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Section VGetting the Job Done…

Through OthersChapter 14

Budgeting and Managing Costs Creatively

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Budget Defined

• Budget– A list of probable expenses and income during a period– A critical instrument in law enforcement planning,

administration and operations

• Financial budget– A plan or schedule adjusting expenses during a certain

period to the estimated income for that period

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Types of Budgets

• Operating budget• Capital budget• Discretionary budget

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Purposes of Budgets

• A plan for and a means to control resources• Permit decision making at lower levels• Help reduce tendency for divisions to build their “own

empires”• Compare expenditures with services provided• Law enforcement’s work plan transformed into dollars• Reflect the political realities of law enforcement agencies

and their jurisdictions

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Responsibility for Preparing the Budget

• Managers at each level should be responsible for the budget they need– Based on input from their subordinates– Results in all-levels budgeting

• Budgets will be more accurate and complete if– They are prepared using a logical process beginning with

the department’s lowest levels and working upward

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The Budgeting Process

• Developing a budget is an art, not a science.• Determine personnel costs.• Review last year’s budget.

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Budgeting Systems

• Line-item budgeting• Performance budgeting• Program budgeting• Activity-based costing• Zero-based budgeting

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Budget Categories

• Variable costs• Fixed costs

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Monitoring the Budget

• After the budget is passed, spending must be monitored.

• Variance analysis is comparing actual costs against what was budgeted and analyzing the differences.

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Cutback Budgeting

• Providing the same or more services with less funding

• Causes of cutback budgeting– The problem is considered solved– Erosion of the economic base– Inflation– Taxpayer revolts– Limits to growth

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Approaches to Handling Budget Cuts

• Cut all requests for personnel increases.• Cut equipment viewed as luxuries.• Use precedent—cut items that have been cut before.• Recommend repair and renovation, not replacement.• Recommend a study to defer the costs.• Cut all costs by a fixed amount.• Cut departments with a bad reputation.• Don’t cut when the safety of staff or the public is involved.

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Managing Costs Creatively

• Identify common cost problems• Employee cost improvement suggestion programs

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Creative Ways to Reduce Costs

• Sharing resources• Using a regional approach or consolidating services• Establishing community resource centers• Contracting• Using a quartermaster system• Using volunteers• Privatizing

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Increasing Revenue

• Fundraising• Donations• Charging for some services• Using asset forfeiture statutes• Going green• Seeking grants