NR 711 Week 3 Operating Budget Draft Example

FY2028 Operating Budget Draft for 4 West, Built to a Ceiling of $7,175,700

Student Name

College of Nursing, Chamberlain University

NR 711: Fiscal Analysis and Project Management

Instructor Name

Month Day, Year

FY2028 Operating Budget Draft for 4 West, Built to a Ceiling of $7,175,700

The Ceiling and the Rules

The finance office set the FY2028 non-capital operating ceiling for 4 West at $7,175,700, which is the FY2027 approved budget of $7,035,000 plus 2%. The draft below totals exactly that figure. It was built in three passes. The first pass entered every increase the unit cannot refuse, because a contract or a price agreement already fixes it. The second pass found the money for those increases inside the unit's other lines, since the 2% growth did not cover them. Only the third pass considered anything the unit wanted to add, and anything added there had to name the line that paid for it. Benefits are held centrally by the hospital and do not sit on the unit's budget, so every salary line below is wages only (Waxman, 2018).

Lines, Changes and Their Sources

Table 1

4 West Operating Lines, FY2027 Approved Against FY2028 Draft

Note. Note. Changes net to +$140,700, the 2% allowed. Minus signs mark reductions.

Committed Spending Came First

Four increases are not choices. The nursing contract adds a 3% step for registered nurses and nursing assistants on 1 July, which costs $144,000 and $19,200. The group purchasing agreement raises the unit's supply prices by 2.5%, which is $13,500 on last year's volume. The interpreter telephone line moves to a new contract tier, adding $4,800. Together these come to $181,500. The ceiling allows $140,700 of growth, so before the unit asks for anything, it is $40,800 short of what it has already agreed to pay. Treating these lines as open to argument would produce a draft that looked balanced in June and broke in August, when the first contract payroll ran (Finkler et al., 2013).

Where the $40,800 Came From

Three lines give it up. The largest is one-to-one sitter hours, which drops by $33,000 to $362,000. At FY2028's loaded rate of about $26.27 an hour, that buys roughly 13,780 hours, about 11% fewer than the 15,476 the unit used last year. The cut is not a hope. In the last three months the charge nurses have reviewed every sitter order each morning against a written protocol, and the review ended about one sitter shift in nine as no longer needed, which is the same kind of nurse-driven protocol other hospitals have used to bring sitter hours down (Burtson & Vento, 2015). Agency nursing drops by $6,800, because one of the two open night positions was filled in May. Office and other drops by $1,000, the cost of the printed forms the unit stopped using when admission paperwork moved into the record. The three reductions total $40,800, which closes the gap exactly.

The One Increase the Unit Chose

Education and travel rises by $8,000 to $32,000, for a full skills day on fall prevention and safe mobility for every nurse and nursing assistant. Minor equipment pays for it, falling from $38,000 to $30,000, which means two of the four recliner chairs the unit had planned to replace this year will wait. The pairing is deliberate. A unit that adds education while holding every equipment line flat has not chosen anything; it has simply asked for more. Here the reader can see which chairs are not being bought so that the skills day can happen (Penner, 2017).

Twelve Months That Tie Back

Table 2

4 West FY2028 Draft by Month

Note. Note. Labor follows calendar days and last year's census by month; supplies follow census; December carries holiday premium pay.

The months are not twelve equal slices. Labor follows the number of days in each month and last year's census pattern, which peaks in January and March, so those months carry more. Holiday premium pay lands in December. Supplies follow census. Shorter months, such as September, November and February, come in lowest. The twelve months add to $7,175,700, the same figure as the annual column, so the monthly variance reports that come later in the year will compare against the same total that was approved.

Memo to the Director of Nursing: What the Unit Agreed to Stop

To keep inside the ceiling, 4 West has agreed to three things it would rather not do. It will run about 1,700 fewer sitter hours, which depends on the morning review continuing every day, including weekends. It will defer two recliner replacements to FY2029, leaving two chairs in service that patients have complained about. And it will buy no new printed education materials, using the hospital's online modules instead.

Four requests were raised by staff and are not funded in this draft. A residency preceptor allowance, $21,600 for paid preceptor hours with new graduates, has no donor line large enough. A 0.2 position for a second unit educator, about $27,000, has the same problem. Replacing the remaining two recliners would cost $6,400. Remote video monitoring is a capital request with its own operating tail and is not an operating budget line at all, so it goes to the capital committee separately.

I would ask that the residency preceptor allowance be the first item considered if the hospital releases money midyear, because it is the one with an effect on retention the unit can measure.

How the Draft Was Checked

The changes in Table 1 net to +$140,700, the growth allowed. The donor reductions, $33,000, $6,800 and $1,000, add to the $40,800 gap, and the $8,000 education increase is matched by the $8,000 minor equipment reduction. The lines in the draft column sum to $7,175,700, and so do the twelve months in Table 2.

References

Burtson, P. L., & Vento, L. (2015). Sitter reduction through mobile video monitoring: A nurse-driven sitter protocol and administrative oversight. JONA: The Journal of Nursing Administration, 45(7/8), 363-369. https://doi.org/10.1097/NNA.0000000000000216

Finkler, S. A., Jones, C. B., & Kovner, C. T. (2013). Financial management for nurse managers and executives (4th ed.). Elsevier Saunders.

Penner, S. J. (2017). Economics and financial management for nurses and nurse leaders (3rd ed.). Springer Publishing.

Waxman, K. T. (2018). Financial and business management for the doctor of nursing practice (2nd ed.). Springer Publishing.