The Budgetary Cycle - Appropriations & Program Work Plans

Description:
Appropriations are the process of allocating anticipated revenues (see Revenue Forecast) to Band programs and agencies. Program Work Plans outline exactly how much money is to be transferred to each program and when.

Purpose:
Appropriations are the link from "fiscal planning" to "financial management." Based upon the Capital Plan and the Preliminary Program Budgets, funds are allocated to programs. Appropriations and Program Work Plans outline how money is transferred and for what purposes. Within these allocations and consistent with established financial policy (see Sample Fiscal Policy), program directors take responsibility for program operations.

Considerations:
Final appropriation levels may be altered based on changing fiscal circumstances including additional or reduced revenues, higher or lower expenditure levels, emergencies, and repriorization. These changes will be reflected monthly in the Expenditure and Variance Report and may require a review of the initial Appropriations.

For this reason, some First Nations may choose to undertake two appropriations - one just prior to the beginning of the fiscal year and the other as part of the Mid-Year Report process. This two-phase appropriation process is also beneficial because the mid-year review provides decision-makers with a good idea about how money was spent in the first half of the fiscal year. If they feel money can be spent more effectively in other ways, then they have the option of reallocating the funds as appropriate.

It is important to remember that the later it gets in a fiscal year, the more difficult it is to adjust Appropriations. What makes it more difficult-programs may have spent funding early in the fiscal year, committed unexpended funds, or have outstanding obligations to meet in accordance with Funding Agreements. Program Work Plans outline the proposed transfer of monies to specific programs and at what stages in the fiscal year.

Process:

  1. Program Directors submit costed Preliminary Program Budgets and the Five-Year Capital Plan.

  2. Program Directors are provided an opportunity to present their program budgets and defend spending projections to the Band Manager and Chief and Council.

  3. The Band Manager and Financial Controller provide Chief and Council with their analysis of the Preliminary Program Budgets and Capital Plan.

  4. Chief and Council make any changes they deem appropriate and necessary to the Preliminary Program Budgets and Capital Plan in order to achieve a balance between the costs of those plans and the Revenue Forecast.

  5. Once this balance has been achieved (see Appropriations and Program Work Plan Template), Chief and Council approve Appropriations for the programs and agencies.

  6. At this stage, First Nation decision-makers have two choices when doing their Appropriations:

    1. Allocate the total Band funding as outlined in the Revenue Forecast to programs and services at the beginning of the new fiscal year; OR

    2. Hold back a portion of the total revenues and allocate the balance to programs and services later in the year. Upon review of program activities (e.g., mid-year), decision-makers can allocate the remaining monies to programs, or alter Program Work Plans and redistribute funds as required.