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Some basic budget building blocks
Personnel: Salary figures must be in compliance with standard institutional policies. If a proposal involves current employees or designated positions, the proposal budget must be based upon current salary figures for those positions. If a suggestion involves new positions, the office of Human Resources can provide estimated salary figures. In multi-year proposals, salaries should allow for projected annual increases.
Fringe Benefits: Fringe benefits are an additional expense item representing the institution’s contribution to employees’ benefit packages based upon union contracts and state and federal regulations. The full-time rate applies to any full-time employee receiving any compensation through a grant or sponsored project award. Payroll can provide rates for current employees. The projected rate for new employees in FY08 is 37% as of 5-1-07, but that is subject to change. (Note that the fringe benefit rates for faculty working in the summer will be less, because some year-round benefits are covered in their annual contract reimbursement payments). Fringe benefits for student workers are determined by credit hour enrollment and number of hours worked per pay period. Some may require FICA benefits of 7.65%. Payroll can supply up-to-date regulatory information. Graduate assistants do not receive fringe benefits.
Travel: Proposed travel must conform to WSU regulations. Cite specific individuals, destinations and activities.
Equipment: Give detailed, written estimates whenever possible. Justify the particular equipment selected in the proposal narrative.
Materials or supplies: Consumable materials or office supplies is one budget area in which small lump sum figures are acceptable.
Consultants/Contractual agreements: Contractual agreements are required if payments will be made to individuals who are not WSU employees (such as guest lecturers, external consultants or outside agencies (non-profit organizations or corporations). A specific sponsor may set a maximum per diem limit for consultants. Check with the sponsoring agency on its policies with regard to charging a per diem for on-site and off-site work.
Other: This misc. category covers items such as phone, postage, copying costs and items which do not fit any other category. Small lump sum figures are acceptable.
Facilities & Administrative costs: Facilities & Administrative (F&A) costs, formerly called indirect costs, cover the intangible expenses associated with administering a project (heat, water, business forms, paperwork processing, etc.). WSU’s rate, negotiated with the U.S. Department of Health and Human Services (as of 7-1-04), is 44% of salaries, wages and fringe benefits. Some sponsors may establish a different rate (for example, 8% of total project costs) or may not allow for any F&A costs. Sponsors should be contacted to determine what rate is acceptable. In cases where the sponsor does not have an established rate, use either the federal negotiated rate or 8% of the total straight costs, whichever is the greater amount. |
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Budget
A budget is generally a list of all planned expenses and revenues. It is a plan for saving and spending. A budget is an significant concept in microeconomics, which uses a budgeting line to illustrate the trade-offs between two or more goods. In other terms, a budget is managerial plan stated in financial terms.
In summary, budget preparation and the purpose of budgeting is to:
1. Provide a forecast of revenues and expenditures i.e. construct a model of how our business might perform financially speaking if certain strategies, events and plans are carried out.
2. Enable the actual financial operation of the business to be deliberate against the forecast.
Business start-up budget The process of calculating the costs of starting a small business begins with a list of all necessary purchases counting tangible assets (for example, equipment, inventory) and services (for example, remodeling, budget insurance), working capital, sources and collateral. The budget should contain a narrative explaining how you decided on the amount of this reserve and a explanation of the expected financial results of business activities. The assets should be valued with each and every cost.
Corporate budget The budget of a company is often compiled annually, but may not be. A finished corporate budget, usually requiring considerable effort, is a plan for the short-term future, typically one year (see Budget Year). While traditionally the Finance subdivision compiles the company's budget, modern software allows hundreds or even thousands of people in various departments (operations, human resources, IT etc) to list their expected revenues and expenses in the final corporate budget.
If the actual figures delivered through the corporate budget period come close to the corporate budgeting, this suggests that the managers understand their business and have been successfully driving it in the intended direction. On the other hand, if the actuals diverge wildly from the corporate budget, this sends an 'out of control' signal, and the share price could suffer as a result.
Government budget The budget of administration is known as government budget a summary or plan of the intended revenues and expenditures of that administration. The United States federal budget is prepared by the Office of Management and Budget, and submitted to Congress for consideration. Invariably, Congress makes many and substantial changes. Nearly all American states are required to have balanced budgets, but the federal government is allowed to run deficits.
The United Kingdom government budget is prepared by the Chancellor of the Exchequer, the second most important member of the government, and must be passed by Parliament. Parliament seldom makes changes to the government budget.
Personal or family budget In a personal or family budget all sources of income (inflows) are identified and expenses (outflows) are planned with the intent of matching outflows to inflows (making ends meet.) In consumer theory, the equation restricting an person or household to spend no more than its total resources is often called the budget constraint. |
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