OPERATING BUDGET
FISCAL YEAR ENDING JUNE 30, 2009
INSTRUCTIONS AND SAMPLE FORMS
North Philadelphia Health System
Non-Salary Expense Budget Preparation Instructions
The following instructions are intended to serve as an aid in completing your Fiscal Year
2008/09 Non-Salary Budget Input Forms. The methodology used in arriving at your
2008/09 budget for each line item will be very similar to prior years. When determining
your non-salary budgets please remember to take any programmatic or budgeted volume
changes into account. As in previous years the guideline to follow when completing the
non-salary expense portion of your budget is:
Assume NO Inflation in Prices for Fiscal Year 2008/09!
Budget Narrative
Each department must prepare a detailed budget narrative describing the key assumptions
and the major vendors used in determining the budgeted dollar amount for each line item.
The budget narrative should also include adequate documentation supporting any
increases over Fiscal Year 2007/08 expenses. Budget packages are considered
incomplete and will not be accepted without a detailed budget narrative.
Accounts Payable Listing (Mar. 2007 – Feb. 2008)
Included in the budget package is a detailed listing (A/P) of non-salary expenses that were
charged to your cost center for the twelve months ending, February 29, 2008. The report
is sorted by expense sub-account and vendor name. The report does not contain all of the
components that appear on your monthly A/P Distribution report, but if requested those
items will be provided.
This report is intended to help you as you budget your non-salary expenses. Review the
vendor names that appear under each sub-account and determine if that is a re-occurring
expense that needs to be budgeted or if it was a unique expense relating to Fiscal Year
2007. If you have any questions regarding this report please contact Finance immediately.
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Non-Salary Budget Input Forms (Exhibit I)
The following section provides a brief description of the information found in the Fiscal
Year 2008/09 Budget - First Draft Input Form. Please review this information prior to
filling out the input form. See Exhibit I for an example of how the form should be
completed.
1. 8-Mo Actual 7/07-2/08
The value in this column represents the eight months of expense that was
actually charged to the corresponding expense sub-account.
2. 4-Mo Budget 3/08-6/08
The value in this column is the amount remaining in your budget for Fiscal
Year 2007/08.
3. Proj 2008
This amount is the sum of the two preceding columns. It is a projection of
what you are expected to spend in Fiscal Year 2007/08 based on the eightmonth actual and four-month remaining budget.
4. Budget 2008
This column reflects the amount that was budgeted for Fiscal Year 2007/08
5. Budget 2009
The value that you enter in this column represents the amount you are
budgeting for Fiscal Year 2008/09. Remember to substantiate this figure
in your budget narrative and to provide as much detail as possible.
6. 08 Proj v 08 Bgt (Over) Under
This amount is the difference between the value in the Budget 2008
column and the value in the Proj 2008 column. The amount in this field
represents either a positive or a negative variance. A negative variance
will be enclosed in parenthesis and is the amount by which the budget was
exceeded. A positive variance is the amount by which you are under
budget.
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7. Percent Variance
The percent variance is calculated in the same manner as the previous
column; however the variance is shown as a percentage rather than a dollar
amount.
Salary and Wage Budget Preparation Instructions
The following instructions are to facilitate you in determining your Fiscal Year 2008/09
staffing requirements. Consistent with prior years, you will not be budgeting salary
expenses, only your departmental staffing requirements. In doing so, you need to
determine your required staffing hours (productive and non-productive) on a departmental
basis by employee general ledger (G/L) type. To determine Fiscal Year 2008/09 required
staffing hours, the Finance Department has provided you with a Labor Budgeting Input
Form, which contains all the necessary information required to complete your 2008/09
Salary Budget.
In order to properly complete these forms, there are several steps that must be followed:
Review Employee Listing (Exhibit II)
Review your existing staff, as reported on the Labor Budgeting Input Forms. This
information is obtained from our payroll system that lists all active employees in your
department as of March 18, 2008. These employees are separated by G/L Type, which is
indicated at the top center of the form. For each employee G/L type, you need to examine
your current active employees. The employee level data you must verify includes:

