publications, practical exercise, personal experience, handouts, and discussion.
STANDARD: Application includes:Identify the purpose of the Internal Control ProgramIdentify the difference between a review and an assistance visitIdentify the processes done prior to conducting a reviewIdentify the process of conducting a review
Identify post review procedures