The Purpose of Governmental Budgeting

The budget preparation process is an opportunity for an agency to collaboratively set and meet financial goals. So what may seem like a bunch of never-ending numbers on a spreadsheet is actually much more: a plan of action for the future of both the agency and the community it serves.

Since many of our clients are actively participating in preliminary budget preparation right now, we thought this would be the perfect time to discuss the four goals of the budget process to highlight why it is so important.

The Four Goals of the Budget Preparation Process

1. Establish Goals to Guide Future Decision Making

The first step of budget preparation is to create a set of budgetary goals. This includes assessing the needs of the community, establishing priorities, and determining challenges and opportunities for government services, capital assets, and management. Moreover, these goals should provide a baseline to plan for future budgets.

2. Develop a Plan to Achieve Goals

Once the goals have been established, financial policies can be adopted and plans for the programmatic, operational and capital components can be created. Programs and services that need attention should be consistent with the policies and plans of the established goals so effective management strategies can be developed.

3. Develop a Budget Based on Plans and Goals

Once the goals are set and the plans are finalized, a budget can be prepared and adopted. Budgets should be developed while financial options are evaluated to ensure the budget amount will meet the goals of the agency.

4. Evaluate and Adjust Budgets as Necessary

No budget is perfect, so each budget should be routinely monitored, measured and evaluated in terms of efficiency and adjusted accordingly. Luckily, there are plenty of integrated software solutions available to help keep things on track.

While we live in an age where technology can assist an agency in managing funds, tracking expenditures, and staying out of the red, there is no substitute for an organized, well-thought-out budget process. That is the key to successful implementation and proper program funding. So, remember to build budgetary architecture around tangible goals and strategic planning. It’ll make it easier to monitor and adjust budgets as needed and build upon their successes by emulating goals with a proven track record. Not to mention simplify what could otherwise be an arduous task.

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