Question over legality of budget setting.

Question

The scenario:
1. The Town Council has approved the recruitment of an additional member of staff, however, the job description, justification etc. had yet to be completed and the number of hours/week, hourly rate etc. had not been decided. The Staffing Sub-Committee (a sub-cttee of Full Council) had proposed a salary budget of £20,000 which was approved at Full Council.
2. The Finance Committee met later to set the budget for the next year. Whilst the recruitment and a financial "cost" (a very vague estimate) had been authorised by Full Council,  within the Finance Committee there was considerable scepticism that the role would be filled: a similar recruitment had been tried within the past few months but because of the ill-defined nature of the job spec there were no applications; there was a strong belief that this will happen again.
3. Since the Finance Committee are setting a budget of what they believe to be a reasonable expectation of costs, they decided to produce a budget which excludes this salary cost, whilst noting that if, in what they considered to be the unlikely event, the Council did manage to recruit someone part of the cost could be taken from the underspend of budgeted income vs. expenditure whilst the remainder could, for this year only, be taken from reserves. And, should someone be recruited then in the following financial year the cost would be a formal line item in the budget since it was a known cost.
4. This was then recommended to Full Council for acceptance.
One Councillor said that setting a budget which excluded a cost that had been authorised at Full Council was "illegal", despite the fact that Full Council would in effect be voting on whether to approve this change.
So my question is.... would that budget have been illegal if it had removed an authorised expense believing that it was unlikely to occur, whilst providing a costing solution which included part funding from Reserves should the event actually take place.
Sorry if that's convoluted !!!!!

Answer 1

A well constructed question with sufficient detail to enable some informed response...

Illegal?  No.  Not illegal.  A process of reasoned discussion, debate and resolution are what is required of a budget planning session.  It is best informed guess work with the ability to veer and haul as circumstances change throughout the FY.

They are all valid points - if it is reasonably expected that the expense will be incurred, and it has been previously agreed, put it in the budget but then again, if there is an element of doubt, and there is the flexibility to absorb the expense from other under-spent lines or reserve (what is reserve for after all??) then that too is OK - if that is what is the result of a reasoned debate.
It would be improper (illegal is still a bit strong since you'd never realistically get a prosecution) to set out to intentionally valid a budget which was hooky - but from what you've said that doesn't appear to be the case.

Answer 2

The legalities and processes have been addressed, but surely the real issue here is the "ill-defined nature of the job spec." Publish a better one, possibly with outside help, and fill the vacancy. You obviously need somebody, otherwise you wouldn't have started the process in the first place. If the job is too multi-faceted, split it into two or more roles, but don't just give up because you don't know how to make the role sound appealing.

Incidentally, I'm puzzled by the chain of command here, if you have a Staffing Sub-Committee reporting directly to the Council without the involvement of the Finance Committee. If Staffing is a Sub-Committee, it needs a parent Committee, which would normally be Finance, so the recommendation of Staffing should be ratified by Finance before being presented to the Council.

Comments

Ill-defined nature of the job spec. You're talking to the converted here. It's an issue some of us have been trying to resolve but there's a limit to how much pain your head can take when you're hitting a brick wall ! Sometimes you have to let people learn from not succeeding. The actual issue is a bit more complex than my description as the role is for a function that is the Finance Committee's responsibility, and the Finance Committee who thus have the best experience/knowledge have had no input into the job description.  The Full Council have unfortunately incorrectly (in my opinion) decided that this is OK.
As for the Staffing SC reporting lines, absolutely. For historical reasons apparently it has always reported to the Full Council but I've always felt it far more logical it reports to / through Finance.
You change what you can, and you work with what you've got when you can't.