Being able to handle the fiscal responsibilities of your position is of utmost importance, and is interwoven into each job priority you oversee.
“Budget” is not a four-letter word
Budget. A six-letter word that has the stigma of a four-letter word. It leaves a bad taste in your mouth and probably gives you a migraine, especially in the current fiscal meltdown many are experiencing. Being able to handle the fiscal responsibilities of your position is of utmost importance, and is interwoven into each job priority you oversee. While you might not love budgeting, and it might even be a bit intimidating, it is a necessary part of your job.
Most of us would readily admit that the reason we embraced this profession is not because of our love of budgets. However, budgeting has become the hinge in which you hinder or foster professionalism. Outlined in this article are three overarching tools or principles you can use to make budgeting easier and less of a headache: rationalize, resources and relationships.
Rationalization is a key component in staying afloat when the waters are rising. Simply put, it’s giving a reason to validate any potential purchase. It might sound inane, but it can be the difference between obtaining what you have determined best, and something else. A good example is Irrigation Efficiency/Conservation, a huge green initiative that has become center stage for both the STMA and Golf Course Superintendents Association. In our current season it would be unwise if we tied into this initiative without emphasizing the financial benefits that can be its partner.
I am honored to have been given the opportunity to work as a Project Manager on the build-out of the second community park for our city. This community park will be 85 acres, and at build out we are estimating that the park will consume about 260 acres of reclaimed water or 84,700,000 gallons. The park I currently supervise requires about 125 acres of Salt River Project (SRP) water, or 40,800,000 gallons, which is relatively inexpensive, at about $2,000 per year. The next community park is situated within eyeshot of the city’s newly constructed Water Treatment Facility, so using any other water source would be taking steps backward. Yet, the cost of using reclaimed water is substantially higher. After doing some preliminary projections we are looking in the ballpark of about $150,000 to $170,000 per year. This cost is the very rationalization needed to upgrade the park irrigation system, thus allowing us to be green, and at the same time emphasize the “hot” button that is on everyone’s mind, the budget.
How could this example save money? Let us say that an irrigation contractor comes in and recommends sprinkler A. However, through speaking with some industry professionals and doing some trials, it is concluded that sprinkler B has better distribution uniformity and thus requires less water to get the same result. Estimates show that the efficiency from Sprinkler B will save 5% a year in water use.
Unfortunately, sprinkler A costs $25 less, which appears to leave sprinkler B only a small fighting chance. Using rationalization, we can justify our decision by underscoring the facts: there are 50 heads a field over four fields, for a total of 200 sprinkler heads. The cost for sprinkler B (200 heads x $25) will cost the project an additional $5,000. Sprinkler A might have an initial lower cost, but would in truth cost the operating budget 5% more each year to achieve the same results. With the anticipated cost of water at $150,000, sprinkler A would cost an extra $7,500 a year to operate ($150,000 x 5%), a financial “gift” that would never stop giving.
Rationalization landed a deafening blow to the cheaper sprinkler head and upgraded the irrigation system that allows for lowering operating costs and puts environmental stewardship at an all-new high. This philosophy applies not only to new construction, but to any area where you may be justifying the purchase of a new piece of equipment, desiring to add additional labor, and/or requesting to use outside contracts to complete projects. In any situation the more history of reasoning and justification you have, the greater plausibility you have of acquiring what you requested.
Resources. How is it that a department can have a $1,000,000 budget, and yet have no money to spend, when someone else with a $500,000 budget seems to have purchasing freedom? This is where the rubber hits the road.
Where I work we have three different categories of accounts: Personnel, Contractual and Commodities. Personnel are obviously staffing requirements that include part-time and full-time employees, and all the benefits associated with those positions. Contractual are those expenses for contracts/outside services or charges from other city departments for services rendered (i.e. IT, Facilities and Fleet maintenance), and Commodities are for the purchase of operational supplies.
The goal of budgeting is to make sure that the bulk of available money is not wrapped up in Personnel and Contractual line items, but to ensure sure that the line items you actually control are adequate to give you the purchasing power to maintain the assets under your supervision. If 95% of the budget is tied up in Personnel and Contractual, then you have not been a good manager of the finances. Of the hypothetical $1,000,000 budget, only $50,000 is left for Commodities or actual spending dollars for the facility. When budget cutbacks do occur, these account lines end up being cut, and thus the spending ice-cube is melted down even further.
You may be asking, “What do you mean by ‘actual’ line items that you control?” When I was first brought on as a supervisor of a community park I soon realized that the electrical account was escalating. I had two choices. Sit back and say, “Boy, that electrical is getting higher every year and I guess I need to justify the raising cost,” or “Boy, that electrical is getting higher and I need to find out why. What can I do to stabilize that account or even reduce it?” Either you are a victim, or someone who initiates a resolution to the fiscal quandary. Which are you?
Once I started researching the electrical account it became clear that our facility was on the wrong type of metering account. It was a usage account that gave us cheaper electricity with the more kilowatts we used. The funny thing is we never used enough to get into the “cheaper” electricity. I immediately changed the plan to a bank-type electrical, where we are charged more or less for the time of day we use the power. With a combination of this and turning off some unnecessary lighting around the facility, we saved about $20,000 in the first year of starting the program.
It is important to look at all areas of your budget. When I first started working for the city I had no idea what IT charges were, how they were assessed or exactly what equipment made up the charges. I took the initiative and began asking questions. Just a word of caution, please tread graciously. There are some people who don’t like their “system” questioned and your initiative can be taken as interrogation. After researching the IT system it became clear that the community park was paying for a printer and a computer that were being used by other areas in our department. We made the change and were able to use those savings in other line items where I was given more spending freedom.
Both Electricity and IT are both Contractual accounts, the monies from those accounts are not actual dollars that I can elect to spend. However, they are costs that must be a part of the budget and each manager can influence how much money is spent from those accounts.
Relationships. An often overlooked aspect, but of vital importance to budgeting, is developing relationships. The older I get the more humbled I am in realizing that I can’t do it alone. I am only as good as the people I surround myself with. I love where I work because of the relationships that are dedicated to the facilities that we maintain. I trust my boss, and am confident that he has my back. When he has to go forward to his boss to rationalize my expenses or justify my resources, I know he has my best interest in mind. Someone who communicates a lone ranger mentality, which may be appealing in an effort to take credit for “your” work, can instead create a recipe for failure.
What are the ingredients you have in your relationship cupboard? How vested are you in the relationships at the STMA and your local chapter? How are you investing in those you are responsible for developing in the area of budgeting? Remember, the Lone Ranger did have Tonto, and was always willing to pass along the lessons he had learned.
The art of budgeting isn’t an activity that many of us enjoy developing, but it is a skill that is worth the effort. Don’t let the word “budget” leave a sour taste in your mouth, but instead check your resources, rationalize your decisions, and invest in your relationships. You’ll become a part of the solution instead of a liability that cannot be afforded.
Todd Wuellner is Sports Complex Supervisor, Rio Vista Community Park, Peoria, AZ.