Budget Development

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Building a Budget

Following are the general steps required to build the General Fund budget at Lane Community College. This information is not intended to suggest a process, timetable, or chronology for budget decisions. Nor does it address Oregon legal requirements.

DEVELOP REOURCE ESTIMATES FOR THE BUDGET YEAR

1. State revenues (approx. 32%): At several points during the year, the Office of Community Colleges & Workforce Development updates revenue projections and sends each community college a spreadsheet estimating the state for the current year and the upcoming fiscal year. Final state allocations will not be determined until the enrollments for each college are finalized in the summer after the budget year has begun.

2. Property taxes (approx. 15%): The state provides estimates for each college on property tax revenues. These are usually based on a percentage increase of the previous year’s amount. Final property tax collections are available in December or January and these are the figures used to estimate the tax revenues for the following fiscal year.

3. Tuition and Instructional Fees (approx. 30%): Institutional Research, Assessment and Planning provides enrollment projections, both current-year and five-year, at several points during the year. These projections are used to estimate tuition revenues for the following fiscal year.

4. Net Working Capital-Unrestricted (approx. 4% to 6%): Projections on unrestricted carryover begin with the Unappropriated Ending Fund Balance and are continually refined during the current year. The Budget Office keeps close track of actual revenues and expenditures during the current year in order to more accurately project unrestricted carryover.

5. Other (approx. 18%): Most other revenues are restricted to certain uses or based on prior year(s) history. The Budget Office helps develop budgets (both revenues and expenditures) for these functions.

DEVELOP BASE EXPENDITURE BUDGET

1. Determine department base budgets: In an incremental system we start with the current year budget as of July 1. Adjustments are made for recurring personnel changes and current-year non-recurring allocations are deleted. Savings in personnel positions that become vacant before the budget year are calculated and come out of the department base budget. Adjustments are also made between line items within current funds available to the department.

2. Determine Salary Provision budget: Salary Provision is used to cover employee compensation increases during the year. This is a contingency budget. The funds in this budget are distributed to departments as compensation packages are finalized. This budget is developed from estimates of potential increases in employee compensation.

3. Develop proposals for changes in support rates: OPE and bad debts charges are adjusted as necessary based on current balances and historical performance.

4. Develop proposed contingency budget: Proposals are developed for the Unappropriated Ending Fund Balance, Board contingency, administrative contingency, and various special projects budgets.

5. Develop proposals for “mandatory” increases: Determine or estimate increases in contracts, legal fees, insurance, utilities and other costs necessary for the operation of the college and not under control of the college.

6. Develop capital budget: Determine capital needs and/or an amount to set aside for facilities and equipment needs.

7. Develop preliminary estimate of “surplus” or “deficit”: This estimate drives decisions about allocation, reallocation and/or reductions in budget components. In practice this estimate is made several times during the budget development process as various recommendations are formulated.

DEVELOP CHANGES TO BASE BUDGET & FINAL BUDGET

1. Determine strategic priorities: Develop a list of projects, programs and services that move the college forward according to the strategic plan.

2. Determine department needs and requests: Develop a list of department requests and needs including positions, projects and M&S.

3. Determine tuition rate: This is the only sizeable revenue the college can control. Data/information gathered to help with this decision include tuition rates at other Oregon community colleges, calculations of tuition as a percentage of total revenues, impact on financial aid students, and affordability for students in general.

4. Develop reduction, reallocation and addition recommendations: A list of recommendations is developed detailing proposed changes in revenues and expenditures. The eventual final product is the Budget Document which reflects all of the budget decisions made during the entire process.

5. Convene Budget Committee and proceed through legal approval/adoption process.