Employee name

Anniversary date

Hourly Rate

Employee G/L Type

Scheduled hours per pay period (Agreed Hours)
The items that require your careful review are the employee general ledger type and the
scheduled hours. These are the basis of your staffing assumptions; therefore, it is
necessary that these components are correct.
As you review the Labor Budgeting Input Forms, make corrections directly to the forms
by adding, deleting and transferring personnel between departments and general ledger
types. To budget for vacant positions, write in the position title, hourly rate and
scheduled hours per pay period in the blank lines provided on the form.
Below the listing of employees is a subtotal line summarizing the information by number
of employees, FTE's and total scheduled hours per pay period. Keep in mind, this system
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is calculating FTE's (Full-Time Equivalent) by dividing total scheduled hours by 80
hours. Overtime and relief hours are not included in this FTE calculation.
Calculate Productive and Non-Productive Staff Coverage (Exhibit III)
Once you have verified and corrected all employee data, you need to begin budgeting for
all productive and non-productive staff coverage necessary for Fiscal Year 2008/09. For
each employee, you must budget total annual hours broken down by Regular hours,
Vacation, Holiday, and Sick or Paid Personal Leave (PPL), if applicable. Do not budget
for any flex personnel; their hours will be budgeted in Step #6 Determination of Relief
Hours. To calculate productive and non-productive coverage you will need to perform
the following steps:
1. Determine each employee's total annual hours
This is accomplished by multiplying the Agreed Hours times 26 pay
periods. Enter this total in the Annual Total column. Reminder: Do not
individually budget flex personnel (employees who have agreed hours of
16 hours or less).
2.
Determine each employee's expected use of non-productive time
Non-productive time consists of vacation, holiday, sick or PPL. Each nonproductive time category needs to be budgeted on an employee by
employee basis. For budget purposes, we will assume all employees will
use the maximum non-productive time they are entitled. Follow the
procedures listed below to budget non-productive time for each employee.
a) Refer to the hospital policy guidelines to determine the
maximum amount of non-productive time each employee is eligible
for based on their length of service with NPHS. Keep in mind, parttime employees receive prorated non-productive hours according to
the number of hours they work. For example, a 32-hour person would
receive 40% of the time a full-time person is entitled. This percentage
is calculated by dividing the number of hours a part-time employee
works by the standard 80 hours.
When you determine the number of budgeted hours remember to base
your budget on the number of scheduled daily hours of each employee;
i.e., 8 hrs per day, 7.5 hrs, or 7 hrs.
For example, two employees are each eligible for 11 holidays. The
first employee works 80 hours per pay period or 8 hours a day;
therefore, he receives 88 hours of budgeted holiday time. The second
employee works 70 hours per pay period or 7 hours a day; therefore, he
receives 77 hours of budgeted holiday time.
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b) Once you've determined the number of annual non-productive hours
for each employee, enter the amount in the appropriate non-productive
time column.
3. Determine each employee's regular hours
This is accomplished by subtracting each employee's vacation, holiday,
sick or PPL hours from their total annual hours.
4. Determine Department's overtime hours
On the basis of historical data, (see Departmental Overtime Analysis)
estimate the number of overtime hours your department will use for Fiscal
Year 2008/09. Overtime hours should include the following:
a) Overtime - normal departmental overtime, and
b) Holiday Overtime - holiday hours paid at overtime rates.
Enter the total Holiday overtime on a blank row in the Overtime Hours
column and show a corresponding decrease in hours in the Regular Hours
column as shown in Exhibit III. The regular hours need to be decreased by
the hours of Holiday overtime in order for the system to properly calculate
the salaries. The total annual hour’s column should be equal to zero.
Next enter the total annual overtime (other than Holiday overtime) hours
expected to be utilized by your department, on the relief hours row in the
Overtime hours column. Do not allocate the annual overtime between
your employees.
Please provide a reconciliation
Exhibit III.
of the total budgeted overtime.
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5. Subtotal the columns
Next, add up the hours in each column and enter the totals in the row
entitled Subtotal, except for the annual overtime hours that you have
already entered in the subtotal row.
6. Determine relief hours
Relief hours are hours that are necessary to cover unscheduled productive
time, which is only applicable to departments who replace their personnel
when they call out or have scheduled absences. To calculate your
departments' annual relief hours you must first determine the total
