Four popular budgeting styles used in athletic programs
Creating an accurate athletic budget largely depends on the type of budgeting strategy used by the sports department.
Ken Mohney, director of student activities with the Mattawan Consolidated School District in Michigan, outlines four popular budgeting styles used in high school sports departments. There are advantages and disadvantages with each style, but ultimately the athletic director must choose what best accommodates their situation and the people involved.
Top-down budgetThis is a budgeting approach where cost projections are generated by the management team, which then imposes a budget on the lower departments. Management forecasts revenue and expenses while considering the previous year’s budget in determining what’s appropriate for the upcoming school year.
Pros: Reduces time by limiting communication with lower departments. It also provides valuable experience for the management team in creating an overall budget and familiarizing itself with individual departments. The absence of communication means less time is wasted on coordination.
Cons: Leaders in the lower departments gain no budgeting experience. The top-down budget also may create a feeling of imposition as management dictates the needs and financial allocations of individual departments.
The opposite of the top-down budget, allowing the lower departments to create a budget and submit it to management for approval. The management team can send the request back down to the lower departments for modifications if necessary.
Pros: It’s a collaborative effort that’s motivating for individual departments that now have a bigger role in the process. It also includes those who are most familiar with their department’s needs.
Cons: It’s more time consuming than the top-down budget and smaller departments may not have experience in creating budgets. It also may open the door for “budget fudge” — a use-it-or-lose-it mentality that causes departments to request money for something they may not need.
A program’s budget starts at zero and the coach must have justification for each item included in their request for funding. Those items are then analyzed by the management team to determine whether funding is appropriate.
Pros: This prevents waste by requiring each department to prove their needs. The zero-based budget also is more adaptable to change than other budgets.
Cons: This can be very time consuming, as all department leaders must itemize their needs on an annual basis while the management team spends considerable time analyzing their requests. It often results in difficult decisions when the management team must prioritize one department’s needs over another.
The athletic department’s budget is based on the prior year’s actual results or budgeted results. Only slight modifications are made before it’s considered for approval.
Pros: The process is quick and easy because figures are carried over from the previous year. This also provides good stability for individual programs because they have a dependable budget with very few changes from year to year.
Cons: Encourages “fudge” as department leaders worry that if they lose funding for one year it can be lost for multiple years. There also is the risk of resource misallocations. Money for one year might again be available the next year even though the need is no longer there.
Budgeting quick tips
• Accuracy + justification = trust. When creating a budget, make sure all your numbers add up. You also need appropriate justification for each and every request. That’s how you build trust with your school board, staff and community members while showing that your budget is free of “fudge.”
• Report the different between proposed and actual budgets. Oftentimes the actual budget doesn’t necessarily reflect the one that was approved. Special circumstances or needs may arise, resulting in excess spending in some areas or even savings in another. Make sure you’re reporting to the administration where the shortfalls and surpluses occurred. This shows you’re being honest and transparent.
• Welcome an external audit. You may have individuals on staff who are qualified to review your proposal, but hiring a budget-savvy person on the outside to audit your work is important. It gets assurance from someone who is detached from your process and shows your dedication to accuracy.
• Continuing education. The NIAAA offers leadership training courses on everything from the philosophy of educational athletics to risk management. One course is called Concepts and Strategies For Interscholastic Budgeting and Finance Using Excel Spreadsheets. It’s highly recommended for all athletic directors responsible for creating budgets.