Planning and budgeting
P&C and school planning
Budget development is an essential component of goal and direction setting for the school. The P&C and the school must develop plans together to get the best possible outcome for students. This requires the parties to identify activities that are expected to occur during the next year and also take into account activities planned for future years.
P&Cs should develop simple processes to estimate the timing and value of cash receipts and cash payments to avoid cash shortages.
The P&C contribution to the school's budget should also be monitored through the principal's reports on the school's finances that are presented to the P&C monthly meetings.
Preparing a budget
A budget:
- must be prepared for each year
- must be approved at the AGM at the beginning of the financial year
- is only as good as the work done preparing and monitoring it. Consultation and realism are the keys to a successful budget.
Budgeting may seem difficult and pointless at first, because you have to make a lot of assumptions about what might happen. The benefits will become clearer throughout the year.
A budget is a plan of expected receipts and payments. Your budget should:
- anticipate your income and expenditure for a financial period
- predict the expected cash flow
- identify potential cash shortfalls.
Remember that budgeting is a continual exercise of planning, monitoring and reviewing.
A sample budget is shown in Example 1 new window 91k 
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Budget committee
The P&C may form a finance/budget committee to facilitate consultations for the treasurer and help the treasurer prepare the budget. This committee will be required to complete the following tasks.
- Identify new revenue and expenditure programs, cost them and set priorities.
- Anticipate receipts for the coming year by looking at the previous year's receipts and consulting with subcommittees.
- List known and/or recurring payments for the coming year.
- Identify any additional receipts and payments.
- Identify anticipated surplus or deficit.
- If there is a surplus, prioritise remaining expenditure and savings programs not yet included in the budget.
- If there is a deficit, review expenditure and revenue programs. A deficit budget may be acceptable as a one-off if funds have been accumulated in the past. For example, funds generated in previous years for a swimming pool may be brought forward and expenditure for the current year will exceed revenue for the current year.
- Amalgamate all the plans for subcommittees into the one budget.
Test the budget
Ask a wide range of questions to test whether the budget is realistic. For example:
- Will sales be as high as last year, given that enrolments are expected to decrease?
- Will competition from a newly opened shop affect sales?
- Are wage increases expected?
- Will increased prices affect the level of sales?
- Will parents be as responsive to fundraising initiatives as last year?
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Preparing a cash flow
Cash flow statements
Once the overall budget has been decided, it is helpful to break the budget up month by month. This is called a cash flow statement new window 91k .
A budget cash flow is shown in Example 1.
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How to prepare a cash flow statement
Prepare a cash flow statement by estimating in which months the receipts and payments are likely to occur.
To make these estimates for ongoing activities, look at the actual cash flow for the previous year.
Be realistic and remember that you are only estimating. While you may try to get as close as possible to the eventual outcomes, you can never accurately predict what will happen. You are not expected to be clairvoyant. The best you can do is gather all possible information, consult widely and get the best advice available.
How to monitor receipts and payments
Actual receipts and payments for all accounts should be compared with the budgeted cash flow statements at each monthly P&C meeting.
The monitoring process allows you to identify if receipts are below anticipated year-to-date receipts or if circumstances have changed, expenditure may have to be adjusted.
Dealing with budget problems
The treasurer should develop a course of action to overcome any financial problems that may occur because budget expectations may not be met.
Action can be taken to get the budget back on track, or the original budget can be revised to take into account the changed circumstances. You need to warn the P&C if expenditure is greater than expected or revenue is less than anticipated.
If necessary, the cumulative totals can be easily graphed with appropriate spreadsheet software to give a graphical overview of the current position and to track trends.
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