‘Budget’; a word that every business lives (and dies) by. We need to formulate one, get it approved, and finally, somehow, live by it! There is a certain horror that comes from a budget in the red, and a ledger that shows green is every institution’s overall goal.
So, how to turn around a budget catastrophe and find a process that works for your business? Let’s take a look at how a small college- Anoka Technical College- recently made some changes that helped bring their budget from a projected $1.4 million deficit to a $500,000 (and growing) surplus- using a process that was counterintuitive and “unusually inclusive”*.
The back story (circa FY2013):
Prior to the arrival of the current president and chief financial officer, Anoka Tech’s budget process had a history of limited transparency and very little communication, which led to a budget that lacked consistency, had an absence of reinvestment and was financially unsustainable. These factors created a feeling of distrust within the staff - they were not privy to the budget decision making process, and the budget that came from it changed often.
The outcome: A $1.4 million deficit to get working on.
What do now? The steps the small college took to turn the tables around included slowing down and getting the school’s faculty involved. The basic approach used to get this process under control included:
- Adopting a measured and methodical approach which included belt tightening, smart spending and asking the question “how will this particular budget change” affect the student?” What it lacked was a slam-the-brakes, stop-all-spending philosophy.
- Empowering faculty and staff with influence and a sense of control. This included sharing accurate budget information, and giving a representative budgeting committee decision making authority and engagement in budget changing decisions.
A truly collaborative budgeting process that the faculty and staff could trust was the result of many months of hard work (and more than 6 revisions). Over the course of 2 years, the college turned a deficit into a surplus! Take a look at the full article for results, the details of the case study, and more information on the process that helped them get there!