Section 6.13

The Budgeting Process

The Business Planning and Budgeting Process

1. PURPOSE AND SCOPE

  • The budgeting process is intended to link the annual operating budget to the longer-term strategic initiatives as set by the board of Directors and the House of Delegates.
    • Each Council or staff department prioritizes its goals, strategies, and activities to be consistent with those strategic initiatives and develops an operating budget intended to achieve its goals and maintain normal operations.  The staff liaison provides input to these budgets as necessary.
  • The Finance Committee consolidates the budget to arrive at an overall budget for the Society.

2. FINANCE COMMITTEE REVIEWS, FINALIZES, AND RECOMMENDS THE OPERATING BUDGET AND CAPITAL BUDGET TO THE BOARD OF DIRECTORS.

  • The Board of Directors approves the operating and capital budgets. 

4. BUDGETING GUIDELINES

The Finance Committee oversees the development of the operating and capital budgets using the following general budgeting guidelines: 
  • Maximize Net Income Guideline given Society needs and market conditions. 
  • Net Income shall be defined as income from budgetary operations excluding realized investment gains and losses. 
  • Net Income shall be targeted to reach 5% of total net revenue, excluding realized gains and losses on security transactions.
  • Society Reserves consist of cash and securities held in the investment portfolio.  Restricted reserves generally include amounts needed to fund operations (if a shortfall exists), capital expenditures, and Board Designated spending, as well as not-yet approved amounts identified by the Finance Committee to fund large, long-term projects.
    • Reserves not restricted as noted above shall be unrestricted reserves. 
    • The Finance Committee will strive to achieve a ratio of Unrestricted Reserves to Budgeted Expenses equal to 50%.
  • Board Designated Spending / Development Funds. See SOG 6.13A for guidelines.
    • Once the Finance Committee recommends approval of the annual budget for the fiscal year, the Vice President of Finance presents the budget to the Board of Directors, prior to the start of the new fiscal year.  Typically, this occurs at the Winter Board Meeting.
    • Unbudgeted expenses require a budget exception. See SOG 6.14.

The Finance Committee may deviate from these guidelines if necessary due to Society needs and market conditions. 

 

Approved By/Date: Board of Directors:  06/2017

Replaces Edition Dated:06/2014

Next Revision Due: 06/2019

 
 

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