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Resource allocation

VIEWS: 25 PAGES: 19

									         Resource allocation

 Resource Allocation Techniques
 Centralisation
 Decentralisation
 Budget Policies
 Implementation/transition
 Reporting, Monitoring
 Case: University of Botonda
          RESOURCE ALLOCATIONS
               TECHNIQUES
1.   Across the Board (exceptions)
2.   Differential cuts for differing units
3.   Cut across evenly and add back differentially
4.   Vertical cuts
5.   Selective allocation
6.   Market driven approach
7.   Functional budgeting
8.   Zero base approach
9.   Enrolment or any formula-based method
SCIEN CE

Fiscal year ending March 31st               $B 1,000,000

Less Cutbacks:

1) Organic Chem istry Position
   Currently Vacant (Assoc)                      25,000

2) Physical Geography (Prof)                     30,000

3) Botany Position (9 m onths)                   20,000

4) Field Trips                                    4,000

5) Travel                                         5,000

6) 2 Assistant Lab. technicians                  16,000

   90% of previous year                      $B 900,000

Plus Addbacks:

1) Inflation Factor                20,000       920,000

2) Field Trips                      4,000       924,000

3) Botany Position (9 m onths)     20,000       944,000

4) Physical Geography (Prof)       30,000      974,000

5) 2 com puters                     6,000      980,000

6) Organic Chem istry (Lecturer)   20,000     1,000,000

7) 10 com puters (Com puter lab)   30,000     1,030,000

   Proposed Bud get com ing year            $B1,030,000
      RESOURCE ALLOCATIONS
           TECHNIQUES




10. My favourite - ALL OF THE ABOVE
DECENTRALISATION DEFINITION
   Distribution of the administrative powers
    or the functions of (a central authority)
    throughout local or regional divisions,
    branches
          CENTRALIZATION
 Total control in limited hands
 Less University politics involved
 Ease of decision making
 Better ability to manage reorganization
 Outsiders will view the University as in
  control
             DECENTRALISATION
                 BENEFITS
   Deans and Managers can be held accountable.
   Deans and Managers are best placed to make
    local decisions.
   Deans and Managers can and will manage. In
    fact, they like it.
   The University likely gets the best value for the
    money.
   Promotes empowerment, quality and higher
    morale.
   Has a positive effect on the budget.
           MIX OF CENTRALISED AND
           DECENTRALISED EXAMPLE

CENTRALISED:              DECENTRALISED:
1) Position Control for   1) Hiring, left to the
   all permanent             department.
   continuing
   positions.
                          2)   Department
2)   Block funding for         chooses where to
     operating                 spend for operating
     expenses.                 expenses.
         Budget Policy/Strategy

   1- All expenses controlled centrally
   2- Supplies are decentralised as well as the
    related deficit or surplus
   3- Travel and supplies are decentralised as
    well as related surplus/deficit
   4- All expenses decentralised (except
    benefits) and related surplus
   5- Everything decentralised
   6- Same as 5 with a tax on surplus
                      Budget Policy/Strategy
                  1       2      3      4      5   6

Salaries

Benefits

Travel

Supplies
                                                       tax
Surplus

Deficit

               Central
 Faculty/department/admin unit
     Implementation strategy
 Will for implementation
 Define goals of the institution
 Choose appropriate budget method
 Existing governing structure
 Representation
 Avoid imposition by government
 Schedule of timing
 Approval process
    Implementation/ transition
 Communication
 Support
 Policies and procedures
 Information systems
 Training
 Reporting and monitoring
               Communication
   Provide background information
   Identify the issues
   Sell the problem before the solution
   Explain the process that will lead to a
    formulation of the possible options
   Keep the community appraised of progress
    made
   Seek support from University Council
   Explain implementation strategy
                Support
 Planning at unit level
 Accountability
 Policies and procedures
 Controls
 Information systems, who needs what,
  examples of management reports
 Help line
      COMPUTERISED SYSTEMS

                Human
              Resources &
  Student       Payroll
Information                  Budget
   System


                Finance
                System
                              Other
              Management    Sub-systems
               Reports
COMPUTERISED SYSTEMS Contd.
Sub Systems – interfaces
 Physical Plant
 Science Stores
 Print Shop
 Mail Room
 Telephones
 Many others
        Reporting, Monitoring
 Take a snapshot of financial data at a
  particular point in time ie. 6 months into
  the fiscal year
 Forecast the needs to the end of the fiscal
  year
 Evaluate forecasted position
                                       DEPARTMENT X - FINANCIAL PROJECTIONS TO MARCH 31
                                          1             2           1+2=3            4                          4-3=5
                                        Actual     Projections      Annual       Annual                       Variance
                                          to           1/1/       Projection     Budget                        surplus
                                        31/12       to 31/03/      to 31/03/     to 31/03                     (deficit)
Salaries:
    Faculty (1)                   $          270,000    $            75,000   $   345,000   $   360,000   $        15,000
    Administrator (2)                         34,000                 12,000   $    46,000        48,000   $         2,000
    Clerical (3)                               8,000                  8,000   $    16,000        32,000   $        16,000
                                  $          312,000    $            95,000   $   407,000   $   440,000   $        33,000
    Beneffits 20% of salaries     $           72,000    $            21,800   $    93,800   $    99,600   $         5,800

Other Expenses:
    Travel (4)                    $            6,000    $             2,000   $     8,000   $    10,000   $          2,000
    Supplies                                  19,000                  7,500   $    26,500        25,000   $         (1,500)
    Photocopying                               8,500                  4,000   $    12,500        12,000   $           (500)
                                  $           33,500    $            13,500   $    47,000   $    47,000   $            -

Total for Department              $          417,500    $           130,300   $   547,800   $   586,600   $        38,800
Notes:
 (1) 3 months' savings from Dr. Away's sabbatical starting 01/01 to 31/03
 (3) New administrator started April 20 - 3 weeks' salary savings
 (4) This new position was not filled until Ocober 1
 (5) Chair to attend SUMA in February
    Case: University of Botonda
Part 1: Describe the process, methodology
 resource allocation techniques,
 decentralisation vs centralisation, funding
 models and budget policies helpful to
 address the financial predicament at UofB
 Part 2: Present your findings to the
 Finance Committee

								
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