productive hours needed to staff your department by G/L type for Fiscal
Year 2008/09.
For example, assume you are responsible for budgeting a executive
department that contains only one G/L type for Executives. This
Executive department needs to staff 2 executives 24 hours a day, 7 days a
week. The following calculation would be performed to determine the
number of productive hours needed to staff your department:
2 executives x 24 hours/day x 365 days/year = 17,520 annual hours
Please note -- you must perform this calculation for each employee G/L
Type applicable to your department.
Once you've determined the total hours needed to staff your department,
subtract those hours from the total number of regular hours that was
computed in the Regular Hour column, Subtotal row (see Exhibit III).
The balance left is the annual total number of relief hours needed for your
department.
Relief hours will be covered in the form of overtime and/or pool/flex time.
When you budget for relief hours it is necessary to specify the breakdown
of hours between overtime and pool/flex time on an annual basis. In order
to determine this breakdown, you should look at the historical experience
of your department. Once the break down of the annual hours is
determined the flex/pool time is entered in the Regular Hours column of
the Relief Hours row and the overtime hours are entered in the Overtime
column of the Relief Hours row.
7. Total the columns
Add the Subtotal row and the Relief Hours row together and enter the total
hours for each column, including annual total hours in the row entitled
Total Hours.
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Please make sure that the detailed hours in each column
add up to the amount you entered in the total hours row
of that column.
Determination of Other Hours (Exhibit IV)
Other hours consist of shift differential hours and on-call and beeper occurrences. If your
department does not work shift differentials or pay employees for being on-call or
carrying beepers you have completed the Labor Budgeting Input Form and may skip to
the conclusion. If this section is applicable to your department, it is critical to remember
that these are NOT ADDITIONAL BUDGETED HOURS, rather they are a breakdown
of the hours you have already budgeted for in the Productive and Non-Productive Staff
Coverage section. This section is necessary to complete in order for the budgeting system
to compute the dollar amounts associated with shift differentials and on-call and beeper
occurrences.
1. Shift Differentials
In order to compute the number of hours associated with each shift
differential, review your employees once again and indicate an
abbreviation next to any employee that works a shift other than day shift.
Please use the following abbreviations:
Evening
Night
Weekend Day
Weekend Evening
Weekend Night
E
N
W/E
W/E/E
W/E/N
Determine the number of annual hours that will require coverage for each
shift (evening, night and weekend). In determining the number of annual
hours for each shift remember to include not only your existing staff, but
also personnel that will be covering relief hours. In addition, the annual
hours for employees that work the weekend shift should be included in the
weekend differential, as well as, the appropriate evening or night shift
differential, if applicable.
Once you have determined the number of annual hours that will be worked
for each shift, enter the hours on the appropriate line in the Other Hours
section of the form. Please note we have split the night shifts between
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RN's and all other personnel; therefore, be sure you enter your
departmental hours on the appropriate line.
The night shifts are broken out due to the varying pay scales of the
departments. Please review the shift differential pay scale listed below for
accuracy. If your department pays a different rate then is listed below,
please contact me immediately so that I may make the appropriate changes
to the system.
Registered Nurses (GMC & SJH):
Evening shift
Night shift (all nursing personnel except RN's)
Weekend
Black Friday (Volunteered or Mandated Overtime)
$2.50/hr.
$2.75/hr.
$3.00/hr.
$3.50/hr.
Non-Nursing Personnel:
Evening shift
Night Shift
10%
10%
2. On-Call or Beeper Occurrences
On the basis of the historical experience of your department, estimate the
number of on-call and/or beeper occurrences you expect your department
to incur over the year. Enter the estimated annual number of on-call
occurrences in the on-call row and the number of beeper occurrences in
the beeper row. Please note the pay rate of the occurrences in the
comment's section to the right of the row.
Conclusion
Once you have performed each of these steps you will have completed your fiscal year
2008/09 salary and wage budget. Remember a key element in completing your salary and
wage budget is the completion of your budget narrative. When you write your narrative
the more detail you include on your salary and wage budget assumptions the easier it will
be as you go through the budget hearings. If you have any questions please do not
hesitate to contact the Finance Department.
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