Review the budget sheet shown and answer the following questions.
Is the PHA meeting its goals for income?
No, the PHA’s monthly and year-to-date actual income is less than the budgeted income.
Is the PHA meeting its goal for annual expenses?
No, the PHA’s monthly and year-to-date expenses are higher than what was budgeted.
Is the PHA’s net income running at a surplus or a deficit?
The PHA is currently running at a surplus. It is not meeting its budgetary goals - it did budget for a larger surplus than it is collecting.
However, while it is not meeting its financial goals, it is still financially viable.
Is the PHA meeting any of its goals? Yes, items that are not in the red in income represent positive break-even progress on budgetary goals.
Unfortunately, that represents only $6.84. Likewise, green items under expenses represent areas that are lower than budgeted.
For this PHA, this means significant surplus under its Contracted Expenses.
Should the budget be revised?
Yes. At the end of the year, the budget should be revised if the variations persist. However, the monthly variations might compensate for themselves
later in the year. The PHA should understand these variations on an annual basis, before making mid-year budget revisions.
Under “income,” which account has the greatest variation between “Budgeted” and “Actual”?
The PHA is experiencing the greatest variation in rental income.
What are some reasons this variation might occur?
This could be due to rents being set lower than anticipated, under-occupancy, or poor implementation of rent collection policies.
Under “Expenses,” which has the greatest variation between “Budgeted” and “Actual”?
The PHA is seeing the greatest variation in budgeted to actual contracted expenses. This variation is resulting in a surplus under this line item for the PHA.
What should the board do to understand this variation?
The board should take a close look at the contracted expenses budget. It might be that some contractors have not invoiced for their services,
or that the PHA is not up-to-date on its contract payments. As a result, monthly expenses later in the year will be higher than budgeted.
The board might request a forecasted budget to determine if these expenses will continue to run a surplus at the end of the year, if all invoices are paid.