EMS World

AUG 2018

EMS World Magazine is the most authoritative source in the world for clinical and educational material designed to improve the delivery of prehospital emergency medical care.

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14 AUGUST 2018 | EMSWORLD.com E MS officers, especially execu- tive EMS officers, are frequently responsible for managing bud- gets. How does a recently pro- moted officer, or one who has never had to work closely with such matters, begin to prepare? There are several things to do. For example: • Become familiar with basic budget terminology; • Become familiar with the type of budget used by the organization; • Become familiar with and participate in the budget process; • Learn how to establish financial objectives; • Monitor budget activities once the budget has been approved. Budget Terminology The first step when working with a budget is to become familiar with the terminology. Here are some common terms: • Budget—A detailed financial plan that includes lists of income sources, expenses, and other categories and specific amounts for each line item in a fiscal period. • Budget calendar—The specific time frame and benchmarks pertaining to budget preparation. • Budget variance—A difference between a budgeted amount and actual amount spent. • Capital budget—A budget, part of the organization's master budget, that includes items with a purchase price greater than a set amount and life expectancy greater than several years. These items are purchased for long-term investment—for example, build- ing a station, buying a new ambulance, etc. • Cost center—A budget account assigned to functional work group (division) to which costs and other activities are assigned as part of the accounting process. • Enterprise fund—A fund used to provide a service to the public. • Financial management objectives—A set of activities used to ensure the organization is meeting revenue and expense forecasts and operations are supporting its strategic goal. • Fiscal year—The year for which a budget is meant to be used. It may also be referred to as a budget year. • Fixed budget—Also known as a static bud- get, once approved, it does not change even if dollars are needed and can be taken from another line item to support an initiative. • Fixed cost—A cost that is independent of how much the item is used. • Forecasting—The process of predicting future outcomes or trends. • Functional work group budget—A budget specific to a group within the organization— e.g., logistics, fleet, dispatch—that is incor- porated into the master budget. • General fund—A department fund sup- ported by dollars contributed by the con- trolling government entity. • Incremental budget—A budget based on data from previous budgets, with minor adjustments from one year to the next. • Line-item budget—A budget that separates each budget activity within each cost center or as part of the overall master budget. • Master budget—A budget that includes financial and accounting activities for the entire organization. • Operational budget—A budget that includes all the expenses an organization requires to remain operational. • Over budget—Costing more than what was budgeted. • Under budget—Costing less than what was budgeted. • Variable cost—A cost that depends on the output or use of the resource. • Zero-based budget—A budget that starts at zero balance at the start of each budget year, and only items considered essential are added. The intent is to add only items the organization truly needs and omit non- essential items that might have remained from the previous year using another budget methodology. Understanding the financial and account- ing terms used during the budget process will help the EMS officer become better prepared to engage in budget discussions and work with their assigned budget. However, it is only the first step. Formal and ongoing budget training must be the goal. This can be accomplished by formal education, in-house or online budget/ accounting certificate courses, and remain- ing engaged with the department budget process. Budget Types With an understanding of basic budget terminology, the second step is to become familiar with the budget format used by your organization. Get a copy of the organization's current budget and begin to review it, make notes, and ask questions. The EMS officer must ascertain whether he or she will be responsible for an assigned functional work group budget or just pro- viding requested information to the bud- get office. Most large organizations have a budget office designated to work with the organization's budget activities. New or even seasoned EMS officers should reference the organization's account- ing experts and not be embarrassed to ask An Introduction to Budgets "From the Officer's Desk" is a bimonthly column aimed at EMS leaders. The new leader must become familiar with their terminology and types By Orlando J. Dominguez, Jr., MBA, RPM FROM THE OFFICER'S DESK

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