Budgets, Approved Annual Budget Process, etc 5013-02 ZZchu

                                                                        - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -

                            TO: Interested Church Ministries                                                       FROM: Jim Bramer, Retired CPA-Auditor 
                                                                                                                                                 Psalm 106:1     FILE: 5013-02

                             RE: Budgets, approved Annual Budget  Process, etc                   UPTD: March 09, 2012

    Below is a hypothetical Online Email thread (THRD) between any one of the following MFTeam members: PAT (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper) and  Jim@bcidot.org   Click here and go to List of threads (THRDs) at www.bcidot.org

FR: LEE: (Ministry Volunteer Treasurer),

                My topic this time, Jim, has to do with aspects of the annual approved General Fund Budget. To remind you, our church has a fiscal year end of 06/30/xxxx. The scenario perspective goes something like this.....

        ) There are two years under discussion here .... 06/30/xxx1 and 06/30/xxx2.
        ) The 06/30/ xxx2 General Fund budget is approved by the congregation the first week of June xxx1, or well before the 06/30/xxx1 year ends.
        ) This means that department heads and the congregation do not know the exact 06/30/xxx1 annual expenditure totals at this time of the year.
        ) Therefore the comparative "actual" numbers for the "Yet to end" 06/30/xxx1 year is a "Ten plus Two" process. Or we take the actual expenditures for 10 months, anticipate expenses for the unknown 2 months and add them together for our best judgment of the annual expenses for the year to end 06/30/xxx1; we understandable call this process our "Ten plus Two" effort.
        ) From the numbers generated from this "Ten plus Two" effort, the church department leaders will determine their expected need for the next year to end 06/30/xxx2.
        ) After no little filtering through May xxx1, the MFTeam gives it their blessing and remits a 06/30/xxx2 annual Budget to the Board of Leadership. They ultimately approves it and presents it to the Congregation for their approval at the annual meeting sometime during the first week in June, xxx1.

        FR:   Jim@bcidot.org  

       Right, Lee, this sounds like how it should happen. But a bit administratively challenging, no doubt. Since this is done at your Church's Annual meeting, the actual 06/30/xxx1 financial report can not be presented at the usual Annual Meeting of any Ministry ---- it is too bad that the financial aspects of the past year can not be a part of the Annual Meeting. So the real annual money numbers is simply made available to interested members sometime in July xxx1.

FR:  LEE: (Ministry Volunteer Treasurer)

            That is true, but my real thrust here, Jim, is to get your insight about probable new year budget changes sometime after July 1, xxx1. This probably should not happen, but frankly it does. Sometimes our projected "Ten plus Two" process is not complete and we need to make some Annual Budget adjustments after this early June Annual meeting approval. But technically, we can not reflect the proper expense budget numbers without getting congregational approval. 
            Our current ‘church rules’ say that the annual budget MUST be congregationally approved. This is awkward, there must be a better way.               

      FR: Jim

        It sounds like what you need is a one time ‘church rules’ change as approval by the congregation --- perhaps at the next Annual meeting. My suggestion is that you get this approval within the following supposed criteria:

    >> The congregation understands the "Ten plus Two" has potential for incompleteness.
    >> That as the General Fund income is sufficient;
    >> That the Board of Leadership is permitted, upon recommendation of the MFTeam, to make  budget changes up to no more than 3% of the original approved annual General Fund Budget
    >> Example..... Annual approved budget is $500,000
    >> Per above, the Board of Leadership can prudently increase it $15,000 without congregational approval
    >> Or the adjusted annual approved budget is now $515,000.

LEE: (Ministry Volunteer Treasurer),

                Would this include times when the Church might add a full time Staff member.

FR:  Jim

        Hopefully this type of thing is planned ahead and included in the new year's budget. Sometimes a full-time staff person (especially a new Associate Pastor, for example) is added and such matters should, in fact, go to the congregational for approval. This could very easily flow as part of the entire new staff and congregation effort. The congregation approval should include an increase to the previously approved annual General Fund budget.

FR: LEE: (Ministry Volunteer Treasurer)

            Also, Jim, as you know, during the year our plans often change to accommodate a need. Example, in January xxx2 we decided to add a specific ministry that was not covered by the original budget. Do we have to go back to the congregation and approve a new budget?

     FR:  Jim

      Such a change might come within the parameters of the aforementioned $15,000. If it is more than that, it warrants congregation approval , in my opinion ........ if for nothing else it is an opportunity to make this new ministry better known and supported, etc.

LEE: (Ministry Volunteer Treasurer)

            Thank you again, Jim; I will share these thoughts and we will go from here.

    This publication originated in September 1999 and was UPTD: May 09, 2011   .