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How does the budget target work in Budget Simulator?

Eric -

This article explains how the parameters for 'balancing the budget' work in Budget Simulator. It also explains some of the detail behind the maths used.

In order to access the 'Budget' view, you will first need to be logged into your Budget Simulator as an administrator.

Once logged in; navigate to the Budget tab. Here you will be given options to administer the budget settings and service groups - these options are available on the left hand side. You can read more about editable content here.

 

 

 The 'Overview' budget settings

At the top of the page referenced above, an overview of the parameters for balancing the budget according to the information you have input is available.

Total 'expenditure' service groups: This is calculated by totalling the monetary values of the services in your service groups which have been marked as expenditure.

Total 'income' service groups: This is calculated by totalling the monetary values of all the services in your service groups which have been marked as income.

Total budget for next period (fixed budget + income): This is calculated by adding the 'total income service groups' with the amount in the 'fixed budget for period' box.

Fixed budget for period: This is the amount that the organisation, in this example Arlen Hill local council, is expected to receive as a fixed amount for the period being consulted on as part of its yearly grant from central government. 

 

Using a fictional council, Arlen Hill Council as an example, this is how the budget parameters are calculated:

Arlen Hill local council is consulting on its budget for 2019-2020.

The ‘fixed budget for period’ is the amount that will be given/allocated to the council for the period of the consultation, i.e. 2019-2020. In this example the amount will be £3,000,000. It is worth mentioning that as a local council this is granted/allocated from central government.

The council predicts to receive an extra £1,000,000 in revenue, which goes in the ‘total income service groups’. This assumes there is no change to this income.

Adding the two figures together, the total projected budget for the council is £4,000,000 to spend in 2019-2020.

However, the council's current expenditure, which is taken from ‘total expenditure service groups’ is £5,000,000.

This means that the council has £1,000,000 overspend than the predicted budget for 2019-2020. This is 25% more than the predicted budget and means the council will need to reduce its budget for 2019-2020 by at least £1,000,000.

Respondents will be asked to adjust the amounts for 'expenditure service groups' and 'income service groups' to address this budget discrepancy of £1,000,000 and balance the books.

 

On the public facing page of the Budget Simulator, this is displayed as follows:

 

Overspend - this shows the difference between the amount the council currently spends on its 'expenditure service groups' and the predicted 'total budget for next period (fixed budget + income)'. This figure is then adjusted as respondents use the sliders to decrease or increase expenditure and income in the service groups.

Over budget - this is a percentage representation of the 'overspend'. This is calculated and rounded to one decimal place. (See note below on rounding)

Total expenses - this is the total expenditure calculated from the expenditure service groups. This is adjusted as the sliders are used to increase or decrease the amounts spent in the expenditure service groups. Adjustments to income service groups do not contribute to this figure.

 

Enforcing the budget target

It is also possible to ask respondents to 'meet' a budget target. This can then be added to your Budget Simulator by selecting 'enforce budget target' from the budget settings page. This prevents respondents from submitting their budget until they have either met or exceeded the budget target. Before choosing whether to go-live with this feature it's worth testing the simulator to ensure that your budget target is achievable.

 

 

Balancing the budget - applying a threshold

Generally, with the 'enforce budget target' set, respondents will be required to balance the budget exactly before being able to submit their response. For example, using the Arlen Hill example above, the budget consultation requires respondents to reduce the overall budget by 25% to hit target (£1,000,000 is 25% of the overall £4,000,000 the council has available to spend).

However you can discuss with your account manager and we can adjust the 'budget target threshold' for your consultation. This means your respondents do not need to balance the budget exactly before proceeding to submit a response.

For example, again utilising the Arlen Hill budget, if the 'budget target threshold' was set to 10% then respondents are able to submit a response to the consultation when they are still 10% over budget, rather than meeting the full saving. 

This feature may be useful if your budget consultation has a large number of services and service groups. By setting an easier-to-reach budget target threshold, your respondents can submit their response without having to manipulate the budget down to the total amount before being able to move forward. 

 

Balancing the budget - rounding

It is important to note that the 'over budget' percentage figure is calculated and rounded to one decimal place. This means that respondents are able to reduce the budget to within 0.049% of your target and be able to submit their response.

For example:

Green Hill is consulting on its budget for 2049-2050.

Green Hill's current expenditure taken from 'total expenditure service groups' is £50m.

Their 'fixed budget for period' for 2049-2050 will be £40m.

This means a budget reduction of £10m or 25% is required.

Respondents can then reduce the budget to within 0.049% of £40m, or £196,000 and be able to submit their response as the system will have acknowledged they have been able to balance the budget.

As illustrated in the screenshot below. Although there is still £196,000 of overspend, or £0.02m (due to the rounding of 2 decimals for the overspend figure). The over budget percentage is calculated to 1 decimal place and therefore returns 0.0% and thus acknowledging that the respondent has 'balanced the budget'.