Budget Tracking
BC Financial Healthcare Professionals Society
October 4, 2010 - Concurrent Session B1
Brenda West, Fraser Health
Chas Moore, Interior Health
Why would a budget change?
Annual process, three year funding letter…
…but subject to perpetual change:
Balanced
budget
directive
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New or
changed
funding
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Details after
concept
approval
2
Maintaining Relevance
• Starts at the top…is the budget used for:
– Strategic planning
– Allocation of reductions and new funding
– Assessing management competence
• Annual budget quickly becomes outdated
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–
–
–
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Rolling budgets adjusted every period
Departmental reports show adjusted budget
At least annually meet with every manager
Detailed budget to department & object code
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Rolling Departmental Budgets
• Creation of base budget:
–
–
–
–
Starting point is prior year’s budget
Annualize programs that changed mid-year
Reverse one-time issues in budget
Global changes: wage adjustments, inflation
• Budget is adjusted throughout year
– Managers have discretion within their portfolio
• Expansion and targets held in contingency
– Posted to departments as decisions made
– Health care is dynamic: 400+ adjustments/period
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Why bother tracking changes?
When…
 Budget may be unrealistic
 Managers not held accountable
 Focus is on trends in actuals
Because…
 More control = more relevance
 Analyzing variances is more effective
 Enables managers to explain
 Reinforce strategic objectives
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5
How to track budget changes?
Use databases that track
changes to operating
budgets at department level
• Both Fraser & Interior developed in-house
• Essentially a parallel general ledger
• Changes tracked by reason/theme
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6
What level of detail is tracked?
•
•
•
•
All financial & staffing statistical amounts
Department and object code
Theme/reason for adjustment
Staffing:
– hours/FTEs by job code
• Interior in total; Fraser by rotation
– rate & step
– type: regular, stat, overtime, vacation, sick, premiums
• Commitment, if unallocated funds
• eg. Interior budget lines
– Financial: 34,361 accounts with budgets <>0
– Staffing: 5,060 combinations of department/job code
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How did you spend that funding?
• No clue
– We cannot split actual spending from other
transactions in department
• We can explain how budget was changed
– Able to use budget as proxy for actuals
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8
Interior Health query
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9
All column headings from Excel export:
Header
Year
Period #
Period
Ref #
Approved
Created By
Row
Theme
FundID
Funding Source
Description
Account
Department Description
EOC ROC
EOC ROC Description
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Department Rollup
2D1
2D2
2D3
2D4
2D5
2D6
Staffing Detail
FTE
Job Code
Step
Reg Hrs
Rate
Vac Hrs
Sick Hrs
Amount
Stat Hrs
Amount
Other Hrs
1X
OT 1.5X
Annualized
OT 2X
Timing Start
OT 2.5X
Timing End
Stat 1.5X
Stat 2X
Contingency
Stat 2.5X
Comment
Charge Prem
Commitment
QD Prem
Type
Shift Prem
Committed
Other Prem
Unspent
Cas Vac Prem
On Call Prem
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Interior Health
query export
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Interior Health:
query export as
pivot table
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Fraser Health query results
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12
Sample Department Staffing Summary
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13
How do you adjust the budget?
• Double entry accounting
– Provide description, theme, 1x or base
– Audit trail (who, when, why)
• Staffing linked to financial budget
– Fraser: input rotation
dollar impact
– Interior: input hours
dollar impact
• Unallocated funds use
tracking number
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Fraser: Staffing Data Entry Form
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16
Interior Health budget adjustment form:
Changes must net
to zero at account level
Must include staffing detail
if impact 3* EOC
Explanation for entry
Backup for adjustment
(approvals, rotations, analysis)
Funding sources for
themed data extracts
Validation routines
Indicate commitment if
contingency account
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Indicate whether 1x or ongoing
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Interior Health
completed example
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How do you
approve changes?
• Only Finance has access
• Business support works with
managers & executive
– Fraser: backup in hardcopy file
– Interior: image of backup
saved in database
• Revised budgets shown
on statements each period
• Board is advised in summary
– Fraser: each quarter
– Interior: bimonthly
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19
Unallocated funds & reductions?
• Each initiative has tracking number
• Held in clearing accounts by sector
• Each period report unallocated funds
(debits) & strategic reallocations (credits)
• Allocate to department as decisions made
• Unallocated funds linked to forecast
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Relevant budgets influence decision making
…needs to be timely and accurate
Give managers control over budget
…they spend less time complaining about it
…they feel more engaged with financials
…they can use it to identify opportunities
Can use budget as proxy for actuals
…instead of project accounting system
Simplify variance analysis
…by eliminating “approved” variances
Need standards for changes
…when, to avoid budget chasing actuals
…how, to maintain consistency & quality
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Questions?
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