Recently, Kathleen Nelson, senior vice president for finance and administration, gave a look into some of the factors in next year’s budget. She’s now going to share about the budgeting process—how it works and who’s involved. Hopefully this will give you a better picture of what happens from December until May each year when we work through planning Bethel’s finances.
What does the budgeting process at Bethel normally look like?
A balanced budget is a requirement. It’s something we require of ourselves but it is also required by our bank, our auditors, and the board of trustees.
First of all, we take a hard look at where we are in meeting our enrollment and budget for the current year.
Next, we create a revenue plan and some high level assumptions for the next year:
- Tuition rates, student enrollment, and financial aid costs at each school
- Salary increases for employees
- Health benefits and pension costs
- Major maintenance projects
Once we know these items, we have a good estimate on what funding may be available for new projects and initiatives.
What are new projects and initiatives and how do you decide which are funded?
Budgeting is a group process and we do this together. Each Executive Leadership Team member works with the employees in their area and the deans work with leadership teams within their schools to prepare and present a prioritization of the requests for their areas. There are 2 pieces of information that help us in this process:
- Detailed requests. Unlike your birthday wish list, these requests require a description and justification, a cost and/or revenue estimate, staffing implications, and estimates for one-time vs. ongoing spending.
- Bethel’s Strategic Plan. We use the strategic plan to help determine if something is advancing us toward our strategic goals. This plan will continue to guide our decision-making for the next few years at Bethel.
We then spend two days together doing an initial review of all of the requests. These are two really long days and often involve hard discussions, but it is very helpful because it gives each of us a view into the priorities of other areas and we can better see how each of our requests fit within the university. Even if we can’t fund something this year, the awareness helps us do some early planning for next year’s priorities and strategic initiatives.
What was approved for next year? Was it impacted by this year’s enrollment shortfall?
It’s never easy and this year was no exception—we had over $8 million in requests. While we haven’t finalized the budget yet, we knew early on that funding would be very limited and we knew that we were committed to funding the start up for the Physician Assistant program and the faculty compensation plan. After that, we have committed to a couple of new faculty positions, and increasing our enrollment and marketing efforts in each school.
What if my request wasn’t approved? Does this mean that my area isn’t strategic?
Not at all! We know that every person here at Bethel contributes to our mission and each area needs support. The reality is that we have more strategically important requests than we are able to fund. The challenge is determining how best to steward our resources. Our goal is to look at the overall picture and determine the best timing when evaluating each request.
Where is the process at this year?
With all of the preplanning and meetings, some folks might think the budget is nearly done, but we’ve hardly begun. There are over 5,000 individual line items in Bethel’s budget. In fact, as I write this, those 5,000 lines of detailed budgeting are due this afternoon from each VP and Dean. We’ll spend the next few weeks rolling these budgets together and doing the analysis and reporting to ensure that the budget is accurate and balanced before presenting a final draft to the board of trustees for their approval in early May.