Budget Comparison Respond to at least two of your classmates’ posts  CARMEN’S POST: Budget Comparison Budgets planning has a big impact in organizations and it is important to understand the different types of budget to spend and receive money (Dropkin and LaTouch, 2007)  

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Budget Comparison

Respond to at least two of your classmates’ posts 

CARMEN’S POST:

Budget Comparison

Budgets planning has a big impact in organizations and it is important to understand the different types of budget to spend and receive money (Dropkin and LaTouch, 2007)  . This week brought a focus on six different types of budget which are: 1) Total, organization-wide operating budget, 2) Operating budget for individual programs, unit, or activity, 3) Capital budget, 4) Cash-flow budget (cash-flow projections), 5) opportunity budget, and 6) Zero- based budget. Each budget has different benefits in organization but can also create negative impacts if not planned accordantly.

*Insight of Budget

1) Organization-Wide operating budget: This type of budget focus on everything the organization spends to function. It evaluates and oversees all services and activities provided within the organization. According to Dropkin and LaTouch (2007) This type of budget identify all the income and expenses anticipated for a year; from employees, consultants, programs, servers, facilities, and other elements needed to organize (p. 6).  Larger nonprofits organizations would benefit the most from this budget because they can see all sources of funding’s and income coming in, and going out. In addition, for auditing purposes or to show grants how money was spent so that grants can continue. Also, it can help with seeing if there would be losses in the planning.

2) Operating Budget Individual Program: Focuses on each individual program within the organization. It allows organizations to develop its own specific individual budget for a program. In comparing with Organization-wide operating budget it gives a clear break down of budget coming in, however, individual programs are more detailed and focus with goals. Unlike organization-wide operating budget that anticipates a year, individual program can be broken down in quarters. Non-profit organizations that offer different services can benefit from this budget as it would focus on the revenue of each program individually and can identify strengths and weakness of each.

3) Capital Budget: Helps organizations think ahead and plan for big projects. According to Dropkin and LaTouch (2007) this type of budget helps plan and manage capital projects, focusing on major spending’s, or one-time large expenditure. This type of budget is similar to both budgets mention above in that they allow to see funding that are coming in and coming out. In contrast this type of budget is non-recurring expenditure. This is beneficial for any organization that needs to do build outs, major construction and/or repairs.

4) Cash Flow Budget: Are important as organizations can see the amount of money coming in and out. When organizations dismiss this type of budget or overlook it, there tends to not be enough cash available to meet outstanding obligations (Dropkin and LaTouch, 2007). This type of budget requires planning as funding’s can take time before organizations can see the money. This type of budget is more of a month-to-moth as it requires receipts and keeping balances of money coming in and out. It is similar to the other budgets in that planning is required. This type of budget is beneficial for organizations that receive funding’s scattered throughout the year. It will help organizations prepare prior and avoid negative cash flow if they balance money correctly.

5) Opportunity Budget: This budget allows for planning and strategic goals. It helps the organizations develop, analyze, think of possible expansion with proper research (Dropkin and LaTouch, 2007). This works when the other types of budget have been created and implemented successfully. The organization would have time to revisit opportunity for growth and when the times come the money available would be utilize for that project, making it simper because information would be in hand. Similar to the other budget in which it allows you to plan ahead. Different in the sense that the prior budget discussed need to be effective so that there would be actually opportunity to grow the organizations with extra funds and not effecting the budget.  

6) Zero-Based Budget: This type of budget is done as the new fiscal year start. Organizations need to avoid past years budget and start from scratch. This helps with making adjustment and having a clear picture of the budget. This type of budget help to reassess the services and make changes if needed. We can compare this to other budget as they all allow organization to plan. They are different in the aspect that this budget is starting with a clean plate. Organizations that would like to make adjustment or modifications to services, although it is not an easy task. This budget requires time as mention in Katz (2015) it requires a microscopic look to see productivity and make change.

 Overall, budgets are essential and effective in organizations. According to Dropkin and LaTouch (2007) there are basic rules and planning that take place in these budgets which show comparison. They differ in the process and steps to get actual outcome.

Reference:

Dropkin, M., Halpin, J., & LaTouche, B. (2007). The budget-building book for nonprofits (2nd ed.). San Francisco, CA: Jossey-Bass.

Katz, D. M. (2015). Starting from Scratch. CFO, 31(9), 34–38.

 

LESLEY’S POST:

Organization-Wide Operating Budget- This type of budget is rather self-explanatory, in that the budget encompasses expenses and incomes for the entirety of the organization (Dropkin, Halpin, and LaTouche, 2007). Budgeting using the organization-wide method differs from other budget types as it examines all areas of operations, together.

