Terms such as accounting and finance are commonly used to describe the overall work in this domain. For the purpose of creating a more specific and strategically based terminology, here are summary descriptions for three distinct but linked areas of agency work in this domain:
Budgeting is a strategic financial planning process that proposes a funding plan and, when agreed to by all key stakeholders, appropriates funding and resources to the agency as a whole. The methods by which this occurs vary by jurisdiction (e.g., zero- based versus experience-based budgeting; state-level budgeting versus local-level budgeting reviewed by the state). The process is generally determined and spearheaded by an outside office of management and budget (OMB) department to which the agency is accountable in the broader governmental structure within which it operates. Budgeting is generally a lengthy process that involves both the executive and legislative branches of government. It involves determining revenues, expenditures and other resources, and results in a comprehensive budget plan.
Once a budget is in place, financing is the process that implements the budget on the revenues side, determining how the budget will be funded from federal, state, local and/or private sources. A critical aspect of this area of work is revenue maximization: determining how revenue can be maximized to serve vital agency programs. Agencies often miss opportunities to maximize their revenues from all federal sources, including federal block grants and foundations that are interested in supporting certain agency efforts.
Once a budget is in place, fiscal management is the process that implements the budget on the expenditure side, determining how funding is administered within the agency once it has been appropriated. Bookkeeping and audit compliance are commonly used to describe important technical aspects of fiscal management. Related processes include staff reimbursement for expenses, management of payments to vendors and management of service delivery. Within fiscal management lie countless opportunities to strengthen the relationship between the overall budget and how specific use of budgeted resources will best serve the needs of children, youth and families and improve outcomes (e.g., performance-based contracting and flexible use of funds across a continuum of services) and to strengthen the cost/benefit consciousness at the case worker and administrative staff levels.
The agency’s budgeting, fiscal management and financing functions should reflect its overall strategy. Examples of how effective agencies do this include: