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How the budget target works
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 Settings > Groups and Sliders. 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.
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': This is calculated by totalling the values of the services in your service groups which have been marked as expenditure and any amount you have entered in the 'Fixed expenditure' box
Total 'income': This is calculated by totalling the values of all the services in your service groups which have been marked as income and the amount you have entered in the 'Fixed income' box that you'll have available to spend this year.
Budget Deficit: This is the difference between the income you are expected to receive this year and the expenditure amount you have entered for your services. In a lot of cases, what you'd have to spend to maintain the status quo is more than the amount available from your income sources.
Example
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 2021-2022.
The ‘fixed income’ is the amount that will be given/allocated to the council for the budget period in question, i.e. 2021-2022. In this example the amount will be £3,000,000.
The council predicts to receive an extra £1,000,000 in revenue from income-generating services, which goes in the ‘slider income’. This assumes there is no change to this income.
Adding the two figures together, the total income for the council is £4,000,000 to spend in 2021-2022.
However, the council's current expenditure, which is taken from ‘total expenditure’ is £5,000,000.
This means that the council has £1,000,000 overspend than the predicted budget for 2021-2022. This is 25% more than the predicted budget and means the council will need to reduce its budget for 2021-2022 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 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 before they can submit their response. This can be achieved in 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 tolerance
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 exercise 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 customer success manager and we can adjust the 'budget target tolerance' for your exercise. This means your respondents do not need to balance the budget exactly before proceeding to submit a response.
For example, again using the Arlen Hill budget, if the 'budget target threshold' was set to 10% then respondents would be able to submit a response to the Simulator when they get within 10% of the target, rather than meeting the full saving.
This feature may be useful if your Simulator has a large number of services and service groups. By setting an easier-to-reach budget target, 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.
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'.
