BUDGETING

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BUDGETING
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Terminal Learning Objective
Action Conditions Standard
Prepare an Activity Level Budget. Given AR 1-1,
Army Command, Leadership and Management (ACLM),
and Budget Exercises. IAW AR 1-1 and ACLM.
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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.

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Installation Financial Management
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Budget

• A formal, written, detailed statement of
  resources required and activities planned for
  the entire command to accomplish its mission.

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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.

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Developing the Installation Command Budget
Estimate (CBE)
HQDA
MACOM
PBG
INSTALLATION CBE
MACOM
CDR
BMG
PBAC
DRM
MADs
ACTIVITIES
MADs
MADs
DRM
PBAC
CDR
DRM
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Financial Management Levels
MAD
ACTIVITY
SUB ACTIVITY
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Activity Chief

• Limited scope/responsibility.
• One program/BASOPS account.
• No budget expert.

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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.

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DPCA Accounts
AMS CODE
ACTIVITY
208018.33
ADMINISTRATIVE CENTER
814731.225
INSTITUTE FOR ADMINISTRATION
878751.11
HQDA INTERN TRAINING
87875.32
MACOM AND ACTIVITY EXECUTIVE PGRM
879732
ARMY CONTINUING EDUCATION
951214
PUBLIC AFFAIRS
BASE OPNS
815796.G1
CHAPLAIN ACTIVITIES
.G2
COMMAND INFORMATION
.G3
ALCOHOL AND DRUG ABUSE
.G9
REENLISTMENT ACTIVITIES
.N1
COMPTROLLER SERVICES/FAO
.N3
INSTALLATION HQ ADMINISTRATION
.N5
PERSONNEL MANAGEMENT
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Budgeting Process

• 1. Receive guidance.
• 2. Determine total requirements by EOR.
• 3. Determine financed requirements.
• 4. Prioritize unfinanced requirements and develop
  decrement list.
• 5. Phasing.
• 6. Prepare supporting schedules.

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Step 1 Receive Guidance

• Dollar Guidance.
• Manpower Guidance.
• Workload Guidance.
• Administrative Guidance.

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Dollar Guidance

• Tentative dollar amount the installation can
  expect to receive.
• Must budget within this dollar amount.
• Consider funding limitations.
• Specific purpose.
• Floors.
• Fences.

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Manpower Guidance

• Limitations on number, grade, and type of
  personnel authorized.
• Military labor expense is not budgeted by the
  installation.

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Workload Guidance

• Estimate of the amount of work performance
  expected by the installation, major activities,
  and activities.

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Administrative Guidance

• Budget format.
• Rounding instructions.
• Special schedule preparations.

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Step 2 Determine Total Requirements by EOR

• Element of Resource
• A code for classifying the type of services,
  goods, or other items being procured or consumed
  according to its nature rather than its purpose.

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Elements of Resource

• 1100 Personnel Compensation
• 1200 Personnel Benefits
• 2100 Travel Transportation of Persons
• 2200 Transportation of Things
• 2300 Rent, Communications, Utilities
• 2400 Printing Reproduction
• 2500 Contractual Services
• 2600 Supplies Materials
• 3100 Supplies Materials- Equipment
• 4300 Interest Dividends

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Two Methods to Determine EOR 1100, Personnel
Compensation

• Salary table.
• Average.

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Salary Table
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Average Method
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Computation of EOR 1200, Personnel Benefits

• Base pay times (x) a stated percentage.
• Example
• 220,000 X 15 33,000.

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Computation of EOR 2100, Travel of Persons - TDY

• To determine the total costs for EOR 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...).

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Computation of Other EORs

• Base figures on historical data plus known
  changes for EORs
• 2300 - Rent, Utilities, Communication
• 2400 - Printing, Reproduction
• 2500 - Contracts
• 2600 - Supplies and Materials
• 3100 - Equipment

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Computation of EOR 2600, Supplies

• Base on work load, seasonal requirements, and
  historical data.

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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.

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When Determining Financed Requirements

• Is this subjective?
• Who acts as the honest broker?

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Step 4 Prioritize Requirements

• Unfinanced requirements
• Establish priorities for the unfinanced
  requirements.
• 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.

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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 Requirements
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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.

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Decrement List

• List of financed requirements which will be
  eliminated if the activitys funding is reduced.
• Decrement lists are prioritized from least
  important to most important.
• Usually a percentage of the total dollar guidance.

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Decrement List and UFR List Relationship
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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.

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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.

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Phasing EOR 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).

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Civilians Paid for 260 Days per Year
1ST
2ND
3RD
4TH
TOTAL
QTR
QTR
QTR
QTR
DAYS
64
65
66
260
65
100
25
49.6
74.6
100
CUM
65/260
6564/260
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Phasing EOR 2100, TDY

• Based on when travel is scheduled to begin
  according to the information submitted by the
  activity chief.

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Phasing EOR 2500, Other Contracts

• Phase based on the contractual requirements for
  the payment.

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Phasing EOR 2600, Supplies

• Can be phased different ways, such as
• Productive (work) days.
• Workload.
• Calendar days.

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Productive Days
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Workload Historical/ Seasonal Data
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Phasing EOR 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.

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Step 6 Prepare Supporting Schedules

• Activity budget schedule.
• UFR lists.
• Decrement lists.
• Supply requirements schedules.
• Contracts.
• Phasing.

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Steps in Consolidation of a Major Activity Budget
(MAB)

• Accuracy - mathematical.
• Balance - between EORs.
• Completeness - adherence to guidance.
• Validity - bonafide need for budget year (BY).

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Developing the Installation Command Budget
Estimate (CBE)
HQDA
MACOM
PBG
INSTALLATION CBE
MACOM
CDR
BMG
PBAC
DRM
MADs
ACTIVITIES
MADs
MADs
DRM
PBAC
CDR
DRM
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Budget Worksheet Formulas

• TOTAL REQUIREMENT (A) ______________
• - DOLLAR GUIDANCE (1)
  ______________
• UNFINANCED REQS (G)
  ______________
• TOTAL REQUIREMENT (A) ______________
• - DIRECTED REQS (B)
  ______________
• REMAINING REQS (C)
  ______________

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Budget Worksheet Formulas (cont.)

• DOLLAR GUIDANCE (1)
  _____________
• - TOTAL DIRECTED RQTS (B) _____________
  
• NET AVAILABLE FUNDS (D) _____________
• REMAINING RQTS (C)
  _____________
• - NET AVAIL FUNDS
  _____________
• LESS IMPORTANT (E)
  _____________

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Terminal Learning Objective
Action Conditions Standard
Prepare an Activity Level Budget. Given AR 1-1,
Army Command, Leadership and Management (ACLM),
and Budget Exercises. IAW AR 1-1 and ACLM.