10 Steps to Budgeting for Salary and Wages.

• Position: 10 STEPS

1

Forecasting. Salaries typically make up the greatest portion of the expenditure budget, so it makes sense to try and better understand how different trends or cost drivers may impact payroll costs.

2

Personnel tracking system. Budget payroll projections are based on the estimate of budgeted positions for the year, so make sure the number of budgeted positions is correct. If the system that tracks budgeted positions is outside of finance, ensure there is regular coordination and communication to ensure accurate information.

3

Vacancy adjustments. Address expected vacancies in the salary budget. Consider tracking expected start dates; reviewing trends (average filled positions per year versus average vacant positions) to determine the dollar impact of including a hiring lag; quantifying the money saved by not filling frozen or eliminated positions; tracking unfunded positions; and budgeting payouts where employees have indicated specific retirement dates.

4

Collective bargaining units. Note the positions that are covered under collective bargaining, identifying the group name and representation, along with the beginning and end date of the contract and key dates in contract provisions; consider setting aside reserves for contract settlements. Also account for any union agreement items such as overtime and holiday premiums that may be different.

5

Impact of inflation. The Consumer Price Index is used most often for determining cost-of-living adjustments, but the U.S. Bureau of Labor Statistics Employment Cost Index might be a better choice, as it measures the change in the cost of labor, free from the influence of employment shifts among occupations and industries.

6

Optimal staffing level. Some governments compare their staffing levels to those of other governments; some make hiring decisions to fulfill strategic initiatives. You might also use volunteers or...