Larger nonprofit organizations would benefit the most from this type of budget considering they operate on a level in which many programs, departments, etc. are involved.

Operating Budgets for Individual Programs, Units, or Activities- In much the same way as the organization-wide operating budgets encompass the entire organization, operating budgets for individual programs, units, or activities require the same setup for expenses and incomes, but rather in a micro manner for each program, unit, or activity.

Nonprofits also benefit from this type of budgeting method as it correlates to the overall organization's effectiveness of budgeting but is also beneficial to for-profit organizations.

Capital Budget- This type of budgeting is quite specific, as it refers to large sums of money at one time for specific purposes, either physical improvement or equipment, and does not reoccur. Capital budgeting is unlike other budget methods as its purpose is purely intentional and is unlikely to be spontaneous.

As detailed by Dropkin et al (2007), the capital budget benefits nonprofits in the planning and management of large capital expenses.

Cash Flow Budget- Cash flow budgeting is managing the difference between the debits and credits of an organization, the amount of money owed vs collected and the amount of money spent vs owed. For example, incomes for a month maybe equivalent to $5,000 but only say $3,000 was actually collected and say $4,000 in expenses are budgeting for during the month, but $5,000 has been spent. This style of budgeting focuses on the difference between expenses and incomes.

Using a cash flow budget method is highly beneficial to nonprofit organizations as there is a delay between the timeframes of earning and collecting.

Opportunity Budget- To plan for expansion and growth is opportunity budgeting. The intentions behind this style are to be in preparation for business growth, should the opportunity arise. An organization may budget for an intended program that could likely increase revenue and organization mission. Opportunity budgeting is entirely opposite to that of cash flow budgeting in the sense that cash flow is specific of its purpose and is rare compared to the open operations of potential opportunities.

Opportunity budgeting would be beneficial for any type of organization with the intentions of expansion or improvement with valid and justifiable research when opportunities arise.

Zero-Based Budget- In this type of budgeting platform, each and every year, a new budget begins with a $0 balance, and that every dollar spent is provided with relevance. Upon the examination of each dollar, this provides opportunities to redistribute funds in a more effective and efficient manner. For example, should a program not prove beneficial the previous year, when the new budget is created for the new year, the allocated amounts may be adjusted or pulled entirely based on the organizational needs.  Zero-based and opportunity methods can be related in that they both allow for expansion and regular examination of prospects of growth and rectification.

Both for-profit and nonprofit organizations could benefit greatly from this budget method, however, as mentioned by Dropkin et all (2007), this style is not for the weak and can be a grueling process. As Ibrahim (2019) declared that ZBB accounts for waste and misuse and provides areas for correction to be achieved.

 

Reference

Dropkin, M., Halpin, J., & LaTouche, B. (2007). The budget-building book for nonprofits (2nd ed.). San Francisco, CA: Jossey-Bass.

Mukdad Ibrahim. (2019). Designing zero-based budgeting for public organizations. Problems and Perspectives in Management, 17(2), 323–333. https://doi-org.proxy-library.ashford.edu/10.21511/ppm.17(2).2019.25

 

 

 

Practice Identification/Evaluation

 Respond to at least two of your classmates’ posts

TIFFANY’S POST:

Practice Identification/Evaluation

The organization that I am going to use for my project is a locate organization call New Foundation Home for Children. New Foundations Home for Children is a private, nonprofit agency specializing in caring for emotionally troubled children, adolescents, and families. NFHFC programs include Group Care Intensive Services (site-based, residential), Empowering Families (in-home family strengthening), and the Family Counseling Center of Anderson (community-based mental health provider)

The majority of the clients seen or treated in this facility utilize either Traditional health insurance, Medicare/Medicaid, and a few utilize services. While this facility does treat families the buck of its clientele is underage and therefore does not have a source of income.  They depend heavily on donations and grants to support themselves.

Private Pay: Private pay is a term used to describe when someone pays for their services such as expenses related to their healthcare with their own money. One of the benefits of private pay is that it is one of the most widely accepted forms of payment from any type of servicer. Also, an individual who is paying out of pocket normally encounters less restriction on the type of services they can receive. Those paying out of pocket can normally see the provider of their choice and they do not require any type of authorization to do so. Now one of the downsides to private pay is the financial burden that it places on an individual and/or a family. For an organization if to many clients are private pay and that cannot afford it, they will suffer because the clients want to utilize their services and they would not have any revenue being generated.

