Budget analysts play a primary role in the development, analysis, and execution of budgets. Budgets are financial plans used to estimate future requirements and organize and allocate expenditures and capital resources effectively. The analysis of spending behavior and the planning of future operations are an integral part of the decision-making process in most corporations and government agencies.
Budget analysts work in both private industry and the public sector. In private industry, a budget analyst examines, analyzes, and seeks new ways to improve efficiency and increase profits. Although analysts working in government generally are not concerned with profits, they too are interested in finding the most efficient distribution of funds and resources among various departments and programs.
A major responsibility of budget analysts is to provide advice and technical assistance in the preparation of annual budgets. At the beginning of the budget cycle, managers and department heads submit proposed operating and financial plans to budget analysts for review. These plans outline expected programs including proposed program increases or new initiatives, estimated costs and expenses, and capital expenditures needed to finance these programs.
Analysts begin by examining the budget estimates or proposals for completeness, accuracy, and conformance with established procedures, regulations, and organizational objectives. They review financial requests by employing cost-benefit analysis, assessing program trade-offs, and exploring alternative funding methods. They also examine past and current budgets, and research economic and financial developments that affect the organization's spending. This process allows analysts to evaluate program proposals in terms of the organization's priorities and financial resources.
After this review process, budget analysts consolidate the individual department budgets into operating and financial budget summaries. The analyst submits preliminary budgets to senior management, or sometimes, as is often the case in local and State governments, to appointed or elected officials, with comments and supporting statements to justify or deny funding requests. By reviewing different departments' operating plans, analysts gain insight into an organization's overall operations. This generally proves very useful when they interpret and offer technical assistance to officials approving the budget. At this point in the budget process, budget analysts help the chief operating officer, agency head, or other top managers analyze the proposed plan and devise possible alternatives if the projected results are unsatisfactory. The final decision to approve the budget, however, is usually made by the organization head or elected officials.
Throughout the rest of the year, analysts periodically monitor the operating budget by reviewing reports and accounting records to determine if allocated funds have been spent as specified. If deviations appear between the approved budget and actual performance, budget analysts may write a report explaining the causes of the variations along with recommendations for new or revised budget procedures. They suggest reallocation of excess funds or recommend program cuts to avoid or alleviate deficits. They also inform program managers and others within their organization of the status and availability of funds in different budget accounts. Before any changes are made to an existing program or a new one is started, a budget analyst assesses its efficiency and effectiveness. Analysts also may project budget needs for long-range planning.
Analysts also assist in developing procedural guidelines and policies governing the development, formulation, and maintenance of the budget. If necessary, they conduct training sessions for agency or company personnel on new budget procedures.
Budget analysts who work for local or State governments may also spend time answering inquiries from constituents.
Budget analysts assure that actual expenditures comply with the approved budget plan.
Budget analysts work in a normal office setting and generally work 40 hours per week. However, during the initial development and mid-year and final reviews of budgets, they often experience the pressure of deadlines and tight work schedules. The work during these periods can be extremely stressful, and analysts are usually required to work more than the routine 40 hours a week.
Budget analysts spend the majority of their time working independently, compiling and analyzing data and preparing budget proposals. Nevertheless, their routine schedule can be interrupted by special budget requests, meetings, and training sessions. Others may travel to obtain budget details and explanations of variances from coworkers, and to personally observe what funding is being used for in the field.
Budget analysts held about 67,000 jobs throughout private industry and government in 1992. Federal, State, and local governments are major employers, accounting for 1 of every 3 budget analyst jobs. The Department of Defense employed 7 of every 10 budget analysts working for the Federal Government. Schools, hospitals, banks, and manufacturers of transportation equipment, chemicals and allied products, electrical and electronic machinery, and industrial machines are other major employers of budget analysts.
Most private firms and government agencies require candidates for budget analyst positions to have at least a bachelor's degree. Within the Federal Government, a bachelor's degree in any field is sufficient background for an entry-level budget analyst trainee position. State and local governments have varying requirements, but a bachelor's degree in one of the following areas usually qualifies one for entry into the occupation: Accounting, finance, business or public administration, economics, political science, planning, statistics, or a social science such as sociology. Sometimes, a field closely related to the employing industry or organization within an industry, such as engineering, may be preferred. Some employers prefer that candidates possess a master's degree to ensure adequate analytical and communication skills. Financial experience can occasionally be substituted for an advanced degree when applying for a budget analyst position. Some companies prefer to promote from within; therefore, competent accounting or payroll clerks and other clerical staff who have worked closely with the budget process are sometimes given the opportunity to advance to entry level budget analyst positions even if they do not meet the educational requirements.
