Of the many tasks we perform in our role as Housing Officers, none seems to have more mystery attached to it than Budgeting. Very few of us have the opportunity as graduate students to take a course that deals with the practical day-to-day aspects of the Budget. Few of our entry level jobs give us adequate experience in the budgeting process. And, unfortunately, many of our Senior Housing Officers guard budget information only to reinforce the adage “He who has the gold has the power.” This article is my effort at sharing some conventional wisdom as it can be applied to the budget process.
In a meeting to set rates, I actually heard a Vice President for Business say “Program should drive the budget.” Indeed, this comment illustrates where I start. The budget is an instrument or tool that really is not a mystery, but most importantly the budget should be a reflection of the mission, vision, values and goals of the department. If the budget is not a reflection of these statements, then how do you make decisions on funding levels? Indeed, how the dollars are allocated should be an accurate reflection of these statements.
Remember that in most universities, Housing and Dining operations are Auxiliary services; and as such, each housing department must have a balanced budget. Since we receive little or no money from the University, it is critical to be conservative with both revenue and expenses. My belief is that revenue should be underestimated and expenses overestimated.
Two important components of the budget that warrant comment are personnel costs and reserve and replacement dollars. There can be little doubt that the cost of personnel is the largest expense in the budget. We are responsible not only for salaries but also for benefits which may cost about a third of the annual salary. Further, once we take on new personnel the cost not only continues, it accelerates each year. Further, I believe it is essential that we budget a line item for reserve and replacement. These dollars in reserve are essential if there is an emergency; but a reserve is an essential part of a plan for upkeep and renovation of our facilities. I know many professionals feel that academic or business officers looking for dollars will sweep up money in reserve. But a well thought out renovation plan matched by a financial plan funded in part by reserves can keep the “big bad wolf” from your door.
I think it is critical to know the politics and find allies. Anonymous people who are behind the scenes do most of the real work at any institution. These people are essential to budget success for they know the institution and how it operates. Often times, they will have their fingers on the pulse of the University and can help you in many financial situations. It is also essential and critical to trust your financial officer. In this instance, it is not so much that this person can or will steal resources; but most importantly, this individual should know the financial details of the Housing operation. It is essential that you can believe and trust the information he/she gives you.
Here are a few thoughts:
• Treat the money as if it were your own. Remember it comes from families that have worked hard to pay us.
• Learn to say no – there are tough decisions to make and you can’t be everyone’s friend.
• Delegate responsibility for aspects of the budget; that is, allow competent staff to manage their own budgets or they will ascribe to what I call the “pot-of-gold” theory. Practitioners of this theory believe there is a “pot-of-gold” somewhere and it is their task to find a method to get some of the gold. Indeed, there is probably less money available than most people realize.
• On the other hand, do not delegate responsibility. Remember that you are responsible for the budget – consequently you must stay in touch with some level of detail regarding the budget – a seeming paradox but an important fine line to acknowledge.
• Finally, do not keep secrets. At least at public institutions, the budgets are public information. There is no quicker method to damage trust than to hide important facts both positive and negative about the budget.
So, here is my conventional wisdom – use it – if it fits your need.
Submitted by Jack Collins, Director of Housing, University of Illinois