AJEET SAHU & ASSOCIATES

30, Mahesh Avenue, Chhota Bangarda Road, MR-5, Indore (M.P.)

Mail: ajeetsahuin@gmail.com, Mobile: 99816-24490

Five ways to become confident on annual budget

In the static organization like school where receipts are predetermined for the year and more
than 80% expenditure of the school are fixed in nature during the year. Even though there are
deviation in budget; in absence of appropriate working and identifying the areas to looking for,
here are 5 ways which help school to become confident in annual budget:

1. Analysis of historical data.

For the planning of current year budget, previous year income and expenditure data should
be analyzed. It shows past trend, identify areas where more awareness to be given. For
example : Cost of printing & stationery for school are increasing in proportionate of total
number of students, this deviation can be considered and current year budget shall be planned
in view of the total number of students for the current session.

2. Identifying major expenses heads catering more than 50% of total budget.

Based on financial analysis, there are some main important budget heads, which are
catering more than 50% of total budget. Employee remuneration is main budget head for the
organization, staffing planning is vital. In sub-division of employee remuneration, there are
administrative department wherein costs are fixed up to certain extent thereafter additional
employees is required whereas number of students are exists. Support staff of the school
planned as administrative staff specific fixed support staff is required. Minimum administrative
and support staff are required up to the student strength of 500 students. Thereafter staff is
required based on additional classes and activity of the school. Academic staff i.e. teachers are
planned in the school, depends on number of student strength in a class. School plans staffing
as per requirement. Regular monitoring and planning of period of classroom helps the school to
utilize resources efficiently. As per standard practice employee remuneration exists more than
40% of total expenditure of school.

3. Efficient forecasting of capital budgeting.

More than 80% of operational expenditure of school is fixed in nature. There is no such
change to incurred surprise expenses in the school. Only capital goods purchase incurred as
sudden due to obsolesce of immediate running equipment, replacement of old capital goods
with new one and due to change in technology. It is needed to maintain infrastructure in good
condition, to complete in current scenario, to get the competition advantage, to introduced
new infrastructure in the school. School forecast capital expenditure based of needs and
 AJEET SAHU & ASSOCIATES
30, Mahesh Avenue, Chhota Bangarda Road, MR-5, Indore (M.P.)
Mail: ajeetsahuin@gmail.com, Mobile: 99816-24490

immediate requirement and competitive decision can be taken most important next to
necessity capital expenditure are selected to purchase in current budget and rest shall be carry
forward for next year. It reduced financial burden of organization.

4. Proportion of overall budgeted expenditure in sub-heads.

It is easy to categorize expenditure in sub-heads. It benefits organization to plan & review

detailed expenditure i.e. employee remuneration segregate into sub-heads of administrative
staff, support staff and academic staff, sub head of budget shown small deviation. In case of
major deviation, corrective action can be taken. Regular review helps organization to plan
function and other activity are also equal important part of the school. Function & Cultural
program head segregate into sub-heads in annual Function, Denali festival celebration and
teacher’s day program. Planning of this expenditure provide overall presumption of the school.

5. Utilization of industry specific benchmark

Proportionate of expenditure heads of school depends on level of the school. In level-1,

emphasis has been given on creation of quality standards and long term results. This is implied
on startup school in duration of 1-3 years. In this duration, advertising, marketing and function
budget is higher than in general. Employee expenditure ratio is also little bit higher. In level-2,
schools are in category of year 4-8 years this is growing period of school wherein operational
breakeven has been achieved and surplus increase consistently in this duration. Marketing
budget is reduced in comparison of starting phase function budget shall increase only by
inflation rate to maintain standards. In level-3, school is well established and expansion period
shall be started after 8 years.