The
Board directs the president to develop annual budget recommendations
that are in accordance with the college’s strategic plan and conform to
the requirements of Local Budget Law (ORS 294.326). The budget shall
provide for:
- Annual operating expenditures not to exceed projected
revenues (Expenditures shall be budgeted according to the college’s
strategic priorities.)
- Debt service, both current (due in less than 12 months) and long term
- Reserves for maintenance and repairs to its existing facilities
- Reserves for acquisition, maintenance and replacement of capital equipment.
- Reserves for strategic capital projects
- Funding levels to fulfill future terms and conditions of employment, including early retirement benefits
- Allocations for special projects related to the strategic directions of the college.
- Allocations for contingencies (unforeseen events requiring expenditures of current resources)
- Ending Fund Balances (according to policies set specifically for that purpose)
Lane has a further responsibility to:
- Plan how it will spend any “onetime” unanticipated revenue, allocating it strategically and prudently between:
- The restoration of any shortfall to targeted ending fund balances,
- Currently unfunded projects in the strategic plan, and/or
- Holding some or all of it in reserve during financially volatile periods.
- Permanently stabilize its finances in their entirety
(operating budget, reserves, contingencies and ending fund balances)
when it perceives a long term change (increase or decrease) to its
available future recurring resources
Discussion
Lane has a fiduciary responsibility to its taxpayers, current students
and future students to best allocate and manage the financial resources
of the college. Like any family, Lane must live within its
financial means, in both the short and long run. Every family should
budget for: everyday expenses commensurate with its current income;
servicing its debts, like credit card loans (short term) and mortgages
(long term); anticipated major repairs and improvements to its home;
special events or projects, like vacations; keeping some money in
savings for unexpected expenses; and, investing any remainder for a
better future.
If the family is especially conscientious, as Lane must be, it will
also plan: what it will do if it receives a “windfall” (perhaps
purchase a boat); how it will survive if something drastic happens to
reduce its current income; and, to leave something to the unborn
grandchildren.
Oregon local budget law requires state entities to adopt a budget in
which the total expenditures equal the total resources (revenues and
beginning fund balances). Community college boards are allowed
significant flexibility within that parameter to adopt budgets that are
suited to each college’s unique situation. For example, Contingency and
Reserve funds are allowed to enable a district to plan for strategic or
long-term expenditures. These funds may be built up over a period
of years.
In addition, in any given year, budgeted expenditures may exceed
budgeted revenues as long as the total resources budget (including the
Beginning Fund Balance) is sufficient to cover the total budgeted
expenditures. However, running operating deficits year after year
creates a dependence on non-recurring resources that is not
sustainable. (See discussion for Ending Fund Balance policy.) A
balanced budget definition must take into account sustainability.
Long-term sustainability must not be sacrificed for short-term
expediency.
Definition of a Balanced Budget
| Using Everyday
Language: |
Using the Language of
Public Budgeting and Finance: |
| Like any
family, Lane must live within its
financial means, in both the short and long run. Every
family should budget for: |
Lane has a
fiduciary responsibility (to its
taxpayers, current students and future students) to plan strategically
how it
will budget responsibly. Lane will
budget for: |
- Everyday
expenses commensurate with its current
income
|
- Annual operating expenditures not to exceed projected
revenues (Expenditures shall be budgeted according to the college’s
strategic priorities.)
|
- Servicing its
debts, like credit card loans
(short term) and mortgages (long term)
|
- Debt
services, both current (due in less than 12
months) and long term
|
- Anticipated
major repairs and improvements to
its home
|
- Adequate
reserves for maintenance and repairs to
its existing facilities
|
- Special
events or projects, like vacations
|
- Adequate reserves for capital projects
- Adequate
allocation for special projects related to
the strategic
directions of the college.
|
- Keeping some money in savings for
unexpected
expenses
- Investing any
remainder for a better future
|
- Contingencies (unforeseen events requiring expenditures of current
resources)
- Restricted ending fund balance (ICP carryover
consistent in amount with documented departmental needs)
- Unappropriated ending fund balance (the
unrestricted assets to be available only for future use—either to help
weather
a severe financial crisis, or to fund future special projects which
have yet to
be identified in the strategic plan)
- It is
acceptable for this balance to annually
fluctuate slightly from its target percentage of the total budget, so
long as
Lane plans how to restore it
- This is the “resource of the last resort;” to
expend
it currently imperils the future viability of the College itself
|
| If the family
is especially conscientious, as
Lane must be, it will also plan |
Lane
has a further
responsibility to:
|
- What it will do if it receives a “windfall” (perhaps
purchase a boat)
|
- Strategically plan how it would spend any “one time” unanticipated revenue; allocating it prudently between:
- The restoration of any shortfall to the targeted ending fund balance.
- Currently unfunded projects in the strategic plan, and/or
- Holding some or all of it in reserve during financially volatile periods
|
- How it will survive if something drastic happens to reduce its current income
- How to leave something to the unborn grandchildren
|
- Permanently stabilize its finances in their entirety
(operating budget, reserves, contingencies and ending fund balances)
when it perceives a long-term change (increase or decrease) to its
available future recurring resources
|
