Budget Timeline and Process Overview
The budget process begins in early winter of the prior fiscal year when the budget managers are asked to begin developing their proposed budgets and imputing in to Power Plan. Over the next few months, discussions are held regarding strategic priorities, operational needs, possible savings and increased revenue. The Finance Committee recommends to the Board that they approve tuition and salary increases in the late winter, and the entire budget in the early spring. After the Finance Committee’s more detailed review has been completed, the Board approves the budget in the late spring. Subsequently, the board approved budget is re-visited by the budget managers, adjusted as needed, and approved by the Board of Trustees in December of that fiscal year.
The following information outlines considerations that Budget Managers and Preparers should take into account during the preparation, analysis and submission of their budgets:
Achieving Operating Efficiencies
All Budget Preparers are asked to consider operating expense efficiencies in preparing budgets that would result in cost savings, but do not significantly impact service. For example, consider using alternate vendors at a lower cost, eliminating redundancies between departments, obtaining a better bulk rate on its faculty housing requirements, etc… Separately, each Budget Preparer is asked to consider operating revenue enhancements which would add to existing revenues, or propose new revenue programs or services that would expand NEC’s revenue stream.
Business as Usual Budgets / Strategic Plan Program Budgets
Budget Preparers are asked to prepare budgets for programs that would be considered extraordinary and would require additional budget dollars to implement. In particular, NEC has begun the implementation of certain initiatives outlined in the Strategic Plan. Budget Preparers are asked to isolate these initiatives as new project codes, and prepare any revenue and expense projections separately from the ‘Business as Usual’ budgets (please contact the Business Office for appropriate project codes). In most of these cases, preliminary cost projections have been completed with senior management. Before preparing budgets for any initiatives, please schedule a meeting with the appropriate senior management team member(s) to review some of these preliminary estimates.
Programs That Require Institutional Advancement Fundraising
Certain programs identified as extraordinary may require additional funding from non-operating sources prior to being approved and consolidated in the budget. ALL such programs should be brought to the attention of the appropriate senior management member(s), who will then assess with Institutional Advancement how the project fits with the overall institutional funding priorities. This required advance review will insure that all new programs are consistent with NEC’s Strategic Plan and are in line with other NEC priorities.
Capital Expenditures / Improvements
- Any expenditure for a tangible good greater then $2,500 is considered a capital item and should be considered separately from the departmental operating budgets. Please contact the Director of Building Operations for any capital improvements to NEC’s physical plant that you may be considering. Budget requests for capital expenditures should be considered carefully, as the amount of funding available for such purchases is extremely limited.
- A capital expenditure request form (managed by the Business Office) must be completed for each proposed item. The form requires a brief summary of the project and/or expenditure and the appropriate approval signatures.
- The project and/or expenditure must be ranked by level of importance, with 1 being the highest and 5, the lowest. These requests will be reviewed by senior management, the Finance Committee and the Board, and a final approved capital expenditure list will be e-mailed to all budget managers at the end of April.
Budget Preparers should ensure that their budgets have taken into account any extraordinary needs related to technology additions and upgrades. The Finance Department will aggregate any individual departmental submissions and work with IT to centralize NEC technology needs and ensure that requests do not duplicate IT’s overall plans.
Budget Preparation Tools
NEC utilizes Power Plan for the budget management process.Training is provided to all new users and to others on an as needed basis.
Monthly Budget Reporting
Budget managers are asked to submit budget/forecast versus actual variance explanations monthly.Specifically, on or about the 12th business day of the subsequent month, Power Plan year-to date actuals will be available for analysis against year-to-date budgets.Reports are available to the budget managers that will assist in identify variances that require explanations.The explanations are typically due back 14-15 business days of the subsequent month.
Definition of a Capital Expenditure
Capital expenditures are defined as purchases over $2,500 to acquire, upgrade, and maintain physical assets such as buildings and building improvements, furniture, instruments, IT infrastructure, and other items. Please note that this $2,500 threshold should not be viewed as an absolute cutoff point, as capital projects may consist of several invoices that are each below $2,500. If you are unsure whether an invoice qualifies as capital, please contact Connor Fink, Senior Accountant in the Business Office at 617-585-1209.
Budget Timeline and Process Overview
In a typical fiscal year, approximately $1 million is allocated to capital expenditures across the entire NEC community. The capital budget for each year is prepared and finalized in the spring of the preceding year. In February-March, select department heads are asked to collect and provide capital expenditure requests. During March-April, department heads meet with the CFO to discuss strategic priorities related to capital spending, at which point the final capital budget is prepared for approval. The budget is then reviewed and approved by the Finance Committee in early May.
On a monthly basis, the Senior Accountant will provide a capital budget update to each department head. The update will contain the budget amount and actual amount spent to date for each capital request. If actual spending for a capital request falls significantly short or exceeds the budgeted amount, please notify Connor Fink, Senior Accountant.