Budget Development Analysis
Thebudgeting process is a very delicate procedure that requires time,correct assessment and research. When inaccurate and unrealisticestimates are used, the results are dire (Hornschild, 2015). Thebudget may end up being overfunded or underfunded. Revenue forSupport Project initiative has been falling, and this is directlyaffecting their budgeting process, in the cases under review. Thisessay looks into capital budgeting and some of its vital aspects bothat the national level and county level (Jacobs, 2013).
Uppercascading women Support Project was established to helpunderprivileged women to get access to health care and socialservices. They are usually subcontracted by the relevant governmentagencies to ensure that health services are provided in thecommunity. Most of the revenues for this non-profit organization comefrom government grants and with the recent economic crisis, verylittle tax collection was obtained, and therefore the grants wouldalso be reduced for this kind of initiatives. The organization is avital service provider for the community and budget cuts fromnational government would directly affect their operations. The othernon-governmental donations would not be enough to cater for therequirements and project set up by Support project.
TheSupport project could host 20 single women and three mothers withchildren in a program that enables them to shelter the needy women.Women are the most vulnerable in the community, and this initiativewould ensure that they are heard and provided with what they need.However, with the huge budget cuts from their largest financier,adjustments would be necessary for the organization to continue withtheir operations. There would be layoffs as well as structuraladjustments to ensure that the project still runs, this would affectthe number of programs to be supported.
Thereare various sources of funds for the Support project, and theyinclude private grants, state agencies, local government contractsand client user fees. The fall in government revenue is as a resultof failing markets that yield less income for business owners hence,affecting the amount of income tax revenue. The government is tryingto avoid the rainy fund drawings. They decided to reduce the budgetallocations and items to curb the situation. The budget cut affectsnonprofits more, and there is 40% reduction in Support project`srevenues (Morgan, Robinson, Strachota & Hough, 2015).
The800 million revenue shortfall in the government budget would have tobe compensated by the reduction in budget allocations for variousbudget items. This is depicted by the closure of a youth correctionalfacility and adult state prison. Budget cuts resulted in savingsbeing derived from the different budget items adjusted such asrunning home programs.
TheCFO and CEO of Support Project followed the budget proceedings andrealized that they would also have to revisit their own budget to theorganization. They would also have to make adjustments to accommodatethe budget cuts. Sonia the CEO argued that the effects of thenational budget would need to be assessed so that the budget for thenonprofit is relevant to the new developments. In her opinion theprograms with great need include crisis services, and treatmentservices for drug abuse, mental health, and alcohol addictions(Morgan, Robinson, Strachota & Hough, 2015).
However,with fewer grants expected to the service contracts and countyprograms would be reduced and the government would seek lessassistance from organizations such as the Women`s Support Project.There were efforts to convince the county commission that the budgetcuts would gravely affect Support Project and no action was takenaddress the issue. The government does not have enough funds to coverall the costs and needs of every docket.
Thebudget items that were affected by the cuts were the community andsocial services that took a 10% reduction. Community programs werereduced by 7%. Huge service contracts for housing, veterans, mentalhealth, children and family services and developmental disabilitieswould continue to operate but without increasing payments. The countycommission budget had massive changes that affected the SupportProject`s finds programs and lobbying effort bore no fruits for theorganization (Morgan, Robinson, Strachota & Hough, 2015). Thepurpose of the organization would be hard hit since 40 percent of theprograms would need to be terminated, and staff layoffs would followa proportional reduction. This would be devastating to the workersthe low government budget would affect all sectors of the economy.
Theplanning of a budget requires one to take into account the neediestareas, and operations that require urgency. There are also recurrentexpenses that would need to be reevaluated, and the right measuresare taken to reduce them. The two most important services for SupportProject are health services and crisis services (Hou, 2015). Theywould require sufficient funding, and since few sources of funds areavailable, it would be good to revise the budget with the help of thecounty commission to arrive at a suitable budget. The world servicesare crucial and therefore justifiable to be kept in the budgetprocess. There is a lot of reliance on organizations such as Supportproject to provide health services to the members of the community(Morgan, Robinson, Strachota & Hough, 2015).
