Step 4: Prioritize Spending to Enact Strategies and Allocate Resources

A well-crafted budget document results from prioritization and allocation of expenditures that align with the college’s goals.

Best Practices in Community College Budgeting

A. Prioritize spending to enact strategies. Current and new expenditures need to be prioritized so that the college’s limited resources are directed towards the most cost-effective expenditures for reaching the college’s goals.
B. Allocate funds based on the results of the prioritization process. Funds should be allocated to the same programmatic areas or subunits that are responsible for the achievement of corresponding goals.
C. Create a budget document that communicates how resources have been allocated to enact strategies. A budget document should tell the story of the challenges the college faces and how the college is using its resources to address its challenges.


GFOA Best Practices

  • Basis of Accounting versus the Budgetary Basis. GFOA recommends that the budget document clearly define the basis of accounting used for budgetary purposes. If the budgetary basis of accounting and the GAAP basis of accounting are the same, this fact should be clearly stated. If the budgetary basis of accounting and the GAAP basis of accounting are different, major differences and similarities between the two bases of accounting should be noted. Disparities may include basis differences, timing differences, fund structure differences, and entity differences. The description of the differences between the GAAP basis of accounting and the budgetary basis of accounting should be written in a manner that is clearly understandable to those without expertise in either accounting or budgeting. The use of technical accounting terms should be avoided whenever possible. In cases where the use of technical accounting terms cannot be avoided, those terms should be clearly defined and fully explained.
  • The Impact of Capital Projects on the Operating Budget. GFOA recommends that governments discuss and quantify the operating impact of capital projects in the budget document.  The impacts should be identified on an individual project basis, but may be summarized.
  • Sustainable Funding Practices for Defined Benefit Pensions and Other Postemployment Benefits (OPEB). GFOA recommends that state, provincial, and local government officials ensure that the costs of DB pensions and OPEB are properly measured and reported. Sustainability requires governments that sponsor or participate in DB pension plans, or that offer OPEB, to contribute the full amount of their actuarially determined contribution (ADC) each year. Failing to fund the ADC during recessionary periods impairs investment returns by providing inadequate funds to invest when stock prices are low. As a result, long-term investment performance will suffer and ultimately require higher contributions.
  • Making the Budget Document Easier to Understand. GFOA recommends that governments incorporate the features to facilitate broader consumption and greater comprehension of the budget document.


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