Town of Bellington Budget

Budgets serve five main purposes; planning, facilitating communication and coordination, allocating resources, controlling profits and operations and evaluating performance and providing incentives. The budgeting process requires both technical and interpersonal leadership skills to achieve each of these purposes effectively. The director’s memo demonstrates several short comings in the budgeting process. The director instituted the “responsibility accounting system” as a means of evaluating performance. However, the DPW director has not consulted Sam in the budget process. Sam understands that his total expenditures are impacted by relatively unpredictable events that contribute to an uncontrollable element of his cost. The frequency, amount, and duration of snow storms are the underlying cost drivers for Sam. Sam can optimize his practices to minimize costs at different levels of snow storms’ to reduce overall costs. Optimizing the processes includes: developing the most efficient routes, creating the right balance of regular wage and overtime, and prudent use of salt and sand. Despite his ability to optimize, his cost variance is ultimately impacted by the level of ‘snow storm’ factors. The director should focus on working with Sam to increase process efficiency, and hold him accountable for operating within this budget for each level of activity.
Sam’s budget is overwhelming seasonal. Dividing the yearly budget by four does not reflect Sam’s costs per quarter accurately. There are off-season cost that may impact snow removal: training, procuring and managing supplies, and maintenance. If these activities exist, they should be reflected separately in the budget. Sam should be evaluated on budgets developed for each quarter. The director’s 3% reduction in costs, as opposed to using a three-year moving average, presents several issues. The 3% reduction is meant to motivate the supervisors. However, this forecast is unrealistic without deflation,