Introduction
Budget development is integral because it enables an organization to plan expenses and reach business goals and expected operational changes. It involves a financial spending plan that estimates revenues and expenditures for a certain period (Barr & McClellan, 2018). However, leadership and staffing are some factors that affect a budget’s development. A leader can make decisions that can lead to a successful or failed budgeting process (Liu et al., 2021). Effective leadership is required to keep a budget balanced and ensure appropriate allocations. Staffing has an impact on budget development due to its impact on expenditure. Budgeting is important in any organization since it provides operations are effectively financed.
A budget is a financial plan that estimates revenue and expenses for a specific period. A successful organization must ensure that it spends what it has or get as revenue (Menifield, 2020). As shown in its budget, Huddle Community of Schools, like most learning institutions in the U.S., obtains its funding from local, state, and federal sources. However, most of the funding for the school comes from the state government. Apart from revenue, spending is another important part of a budget (Menifield, 2020). The primary factors that affect the institution’s expenditure are inflation, project investments, and staff turnover. The leaders of the school must ensure that the budget is strategic and aligns with their values and objectives.
Abstract
Budget development is influenced by a number of elements, including leadership and staffing. A leader has the power to make choices that will determine whether the budgeting process is successful or unsuccessful. Effective leadership is needed to maintain budget balance and guarantee precise and appropriate allocations. Due to its effect on spending, staffing impacts budget development. For instance, in an interview, the Huddle Community of Schools’ leader stated that he decreased employees to cut costs. This indicates that a leader can make decisions that affect budget development. Any institution that wants to ensure that activities are effectively financed must engage in budgeting.
Apart from understanding the role of leadership and staffing in budget development, the paper illustrates other factors that affect budgeting. Firstly, the research delves into determining where the organizations get their revenue. Upon looking at the proposed budget, it is evident that the school’s main source of funds is local, state, and federal funding. Secondly, the main factors that affect spending are addressed and include inflation, staff turnover, and investment projects initiated by the organization. Thirdly, the purpose of focus and disciple in the budget is discussed in great detail. Lastly, the proposed budget of the Huddle Community of Schools is explained in the paper.
Leadership in Budget Development
Leadership and budget development are among the most important management concepts. Budgeting involves proposing revenue and estimated expenditure of an organization, while leadership is about making appropriate decisions on behalf of others (Barr & McClellan, 2018). As shown in the interview, the educational leader stated that the school had financial aid at the start of the pandemic, but the leaders decided to delay the process. This contributed to the institution’s problems, especially in undertaking its activities. As a leader, he ensured the company adopted up-to-date technology to automate its most important tasks, like making budgets (Busta, 2021). He brings together employees to help develop an organization’s budget. Therefore, an effective leader in an organization significantly impacts the development of a reasonable budget.
Leaders are in charge of more than just delegates during the budget development process. Maintaining a budget balance and ensuring that allocations are precise and appropriate requires true leadership (Junita et al., 2018). The number of factors that go into a budget would astound one. A good leader must know important items that should be prioritized to ensure that the institutions run effectively. As a result, it takes a highly effective leader to quickly discover the remedy to a problem. For example, in the interview, the education leader stated they faced financial problems purchasing new technology. Based on this, he decided to control spending by determining the expenses that could be reduced to get the amount needed to incorporate new technology.
Moreover, a good leader is decisive and understands how to help the organization and stakeholders. The interviewee wanted to know the challenges leaders face in budget making. The pandemic has hastened the move to online learning, and teachers have had to ask for new technology to change their course content (Lederer et al., 2020). In budget development, a leader must eliminate aspects derail the organization and focus on promoting important concepts. In the interview, the educational leader stated that apart from overseeing the nursing school, his role is controlling the number of staff. He revealed that he had to make firm decisions to dismiss some staff who were not working hard enough, negatively impacting the institution’s budget. The educational leader said he had expanded the workforce more actively, particularly by luring highly qualified individuals.
The Impact of Staffing on Budget Development
In any organization, staffing impacts the development of a budget. It is crucial to make sure that there are enough staff members for each department and that the budget accounts for every staff person (Rivito & Mulyani, 2019). The number of students that are or will be enrolled in the institution significantly impacts the number of staff employed. The amount of money given to each school greatly affects how many people are assigned to each school. The budgets for staffing at the school with larger student populations are correspondingly larger. On the other hand, educational institutions that have a lower enrollment will be given a budget that is proportional to the number of students they enroll. As a result, the size of an organization’s workforce has a significant impact on the process of budget formulation.
An increase or decrease in the number of employees in an organization affects the expenditure. The amount of labor spent on the institution is higher when there are many staff members than when there are few (Rivito & Mulyani, 2019). However, the employees hired in an educational institution are determined by the expectations the school must meet, such as ensuring its educational objectives and goals. The staffing criteria are designed to make it easier to discover the appropriate individual who possesses the abilities and attributes required to fill the position that needs to be filled. Thus, expenditure through staffing and budgeting development are critical components of achieving the best staffing-to-classroom ratio.