Because developing a budget involves manipulating numbers and requires strong analytical skills, courses in mathematics, statistics, or accounting are helpful, regardless of the prospective budget analyst's major field of study. Because most financial analysis performed by organizations is automated, a familiarity with the financial software packages used by most organizations in budget analysis, as well as word processing, is generally required by employers. Software packages commonly used by budget analysts include electronic spreadsheets and database and graphics software. Job candidates who already possess these computer skills may be preferred over those who need to be trained.
In addition to analytical and computer skills, those seeking a career as a budget analyst must also be able to work under strict time constraints. Strong oral and written communication skills are essential for analysts to prepare, present and defend budget proposals to decision makers.
Entry level budget analysts may receive some formal training when they begin their jobs. However, most employers feel that the best training is obtained by working through one complete budget cycle. During the cycle, analysts become familiar with all the steps involved in the budgeting process.
The Federal Government, on the other hand, offers extensive on-the-job and classroom training for entry level analysts, who are initially called trainees. Analysts are encouraged to participate in the various classes offered throughout their careers.
Beginning analysts usually work under close supervision. Capable entry level analysts can be promoted into intermediate level positions within 1 to 2 years, and then into senior positions within a few more years. Progressing to a higher level means added budgetary responsibility and can lead to a supervisory role.
In the Federal Government, for example, beginning budget analysts compare projected costs with prior expenditures; consolidate and enter data prepared by others; and assist higher grade analysts by doing research. As analysts progress, they begin to develop and formulate budget estimates and justification statements; perform in-depth analyses of budget requests; write statements supporting funding requests; advise program managers and others on the status and availability of funds in different budget activities; and present and defend budget proposals to senior managers.
Because financial and analytical skills are vital in any organization, budget analysts often are able to transfer to a related field in other organizations.
Employment of budget analysts is expected to grow about as fast as the average for all occupations through the year 2005. In addition to employment growth, many job openings will result from the need to replace experienced budget analysts who transfer to other occupations or leave the labor force.
Expanding use of automation may make analysts more productive, allowing them to process more data in less time. Also, computers are increasingly used to organize, summarize, and disseminate automated data to the top levels in organizations, thereby centralizing decision-making and reducing the need for middle managers. Any computer-induced effects on employment may be offset, however, by a greater demand for information and analysis. Easier manipulation of and accessibility to data provide management more considerations on which to base decisions. Also, because of the growing complexity of business and the increasing specialization of functions within organizations, more attention is being given to planning and financial control. Many companies will continue to rely heavily on budget analysts to examine, analyze, and develop budgets to determine capital requirements and to allocate labor and other resources efficiently among all parts of the organization. Managers will continue to use budgets as a vehicle to plan, coordinate, control, and evaluate activities within their organizations more effectively.
Despite the increase in demand for budget analysts, competition for jobs should remain keen because of the substantial number of qualified applicants. Job opportunities are usually best for candidates with a college degree, particularly a master's. In some cases, experience is more beneficial than a degree and can be used to offset a lack of education. A working knowledge of computer financial software packages can also enhance one's employment prospects in this field.
The financial work performed by budget analysts is an important function in every organization. Financial and budget reports must be completed even during periods of economic slowdowns. Therefore, employment of budget analysts generally is not as adversely affected as other workers during economic slumps.
Salaries of budget analysts vary widely by experience, education, and employer. According to a 1993 survey of financial, accounting, banking, and information systems professions conducted by Robert Half International Incorporated, average annual starting salaries of budget and other financial analysts ranged from $23,500 to $28,000 for those working in medium-size firms, and from $24,000 to $29,000 for those employed by larger organizations. Analysts with 1 to 3 years of experience earned from $27,000 to $35,000 a year in medium-size firms and from $28,500 to $37,500 in larger companies. Senior analysts earned from $34,500 to $41,200 in medium-size firms and from $36,000 to $44,000 in larger firms. Earnings of managers in this field ranged from $41,000 to $51,000 in medium-size firms to $45,000 to $62,000 in large organizations.
A survey of workplaces in 160 metropolitan areas reported that experienced budget analysts had median annual earnings of about $39,700 in 1992, with the middle half earning between about $35,700 and $44,300 a year.
In the Federal Government, budget analysts generally started as trainees earning about $18,300 a year in 1993. Candidates with a master's degree began at $27,800. The average annual salary for budget analysts employed by the Federal Government in nonsupervisory, supervisory, and managerial positions was $42,033 in 1993.
Budget analysts review, analyze, and interpret financial data; make recommendations for the future; and assist in the implementation of new ideas. Workers who use these skills in other occupations include accountants and auditors, economists, financial analysts, financial managers, and loan officers.
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Reprinted with Permission of U. S. Department of Labor