Race Don't Chase Question

I've just listened to the Race don't Chase podcasts and had a couple of questions.
We are a public School District (K-12). Obviously non-profit. Our income is based on Tax revenues and Student body.
We have to have budgets done by the end of the fiscal year (July 1). THey get approved and processed by September. But in November we can get another cut that will take effect in January. Here's an example:

We develop our IT budget starting in March.We base our budget on personnel and projects. We do not know ou r target number yet so we use last year's. We finalize ouf IT Budget at 35M. We're then told (in June) to reduce it by 10% based on information coming from the state. Our final number comes in around 31M. Then in November (Tax assesment time) we get a reduction in the actual amount of money comming from the state. This year it's approximately 20M district wide. This'll translate to about 7-8M just for IT.

How does Race Don't Chase apply to this kind of scenario? Should we be budgeting based on the fact that we know that the state will reduce our funding in November? I can't see doing that too much because if we don't ask for it we don't get it and they'll still reduce our money later. Do we knowingly pad the budget (I don't really like the word pad in this case) and ear mark certain line items as expendable "if" the cut comes?

Any thoughts?

Capt_Ron

Race Don't Chase Question

Captain Ron,

Don't pad the budget - look at your projects and figure out what they'll cost.

Then list your projects in order of priority. When you need to make cuts, cut the lowest priority projects until your numbers are in line with the budget.

If you've all agreed on the priorities before November, then this exercise should be (relatively) straightforward.

John

Re: Race Don't Chase Question

[quote="Capt_Ron"]Obviously non-profit. [...]But in November we can get another cut that will take effect in January. [...]
How does Race Don't Chase apply to this kind of scenario? Should we be budgeting based on the fact that we know that the state will reduce our funding in November? [/quote]

I share your struggle Capt_Ron. I work in a non-profit and have gone through retrenchments before.

Separate capital expenses (great flexibility), personnel expenses (no flexibility), and routine operational expenses (limited flexibility.)

If you are like me then your budget is heavily front loaded to acquire capital items and get them installed before classes resume. Consequently a mid-year retrenchment is doubly difficult to accommodate. Stretching replacement cycles, canceling or renegotiating maintenance contracts, and delaying upgrades are your best options. Don't skimp on infrastructure...but folks may have to wait an extra year to get their shiny new laptops.

Continue investing in people and training. Quality people trump equipment.

Good luck. PM me if you want to exchange more ideas off-line.

Race Don't Chase Question

I am in exactly the same spot. In addition to loss of state and federal budget lines, we are also partly supported by an endowment that just lost 1/3 of it's value. And...the word on the scientific street is that granting agencies will be making major cutbacks in awards in 09.

We will have a 15% "recision" this budget year, which means our budget that we submitted will be cut--at some point, and we don't know when--by at least 15%.

I agree with the excellent advice you've been given here--prioritize, and look for things that are flexible.

It's not fun, but at least you know you will probably keep your best people, since loosing them to private industry at this uncertain time is unlikely.