planning and budgeting. financial planning the success of a program does not only depend on whether...

PLANNING AND BUDGETING

Financial Planning

The success of a program does not only depend on whether it meets its objective and goals but also on whether it does so financially.

Financial Organization

A budget should reflect sensitive planning that responds to the input of the staff.

It is essential to have one person who has overall responsibility for financial management

Financial Organization

The structure of the organization will determine

who is responsible for various aspects of financial management

The number of people who will contribute to budget development, implementation, monitoring, and year end analysis

Strategic Planning

Characteristics The planning horizon should relatively be

short The procedure should encourage the

participation of outside parties to improve the reliability and creativity of the resulting plan

Strategic Planning: Process

• Develop a clear mission statement• Assess the schools strengths and

weaknesses• Conduct a thorough market analysis• Analyze Competitors• Create company goals and objectives• Formulate strategic options and select

appropriate strategies• Translate strategic plans into actions• Establish accurate controls

Forms of Ownership

Sole propriertorship Partnership Corporations

Sole proprietorship

Owned and managed by one individual

Advantages: Simplicity in creation The owner has total Decision-making

authority• There are no special legal restrictions• Easy to discontinue

• Disadvantages

• Unlimited personal liability• Limited Skills and capabilities• Limited access to capital• Lack of continuity in the business

Partnership

Two or more persons who engage in business as co-owners for the purpose of making a profit

Co-owner share assets and liabilities, and profit

Types of Partners

General partners Limited partners

Secret partners Honorarium partners

Advantages Easy to establish Division of profits Larger pool of capital Ability to attract limited partners

• Disadvantages• Unlimited liability of at least one partner• Capital accumulation• Difficulty in disposing partnership

interest without dissolving partnership• Lack of continuity• Potential for personality and authority

conflicts• Partners are bound by the law of agency

Corporations

It is a separate entity apart from its owners

The owners are called shareholders

Advantages Limited liability of stockholders Ability to attract capital Does not depend on the fate of any

single individual Transferable ownership Larger pool of skills, expertise, and

knowledge

Disadvantages Cost and time Taxation Potential for diminished managerial

objectives Legal restrictions and regulatory red

tape Potential loss of control by the founder of

the organization

Incorporation

In 1982, all schools that are incorporated are supposed to be registered at the SEC as non-stock non-profit organizations.

The school owns itself but is not owned by individuals

Members of the Corporation

At least 5 but not more than 15 natural persons.

who must be of legal age

Foundation Can take effect only after The shares of the stockholders have been

conveyed To the corporation The filling of the office of the SEC of the copy

of the stockholdres resolution duly certified by the governing board

The filing with the office of the SEC the certificate by the board of trustees of the foundation as to conveyance and conversion of the stock corporation into a foundation

Different Kinds of Budgets

Start-up budgets Capital budgets Operating budgets

Start-up budgets

Designing, or consulting with other professionals on the design of the physical spaces

Identifying and making recommendations on the selection and purchase of equipments, furnishings, materials, and supplies

Developing job descriptions

Developing the beginning philosophy, and program objectives, to be later refined and adapted by the program staff and management

Developing the initial administrative forms and procedures

Cooperating with other professionals Reviewing current child care legislation

Capital Budgets/Capital Expense• Annual operating budgets• Land costs building costs• Additions to existing buildings• Renovations or alterations to existing

buildings• Equipment and furnishings• Outdoor creative playgrounds• Fencing• Playground landscaping

Operating Budget/Operating Costs Anticipated costs during the fiscal year Information is projected from the best

information collected from other center experiences

These are projected costs for a new operation

These must clearly reflect any changes or new directions in the center

Expenditures/Income

Fixed Costs Variable costs Semi-variable costs

Operating Budget- Item by Item Staff Costs Benefits Consultants Professional Development and in-service

training

Budget Item by ItemNon-staff• Mortgage/rental and loan payments• Property taxes• Business taxes• Maintenance and repairs• Depreciation on building, equipment,

and furnishings• Utilities• Insurance• Ground maintenance

• Food *• Educational equipment• Educational supplies• Teacher resources and membership in

professional organization• First-aid• Housekeeping supplies• Office supplies and equipment• Special programs• Field trips and travel

Advertising, postage, and courier Audit and bookkeeping fees Legal expenses Bad debts and low enrollments Miscellaneous

A budget item by itemIncome The line expenditures in the budget are

balanced by the income side. Once expenditures have been

determined, the sources of income are evaluated and the fees established.

The actual fee charged should be higher than the exact formula amount, to allow some income over expenditures as a buffer or contingency fund.

Any money left from the fiscal year is borught forward as an income next budget year

Balancing the budget

The total of the income column and the expenditures column should be expressed in terms of income over expenditures

Conclusion

Understanding, planning, and monitoring financial matters of an early childhood setting is the primary responsibility of the board or owner, administrator, or supervisor.

Nonetheless the staff needs to understand how budgets are developed and the implications that they have for the quality of the center’s overall operation.

Location, Layout, and Physical Facilities Proximity to market Population trends

Physical Environments

Developmental needs of children Demographics change, centers are faced

with shifting enrolment demands Focus on Safety

Designing Space for Infants

Make them feel secure Stimulate them through varying levels of

challenge Secure and comfortable places An environment where supervision is easy Quiet areas and spaces to be alone Encourage and support group interactions Room allows a wide range of movement

Toddlers

Security of some defined space Flexibility of large areas Prefer large toys They test their bodies

Preschoolers

The layout of the room should generally reflect program goals and expectations, giving behavioural cues to children

Clear definitions of play areas, so allow a clear space for children, with open areas where they can use their bodies to enhance their involvement

The arrangement of the space dictates the level of teacher involvement needed for children in all care setting help children remember the expectations for inside play