Thereis need to carry out project appraisals on both the cost-benefit andsocial benefits that accrue to the users. Cost-benefit analysisshould be conducted ensure that the returns are profitable and thatthe people are able to access health service. The researchers shouldensure that the right measures are taken to ensure that the projectsare cost efficient and economical while still providing qualityservice and products to the citizens. The need to carry out theseappraisals is to ensure that risks are factored in, and the rightprecautionary measures taken (Hou, 2015).
Theprocess of financial planning requires time, money and the rightexpertise which can be sought from the government. The cost benefitanalysis measures may be used to determine the marginal efficiency ofcapital. The use of various appraisal methods enables one to factorin all the required risks and returns (Hornschild, 2015).
Thereare multiple perspectives that are taken in financial planning thataffect the budget controls. There may be the need to reduce recurrentexpenditure items such as wage bills. However, this affects thelivelihood of most individuals leaving the citizens in a bad state.Infrastructural development and security usually take up the biggestslice of the budget therefore the researcher should ensure that theright returns accrue to the country after completion of thoseprojects (Jacobs, 2013). This should include the use of present valueand future values measures. A well-presented budget providesstakeholders with a great and sufficient view of what to expect afterinvesting in a project. It is not any different with the publicsector as it is in the private sector (MacKay, 2017).
Thedecision-making process becomes much easier if correct figures areprovided by the researchers and economists. All macro and microfactors need to be considered to ensure that the services that arerequired the most by citizens are provided.
Theprocess of making decisions could also be done technically by use ofvarious techniques like the pecking order. This ensures that nobiasedness is experienced during the process. Having the facts rightalso reduces bureaucracy, and ensures that people are on the samepage without being objective about the budget. The same should occurfor Support Project since they rely mostly on government funding.They should provide the stakeholders government and donors with theright financial statement so that they can make an informed decision.They should factor in the marginal efficiency of their health andcrisis services to the community as these are actually recurrentexpenses (Hou, 2015).
Thereare health risks every day, and therefore there should be enoughsupplies for the communities in need of help. The government shouldalso have the social workers and chairpersons of these non-profitboards on their budget committees to provide them with the rightinformation on what would be appropriate for these sectors. Thereshould be proper and feasible projects that are cost efficient andbeneficial to the communities. The personnel required should also becompetent, if the marginal productivity of labor is low, then some ofthem should be relieved of their duties after agreeing to the termsof benefit (MacKay, 2017).
Thiscourse is important because the students are able to learn about theelements of budgeting. It is not usually an easy process as theoutcomes affect many stakeholders and therefore the figures should befair to everyone. The course objectives are clear on what should belearned. The individuals who would work in the non-profitorganization they are able to familiarize themselves with what isneeded during the budgeting process. The course provides alsoprovides budgeting officers with the right skills to enable them tocarry out their duties efficiently. The right skill set and expertiseare required in the job market therefore, this course is sufficientto ensure that the right individuals work for the government andnon-profit organizations. Taking into account the hard skillsrequired, presentation and research are key for the proper workingout of the budget numbers. Teamwork and marketing skills are alsoessential since the individual is able to convince stakeholders aboutthe benefits of taking up investment. Acquisition of skills is alsoimportant in ensuring that donors see the vision of the organizationand that they are ready for their support.
Inconclusion, budgets need to be well researched, and the rightpolicies implemented for the interest of the people is supposed toserve. Budget development is a complex task, and fiscal planners haveto take into account the implications of the choices they make. Forinstance, the items to omit and the ones that need more budgetaryallocation. There is usually a multiplier effect in the economy whenit comes to the budgeting process. Financial planning plays a crucialrole in the development of a budget since the whole process involvesfunds and how best they can be managed.
Hornschild, R.(2015). Arbeit mit Budget: Sales and Marketing Planning.Internationales Business Development, 253-265.doi:10.1007/978-3-658-05659-9_14
Hou,Y. (2015). Local government budget stabilization: An introduction. Inlocal Government Stabilization: Explorations and Evidence:Explorations and Evidence. Springer International Publishing.
Jacobs, D. F.(2013). Capital Budgeting for Government Entities. CapitalBudgeting Valuation, 403-420. doi:10.1002/9781118258422.ch21
MacKay, R. C.(2017). The Impact of Fiscal Stress on Local Government FiscalStructures: An Event Study of the Orange County Bankruptcy. PublicBudgeting & Finance. doi:10.1111/pbaf.12149
MorganD., Robinson K.S., Strachota, D., & Hough, J.A (2015) Budgetingfor Local Government and Communities.
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