In a learning institution, a staff’s academic qualification and experience affect their salary, eventually affecting the budget. An individual’s qualification must be carefully considered when creating the budget to ensure that no employee is underpaid or overpaid and that the budget is fairly balanced, reaches equilibrium, and, ideally, generates income. It is important that every applicant at least satisfies the minimum standards and requirements needed to be taken into consideration and hired, including experience, applicable skills, and other relevant methods (Rivito & Mulyani, 2019). As a result, each employee who satisfies the criteria necessary to fill the position should be paid acceptable compensation.
Where The Organization Earns Revenue
Huddle Community of Schools generates revenue from local, state, and federal funding. Local revenues are generated from investments, student activities, local property, and non-property taxes (Owings & Kaplan, 2019). The school has engaged in external investments to ensure they earn something to supplement other funding. The institution obtains funds from student activities such as payment of food service and transportation fees, the sale of school uniforms, and textbook sales. In addition, Local property and non-property taxes provide for most local revenues, with the remainder made up of particular ownership taxes, overdue taxes, penalties and interest, and other local revenue.
State aid is one of the principal sources of state money for community schools in the U.S. The funding is distributed every year through the Public-School Finance Act. According to Owings and Kaplan (2019), about 48% of the school budget originates from state resources such as income taxes, sales tax, and fees. As shown in the budget, the total funding received by Huddle Community of Schools from local sources is $886716.48. Most of the remaining state funds are allocated to specific programs such as vocational and technical education, English language proficiency, special education, gifted and talented education, and transportation. Thus, local sources are among the main funding avenues for schools.
Federal funds are usually allocated to schools for specific programs. The use of government funds is rigorously governed by federal law. The federal funding is distributed to states and district schools through various formulas and competitive grant programs. Huddle Community of Schools obtains a total of $137372.24 as federal funding. This contribution to school finance is around 11% of overall operating earnings for school districts. However, most federal funds get to school districts through the state to support certain initiatives. Some of these programs at the school include vocational education, drug awareness, and food service.
The Key Factors That Impact Spending
Inflation is a primary factor affecting the spending of the Huddle Community of School. According to Coibion et al. (2020), inflation is the rate of increased prices of goods and services over a given period. High inflation raises the costs of necessities, such as housing, food, and transportation, and will increase expenditure. With this, educators are more likely to demand additional salaries to cushion them during the period. For example, the Huddle Community of Schools’ board suggests a salary rise of 1.5% for all employees due to the increased cost of living. Therefore, inflation can increase or decrease the expenditure of the institution.
Investment is another key factor that has an impact on the spending of the institution. It involves funds committed to a new business venture or the expansion of an existing business (Cutler et al., 2020). As shown in the budget, the management at Huddle Community of Schools would like to order a new passenger bus for the school with a carrying capacity of 70-passenger bus for $35,400. This is considered an investment because it aims to increase efficiency and attract more students to the school. In addition, the educational leader, through the interview, reveal that they want to adopt new technology to support online learning programs.
Employee turnover is among the aspects that impact the school’s expenditure. Kurniawaty et al. (2019) define staff turnover as the rate at which employees leave an organization and are supposed to be replaced by new ones. A new employee needs orientation and training after being employed by an organization to fill a vacancy. Huddle Community of School may have to pay for job postings, hire recruiters, sponsor events, form alliances, and provide referral bonuses in their quest to find new hires. In addition, costs associated with screening candidates can rise because of assessment tests, background checks, and various travel fees.
The Role of Focus and Discipline in Budgeting
Focus and discipline promote strategic budgeting in an organization. They enable the organization to align its budgeting process with its vision, goals, and objectives (Steiss, 2019). Getting the correct elements in the budget has the ability to make or break the institution. Setting and monitoring precise financial goals is an important aspect of discipline in budgeting. People who have problems with money might feel better and get closer to a better financial future if they are more disciplined (Collins, 2001). Some discipline practices when budgeting includes adhering to short and long-term financial objectives, creating a budget, reducing spending, developing smart investing strategies, and working with a financial planner.
Focus and discipline promote accountability in budgeting in the institution. The main purpose is to assist the organization in realizing its full financial potential by developing an effective budget (Steiss, 2019). Focus is important because it enables the leaders to work with other stakeholders, such as accountants, financial advisors, and others, to brainstorm on developing an appropriate budget. There are some people who need help when making a budget. On the other hand, there are others who find it helpful to form their strategy and have the assurance to stick with it even when there are negative opinions.
Discipline entails keeping spending under control and ensuring the organization makes the necessary payments. Despite how much money the institution earns and receives, it will never be enough if it cannot limit spending (Steiss, 2019). No matter how much money we make, our needs will always be able to be satisfied. Based on this, it is essential for everyone to manage their spending. The leading cause of people not sticking to their budget is these impulsive purchases. To account for impulsive purchases, they can set aside money in their budget, but it is important to watch not spend more than they receive.
