The Planning Cycle - Preliminary Program Budgets

Description:
Preliminary Program Budgets outline the activities that will be undertaken on a program-by-program basis. These Budgets effectively implement the priorities established and approved by Band Council while meeting minimum program standards. Program budgets are costed plans. That means they not only establish what the program will do, but also estimates the funds required to carry out those activities.

Purpose:
Preliminary Program Budgets give decision-makers a good sense about program funding needs for the upcoming fiscal year. The budgets contained in the Preliminary Budgets need to be realistic so that deficits can be avoided. Unfortunately, there is a tendency of Program Directors to "pad" their budgets because they assume that some cuts will be made by Band Council. However, this is an unproductive exercise which should be discouraged as it can mislead Band Council when it considers budget Allocations.

If Funding Agreements are in place for the upcoming fiscal year, Preliminary Budgets should make use of the Revenue Forecast for that program when developing program budgets. In situations where Funding Agreements are not in place for the fiscal year being planned, Preliminary Budgets should be based upon anticipated revenues. In these cases, the Preliminary Program Budgets may well become important negotiation tools in establishing funding levels for new Funding Agreements.

Preliminary Program Budgets must reflect the Band's overall goals and priorities and are critical components for preparation of Final Budgets and in completing Appropriations. Preliminary Budgets guide program staff in carrying out their responsibilities. As well, they become an important information source containing measures against which the program and the Program Director can be evaluated and held accountable.

Process:
Generally, it is the responsibility of Program Directors to develop preliminary budgets in conjunction with the Band Manager and Financial Controller. Staff who work in the program should be involved as they usually have the best understanding of program obligations, priorities and costs. (see Sample Preliminary Program Budget)

There are several steps in developing Preliminary Program Budgets:

  1. The Band Manager should hold a Program Directors meeting to discuss the time lines and the format for Program Budgets. The Financial Controller should have available a Revenue Forecast based on previous and current year expenditures.

  2. Program Directors will meet with their staff to begin developing the budgets. (It may be useful to refer to the Mandate Objectives and Priorization sections for planning tips.)

  3. During these meetings, program priorities are identified and costed. This should include "regular" program activities and any other extraordinary expenditures anticipated by the program staff (such as the purchase of a new computer system).

  4. All program expenditures, including any common charges due to general Band Administration should be included. Programs should list details of projected expenditures, personnel and benefit costs, operating costs, required equipment, and supply costs for the upcoming fiscal year. This detailed list is based on the current year's expenditures. Finally, the budgets must also take into account changes to program priorities to develop an accurate projection of the next year's program budget.

  5. The Financial Controller will summarize the Preliminary Program Budget submissions for Chief and Council. It is extremely useful to have Program Directors present their budget submissions for Band Council. Chief and Councillors along with the Band Manager have an opportunity to challenge and understand the requirements, for each program.

  6. Band Council will have the task of making the necessary cuts (and occasionally additions) to submitted budgets. It is useful for Band Council to determine what areas of the budgets should be pared back or eliminated. How these changes get put into place is the responsibility of the Program Director.

  7. Program Directors will then be advised of amendments required to Preliminary Program Budgets. They are responsible for making those adjustments and submit revised documents to the Band Manager within a certain time frame.

Roles and Responsibilities:
As you can see, Program Directors and staff are responsible for developing preliminary program budgets. The Financial Controller is needed to provide financial information. At this stage, the Chief, Councillors and Band Manager play the role of the "devil's advocate."

Timing:
Preliminary Program Budgets should be developed by the end of February. This allows adequate time to present the preliminary information to Chief and Council, to gain their feedback and submit revised Program Budgets by fiscal year-end.