BTE Macro Trends Budgeting™ is, a unique and powerful tool and approach for planning an institution’s financial future using a five-year planning horizon. BTE Macro Trends Budgeting™ is both a financial modeling tool and a way of thinking about managing financial challenges.
Traditional Budget Planning
Traditional budget planning sometimes results in our having to manage, every year or two, a situation where expenses exceed revenues, forcing us to engage in cost cutting exercises. These recurring budget cutting exercises, when graphed, look like the graphic on the right.
Traditional budgeting does not incorporate macro trends into budgets. BTE Macro Trends Budgeting™ is a five-year budgeting plan that helps identify and incorporate into your budget macro trends that affect your institution.
Macro trends are revenue and expense trends that have recurring and sustained effects on your institution. Macro Trends also often take at least three years to see clearly.
Some Examples of Macro Trends
- Tuition and fee trends
- Tuition discounting trends
- Grants and contract trends
- Unrelated business income
- Health insurance premiums
- Utility rates
- Personnel salary increase
- Personnel staffing trends
For example, over the past thirty years higher education institutions have seen a gradual increase in the average discount rate used to attract students. However, discount rates can, when they reach certain levels, eliminate many of the income gains hoped for by increasing tuition. This and other macro trends make budgeting a challenging process.
BTE Macro Trends Budgeting™ Model
The BTE Macro Trends Budgeting™ model and process is designed to help budgets, over time, to look like the second graphic on the right – a place where revenues rise at a faster rate than expenses. The BTE Macro Trends Budgeting™ process and model uses a five-year planning tool to identify the impact of programmatic and policy initiatives, and unforeseen challenges – like the coronavirus -- on your institution’s financial future.
In addition to the financial model, BTE Macro Trends Budgeting™ uses processes like prioritizing actions based on their visibility and impact on improving your institution’s finances.
Prioritizing the visibility and impact of actions is a key tool in meeting the challenges to your institution’s financial future, arising from an unforeseen threat like the coronavirus.
In situations like this, it is critical to be able to triage the many actions that must be taken to preserve and insure your institution’s financial and organizational strength and future. BTE Macro Trends Budgeting™ helps you to engage in financial triage that buys you time by identifying high impact and immediately attainable outcomes while building financial strength.
BTE Macro Trends Budgeting™ also helps an institution’s leadership to assess the interactions and impacts of strategic planning and visioning initiatives as well as disaster management strategies on your institution’s financial health and strength by focusing on:
- The impacts of “What if” scenarios on your institution’s financial future
- The impacts of external factors, like the coronavirus, on the revenue stream and expense levels for your institution
- The levers you can use to create financial sustainability
- The key financial trends facing the institution
- The impacts of new initiatives and programs on the institution’s financial future, and
- What it will take to achieve positive future financial trends.
Macro Trends Budgeting™ uses sophisticated processes and tools. Yet, it is easy for financial people to use and non-financial people to understand. As one leader said “The financial models that you presented were both professionally done and very sophisticated. The best part was that you presented the information in a way that made very clear the challenges we face and the steps we need to take.”
The graphs are by Howard Bell.