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NYS Comptroller

THOMAS P. DiNAPOLI

The Academy for New York State's Local Officials

Multiyear Financial Planning: A Tutorial for Local Government Officials

Module 3: Projecting Expenditures

Expenditures by Function

Although the basic OSC templates for municipalites and school districts project expenditures by object, local govenrments may wish to project them by function instead, or in addtion to this. The templates OSC designed for cities under AIM include a section to project general fund expenditures by function.

After projecting by object, the extra effort to project by function as well is relatively minimal yet the benefits are great. Knowing how fast its personal services and benefits are growing might tell a locality to consider revising staffing levels, but it won’t tell where potential cuts can be most efficiently made. If they can see that a major function is large and growing fast, local officials may be more inclined to address their budget problems by investigating possible efficiencies in that department rather than pursuing across-the-board cuts to all departments.

Projecting by function also gives officials the opportunity to assess whether they have incorporated all of the policy information needed. Department heads can describe any major new initiatives, mandates, etc., to their areas that will affect the estimates that have already been more globally made.

Most functional expenses are driven primarily by personal services costs, which account for the largest part of local government expenditures. Some communities distribute part or all employee benefit expenses by function; others reflect them centrally. Non-personal service costs (i.e., equipment/capital and contractual expenses) account for the rest.

If a locality does project by both object and function of expense, it should cross-check totals and adjust assumptions as necessary to make sure the totals are not radically different in out-years.

  Next: Functional Categories