Unbudgeted Line Item

[jeffkoke]

We're getting ready to start our budgeting process for next year. There are times when a decision is made to purchase something that was not included in the current year's budget.

In the past, we have just expensed the item against that ministry's line item and consequently blowing their budget out of proportion for the remainder of the year. Of course, this skews their reports from that point onward.

Does it make sense to create an "unbudgeted" line item for any ministry that finds itself in the above situation? Can this be done such that it doen't adversely impact a ministry's budget during the year.

Is there a better way to do this?

AdvanceThanks,
Jeff

[Randy B]

I work in government and here is what we do. We have a contingency department and budget some amount of money for that every year. When something comes up that will use the contingency, we do a budget transfer from contingency to the department requiring the money. That way it does not cause a large unexplained variance and the government has budgeted for these types of things. This may be a solution for you.

[Kristi]

Jeff,
If it is going to be a large purchase...like if our Copier dies in the middle of the year; our Finance Committee decides if we will: amend the current budget to included the unexpected expence in that line item, amend with a new one-time line item...ie New Copier (one-time), let the original line item go over knowing the reason why or make a new Fund and try to take up collections for it.

When we had to replace our phone system a few years ago; we made a one-time line item and amended the budget. Then someone heard about the situation and bought the phones for us.

The committee we currently have said we should never amend the budget once it was set. The next month we had to amend it when we hired a new employee full-time.

Whatever your church decides, remember to be flexible.
Kristi

[Dish-Man]

This may not fit every case, but every year we ask for MONTHLY operating expenses for each account/committee and THEN for capital purchases (things that are not normally expensed to a single year such as copiers, computers, etc.) If you included items like this, your budget might be skewed from year to year because of one major purchase (like your normal printing budget may be $3,000.00/yr, but if you purchased a new copier or printer, you could double or triple the budget for that one year when that piece of equipment will be used for many years) Basically we say that "normal expenses" are expenses that occur month by month, year by year and are normally "used up" in that one year. A capital expense is usually a high dollar item that is purchased ONCE and will be used multiple years. What we do is create a separate account at the bank for capital purchases and then publish a list of projected purchases for the year and figure a way to fund these. You can have one line item in your yearly budget expense for captial funding, or do like we do and raise the money. What we do is that every time our checking account gets over a certain amount, we transfer the excess into the capital account. Again, this might not help for "unforseen" items, but you can still budget a set amount for these type of expenditures and put the money in a separate account so it won't skew one particular account. One example we had was that the Flower Account usually runs about $1,000.00/yr, but when we replaced all the silk arrangements and brass/silver vases, etc. we spent over $2,000.00 in one pop. We used the money out of the capital account and the flower account looked normal for the year, and these items will be used for years to come.