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Prior to becoming a Councillor, I worked extensively with top down budgetary control,  Its not complicated and essentially death by spreadsheet.  While with top down you are told what your budget is with PCs it is very different in that you set the budget .  At the moment all this is left to the RFO and most Cllrs just accept what she says .  I am however trying to get to grips with the calculations and need some re-assurance .  Basically, as I see it  you are part way through the year deciding what your main budgets will be next year .  This to me is not that complicated as with  the year round you should have a good grasp of the required spend and the various reserves pots can be easily discussed and set .  Therefore, the sum of these three pots less any predicted income should be your commitments.  The question then is how do you fund  them .   This to me should the cash in hand when you set the budgets less anything you spend between that date and the year end  and that can be estimated by good forecasting.   The difference  between the end of year cash in hand and the budgets total should then  be the required precept

I am currently trying to get inside our clerk’s head but I know she wont set the  reserves for some unknown reason.  Is my logic basically, OK ?

by (5.0k points)

2 Answers

0 votes
Your logic is (almost) spot on. You have in fact highlighted the single point which I raised last November and blew a hole through literally decades of incompetent budgeting by ½ wits.
If the predicted (in Nov current FY) unallocated cash at bank  at end FY is negligible (which it really should be in a well monitored, managed and adjusted budget) then it is likely to be a negligible consideration.
However! When the predicted (in Nov current FY) cash at bank 31 Mar is TWICE the clerk proposed precept for next FY, it “should” be obvious to all that ANY precept is wholly unjustified.
You wouldn’t imagine that would be a “hard sell” but it was like white man’s magic explaining this to the PC and even the IA was unable to grip the simple principle.
The problem arises when clerk and Cllrs have no credible financial management or budgeting experience.

Almost forgot - the only part you didn’t mention was taking some from the cash at bank cf balance to top up accruing EMRs
by (22.3k points)
0 votes
It is not as the saying goes "rocket science" but it is a fact that many RFO's are appointed because they are the clerk or it's convenient to fill another position with the poison chalice name tag rather than someone with at least an understanding of basic accounts.
Accurate Budget preparation setting and more importantly monitoring is the answer to all problems of this sort. The RFO should be monitoring progress, throughout the year and constantly assessing projecting forward to the end of year and highlighting variances so that amendments can be made( i.e. moving money from contingencies to cover over-runs)

Year end actual costs and budget accuracy should be the basis of the next years budget assessments not think of a figure accounting.
by (27.5k points)
RAG.  Could you explain what you mean by "accruing EMRs" please. In my mind if I have  budgets of £50k General reserves £250k year round and £200k EMR for this year, then the same figures for next year have absolutely nothing to do with one another .  They are separate figures made by two separate judgements at separate times.   Of course, once the total is agreed it would be acceptable to vire money around but the total would remain the same.  All figures in all budgets are not real money they are just figures you monitor spend against .   So if I was saving up money for an  EMR project I would simply increase the figure allocated against it
My head is starting to hurt now .
The advice seems to be that the precept is set based on the  predicted year round budget calculation only .   Surely the reserves pots are separate budgets in their own right and cash must held to fund them . It seems to me that the above says whatever cash you have in hand you make it fit the budgets.  That way any excess reserves held  will never be reduced ,  As I say am I going crazy?

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