Proposed Budget
Expenses
The development of a budget is essential to the functioning of any business since it ensures that daily business activities are adequately financed. It is a strategy for building a clearly articulated purpose, which will be supported by a set of values (Vries et al., 2019). In this particular situation, a differentiation strategy was utilized to develop a budget for the Huddle Community School. In addition to this, a monitoring and assessment strategy was utilized in order to perform the calculation for the required range. The output demonstrates, on the basis of the data that was used to produce an estimate of the organization’s budget, the output demonstrates that the establishment is lacking in income and overspending, resulting in a deficit.
The direct and indirect costs included in the budget ultimately contribute to the total spending. According to the budget suggested, the organization’s entire revenue comes in at $3,121,952. Direct costs are expenses linked directly to an organization’s or project’s budget (Menifield, 2020). They can be identified specifically with Huddle Community Schools’ activities contributing to its performance. As shown in the table below, the proposed direct cost for the institution is $2924114.2679. They consist of the cost of enrolment, special education, reading instruction, guidance and services, and vocational instruction. Therefore, direct costs are items that directly impact the organization.
On the other hand, indirect costs are administration expenses that are not directly linked to an organization’s main purpose. In other words, they have considered background expenses involved with running the business (Menifield, 2020). As indicated in the table below, derived from the proposed budget, the indirect cost for Huddle Community Schools is $1001097.9151. These are the cost of health, library services, Board of Education, Executive administration, building level administration, food services, pupil transportation, and plant and maintenance. These are items that exist to support learning in the institution and ensure that the anticipated objectives are achieved.
Revenue
Revenue is an important component of a budget because it ensures that an organization effectively allocates resources. For Huddle Community Schools, revenue is the income obtained from different sources such as federal, local, and state governments. In the proposed budget, the total revenue received by the institution is $3121951.97. It is a summation of $886716.48, $2097863.25, and 137372.24 from local, state, and federal governments, respectively. This indicates that the organization gets most of its funding from the state government, which is supposed to finance operations such as foundation formula and transport. As s result, Huddle Community Schools’ budget is supposed to be within the revenue it gets from the government and other sources.
Comparing the revenue and expenses
A budget deficit occurs when an organization’s expenditures are greater than its receipts for the given period. An organization should never spend more than it brings in during the budget year, as this is contrary to sound budgeting principles (Menifield, 2020). According to the budget for Huddle Community Schools, the total revenues collected amount to $3121951.97, while the total expenses that are expected to be incurred amount to $3925212.183. This is evidence that the organization has a shortfall of 803260.2128 dollars. Based on this information, the management can cut expenses so that the revenue can cover them, or they can look for new income sources to make a difference.
Moreover, the budget should be linked with the organization’s strategic goals. As no obvious strategic plan exists, the company’s continuing development cannot be performed effectively without a good budget (Menifield, 2020). A differentiation strategy served as the foundation for the creation of the budget for the Huddle Community School. In other words, each value was evaluated independently based on its history as well as the characteristics that are present right now. In addition, a performance monitoring approach was utilized in order to ascertain the needed range. As a result, there is a need for the organization to ensure that budget expert are involved in the process.
Conclusion
Despite having a detailed budget, Huddle Community of School should enhance its budget development to ensure that the spending is less than the revenue. Creating a budget is crucial because it enables a company to plan its spending, achieve its objectives, and prepare for anticipated operational changes. It entails a financial spending plan that forecasts income and expenses for a specific time period. However, some factors influencing a budget’s creation include leadership and staffing. A leader has the power to make choices that will determine whether the budgeting process is successful or unsuccessful. In addition, effective leadership is needed to maintain budget balance and guarantee precise and appropriate allocations. Due to its effect on spending, staffing impacts budget development.
A budget is a financial strategy that predicts income and expenses for a given time frame. A successful business must spend the money it makes or receives in terms of aid from funding institutions. The majority of educational institutions in the U.S. receive their money from regional, state, and federal agencies. However, the state government provides the majority of the school’s funding. Spending is another significant component of a budget, in addition to revenue. Inflation, project investments, and employee turnover are the main elements influencing the institution’s expenditures. A high inflation increases the cost of products, leading to a rise in expenditure. For example, when inflation is high, the leaders are forced to consider increasing staff members’ salaries. As a result, developing an efficient budget call for tremendous discipline and attention.
There is a deficit in the budget because the expenses are more than the revenue obtained by the organization. The budget deficit can be fixed by cutting spending and bringing in more money. The school can make money by adding vocational fees and getting more money from the state. They can ask for additional funding from other entities other than the government to assist the school in running its affairs. For example, the school wants to upgrade its digital infrastructure to support online learning. However, the government should give more money to schools to enable them to finance important operations. Thus, if the institution cannot get additional funding, they should strive to reduce the expenses.
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