Step 1: Prepare and Develop Inputs for the Budgeting Process

The planning and budgeting process begins with establishing principles and policies to guide the budget process and gaining a better understanding of the forces that shape the budget.

Best Practices in Community College Budgeting

A. Adopt/re-affirm budgeting principles and policies to guide the budgeting process. Budget principles and policies set standards for how the college manages its resources.
B. Examine internal and external forces that impact the budget. Analyzing academic and financial performance and also external factors is key to understanding their impact on a college’s budget.

 

GFOA Best Practices

Policies

  • Adopting Financial Policies. GFOA recommends that governments formally adopt financial policies.  Steps to consider when making effective financial policies include (1) scope, (2) development, (3) design, (4) presentation, and (5) review.
  • Appropriate Level of Unrestricted Fund Balance in the General Fund. GFOA recommends that governments establish a formal policy on the level of unrestricted fund balance that should be maintained in the general fund for GAAP and budgetary purposes. Such a guideline should be set by the appropriate policy body and articulate a framework and process for how the government would increase or decrease the level of unrestricted fund balance over a specific time period. In particular, governments should provide broad guidance in the policy for how resources will be directed to replenish fund balance  should the balance fall below the level prescribed.
  • Establishing an Effective Grants Policy. GFOA recommends that governments develop a formal grants policy.  Further, GFOA recommends that such a policy address steps to take prior to applying for or accepting grants.

Long-Term Forecasts

  • Long-Term Financial Planning. GFOA recommends that all governments regularly engage in long-term financial planning.
  • Financial Forecasting in the Budget Preparation Process. GFOA recommends that governments at all levels forecast major revenues and expenditures. The forecast should extend several years into the future. The forecast, along with its underlying assumptions and methodology, should be clearly stated and made available to stakeholders in the budget process. It also should be concisely presented in the final budget document. The forecast should be regularly monitored and periodically updated.

Related Topics

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