Traditional Insurance: This most often refers to private insurance companies, who provide their customers with health plans that offer cost coverage and reimbursements for medical treatment and care services. The vast majority of the population, about 74 percent, is covered by private health insurance. Those under the age of 65 normally depend heavily on traditional health insurance. There are currently over 1000+ private insurance companies. As a result the amount of patient cost sharing also varies with each company as while as the providers that an individual would be able to see.

Another form of mental health clientele payer source is Medicare/Medicaid. While the Affordable Care Act’s (ACA) Medicaid expansion has increased insurance coverage, its effects on health outcomes have been mixed (Winkelman & Chang, 2017).  Medicaid is the largest lone payer for mental health services in the United States and is progressively playing a larger role in the reimbursement of mental health disorder services.  Medicaid has had an enormous impact on the shape and impact of public mental health care. A benefit for an organization that deals in Mental health is that…. Medicaid coverage and policy enlargement was linked to substantial reduction in cost-related barriers (BAICKER et al., 2018). Medicaid has significant impacts on the diagnosis and treatment of people with considerable unmet mental health demand and it has enhanced access to care (BAICKER et al., 2018). Another benefit of the Medicaid program is that it provides a source for those that fall into certain requirement a way to pay for services regarding their mental health, therefore it gives more individuals as opportunity to seek care. The downside is that not all people qualify for Medicaid and not all providers accept this as a form of payment for services rendered.

BAICKER, K., ALLEN, H.L., WRIGHT, B.J., TAUBMAN, S.L. and FINKELSTEIN, A.N. (2018), The Effect of Medicaid on Management of Depression: Evidence from the Oregon Health Insurance Experiment. The Milbank Quarterly, 96: 29-56. https://doi.org/10.1111/1468-0009.12311 (Links to an external site.)

Winkelman, T.N., Chang, V.W. Medicaid Expansion, Mental Health, and Access to Care among      Childless Adults with and without Chronic Conditions. J GEN INTERN MED 33, 376–383               (2018). https://doi.org/10.1007/s11606-017-4217-5

JO’S POST:

The nonprofit real mental health business is called RI International. They are located in Arizona and have several other sites across the United States and New Zealand.  The payer source will be Medicare/Medicaid. This community-based organization offers one-to-one counseling and groups for mental health and substance.

For individuals who have Medicare, they will need to have Medicaid. Unfortunately, we cannot bill Medicare only for behavioral health services. Our billing is strictly Medicaid or Arizona Health Care Cost Containment System (AHCCCS), many who come for our services have Medicaid/Medicare as their payer so we can by the state laws bill for Medicaid for the needed behavioral health services.

In 2008, Congress passed the Mental Health Parity and Addiction Equity Act (MHPAEA) act was to ensure equal coverage of treatment for mental illness and addiction to be the same as physical health. The MHPAEA sets some principles and guiding principles to assist with the care of individuals who are living with mental health and substance use disorders (MH/SUD). This coverage does not mean that the coverage is the best, it just means that if the physical health plan has no limitations then the mental health plan will not be limited also. Before this change mental health and substance disorder treatment was very limited despite the physical health have more unlimited visitations and access. The law is federal but states can in-act their standards.

Despite the implementation of MHPAEA, there are still concerns with individuals who are living with Mental health and substance use challenges that are still prevalent despite efforts to combat disparities. When individuals live in states that offer Medicaid fees for service is implemented these states do not have to follow the Parity laws. With no parity law to follow individuals could receive minimal care or go without the appropriate care needed to function in society. Although Medicaid is a federal program each state chooses how the services are provided and paid for. Those states that are fee-for-service are not subject to a lot of the regulations that the 2008 Mental Health Parity and Addiction Equity Act has in place for coverage.

Reference

Drake, C., Busch, S. H., & Golberstein, E. (2019). The effects of federal parity on mental health services use and spending: Evidence from the medical expenditure panel survey. Psychiatric Services, 70(4), 287–293. https://doi-org.proxy-library.ashford.edu/10.1176/appi.ps.201800313 (Links to an external site.)

National Alliance on Mental Illness. (n.d.).What is Mental Health Parity?. https://www.nami.org/Your-Journey/Individuals-with-Mental-Illness/Understanding-Health-Insurance/What-is-Mental-Health-Parity (Links to an external site.)

Smaldone A, & Cullen-Drill M. (2010). Mental health parity legislation: understanding the pros and cons. Journal of Psychosocial Nursing & Mental Health Services, 48(9), 26–34. https://doi-org.proxy-library.ashford.edu/10.3928/02793695-20100730-06