ORGANIZATION AND MANAGEMENT OF ECCD PROGRAMMES

Lesson 07: Financial management of ECCE Programmes

Preparation of Budget

A major task of the director is the preparation of the budget. The director’s role is to balance income and expenses and in some cases show a profit. The director prepares a budget by

1. Estimating costs

   • The financial director’s first task is to figure programme cost. This task requires an overall understanding of the ECE programme, its goals and objectives.
   • The director determines what is needed for children in the particular community and the programme and then analyses the cost of meeting their needs.
   • If other people are preparing the budget the director works with them in interpreting the programme needs. In their planning model some objectives may have to be postponed or omitted because of lack of funds. Priorities should be established on the basis of the programme goals while the cost and availability of funds determines the scope of the programme. For ex: if the programme serves children from infancy to the preschool age,
     the director has to recognize that costs of infant programme are considerably higher than the costs of preschoolers based on the higher staff child ratio.
   • Determining the money or amount of budget is a major part of the overall financial plan. This figure is arrived at by listing the items needed to operate the programme for a year in categories such as salaries, space and equipment and by determining with as much accuracy as possible. How much each of these categories will cost and the sum of the costs for each category is the amount of income needed for a year. (How about having example tables of excel sheets here on budgeting?)

   Factors: factors that will influence the total amount spent by a center and the ways in which that amount is allocated are:

   • Number, special needs and ages of children enrolled
     
   • Teacher-child ratio
     
   • Staff training
     
   • Type and location of building
     
   • Amount of equipment already owned or available
     
   • Type of programme and services provided
     
   • General economic condition
     
   • Amount and type of in- kind contributions

   The sum of the costs for each category is the cost of running the center for one year. Dividing this figure by the number of children to be served establishes the cost per child, a figure that can be further examined on a monthly, weekly, daily and hourly basis. It is also important to consider whether the center is a non-profit organization or a profit making organization.

2. Determining how much income will be available

   • Many child care centers are started either by individuals or groups with limited resources and limited security. Yet the start up budget requires major amounts of capital.
   • Startup capital includes the money that must be available before the programme begins and the money that is needed to support the initial programme operation until the flow of tuition fee and other funds is sufficient to support the ongoing programme.
   • Operating funds refers to the amount needed to run the center and must include all the regular budget items.
   • Once the facility is established and the basic equipment has been purchased income must be adequate to ensure daily programme operation. In determining the amount needed, a break even chart is useful.
   • The fixed costs should be determined like rent, utilities, director’s salary etc. that will remain same regardless of enrollment.
   • Next variable costs are determined which change as children are added or subtracted. Using the break even chart, the director projects the income based on the enrollment.
     
3. Adjusting the budget figures
   • While it is relatively easy to change the budget figures on paper, chronic budgetary problems that will drain staff energy from the daily operation will remain unless the center can actually reduce costs to the level of income earned.
   • Each expense must be analyzed with an eye towards its relative importance in the overall programme. Can the equipment budget be lowered by substituting some free or inexpensive material? Can the food cost be lowered? This process is time consuming.