Certainly, complying with self-dealing rules and following the letter of the bylaws are requirements of fiscal responsibility. But they may be just the minimum requirements.
Here are three ways for boards to further exercise their fiscal responsibility.
1. Assure the agency stays within its budget
Prepare a realistic budget. It is always appropriate to budget based upon educated estimates of the actual costs and revenues of intended services. But these estimates should not ignore the history of the budget item.
Neither history nor the estimate should stand as the lone criterion of a budget item. Justify the budget variances. At each board meeting, receive a report from staff on actual expenditures compared to budget. Significant variances – say, 10 percent or greater – should be explained.
A plan should be presented to bring the budgeted item back into line to accomplish the agency’s budget goals for the year. While it is important to correct unfavorable variances – spending too much –do not overlook under-spending. Money not spent as planned, such as advertising or program development costs, may result in revenues missing budget later in the period.
Adjust the budget when needed. Occasionally, the budgeted items may prove invalid. A program may not begin because of permitting or personnel issues. A major event may disrupt revenues or require overtime. When this happens, create a new budget for the remainder of the period with these events taken into consideration. The budget for unaffected line items remains unchanged. Then, once again, the agency is working with an achievable budget.Button Text