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CHAPTER 14: BUDGETING AND MANAGING COSTS CREATIVELY
TRUE/FALSE
1. Once drawn up, a budget should be strictly adhered to and never exceeded.
a. True
b. False
2. Common costs are costs that are directly traceable to a segment of an agency, such as a particular
department or division.
a. True
b. False
3. Reducing costs is the responsibility of all employees.
a. True
b. False
4. Preparing budgets is difficult because most law enforcement services are intangible.
a. True
b. False
5. Salaries and benefits are considered direct expenses.
a. True
b. False
6. An agency’s calendar year and fiscal year are always the same.
a. True
b. False
7. Another relatively new approach to saving costs that is being implemented by many agencies across
the country is the effort to “go green.”
a. True
b. False
8. Long-term expenses are easier to plan for than short-term expenditures.
a. True
b. False
9. Rent and insurance are considered fixed costs.
a. True
b. False
10. All law enforcement employees should contribute ideas related to budget items as specific needs arise.
a. True
b. False
11. Budgets prepared using a logical process beginning with the lowest levels of the department and
working upward will be more accurate and complete.
a. True
b. False
12. Line-item budgeting was initiated during the 1930s and is no longer popular.
a. True
b. False
13. It is unconstitutional for law enforcement agencies to charge for provision of traditional services such
as DUI arrests.
a. True
b. False
14. Chiefs should develop a mind-set that sees budgeting as a year-round process, not just a task that
occurs once a year.
a. True
b. False
15. The main clearinghouse for federal grants is a website called www.grants.gov, which makes available
billions of dollars of grant money each year.
a. True
b. False
16. Writing a grant application is fairly easy; most applications have templates for departments to use that
make them essentially a “fill in the blank” type of application.
a. True
b. False
17. An accounting period is the time covered by the income statement and other financial statements that
report operating results.
a. True
b. False
MULTIPLE CHOICE
18. The budget is a critical document for __________.
a.
operations
b.
planning
c.
administration
d.
all of these
19. Variance reports __________.
a.
should be made annually
b.
are an automatic red flag that the budget was prepared incorrectly
c.
should be made known to everyone who directly or indirectly influences the costs
d.
all of these
20. Most police budgeting is __________.
a.
an annual process
b.
a continuous process
c.
both an annual process and a continuous process
d.
neither an annual process nor a continuous process
21. Bottom-line budget philosophy holds that __________.
a.
shifting funds from one category to another must be approved
b.
funds may be expended beyond the total approved
c.
there is no limit on funding
d.
funds may be expended up to the total amount approved regardless of category
22. Budget preparation responsibility may be assigned to __________.
a.
the records division
b.
a finance officer
c.
a separate police division
d.
any of these
23. The “all levels” police budget approach means that __________.
a.
all department categories must expend equally
b.
all levels of personnel should be involved in budget preparation
c.
all levels must approve expenditures
d.
all of these
24. A fiscal year is __________.
a.
the standard year for all governments
b.
the same as a calendar year
c.
the accounting or budget period for an agency
d.
determined by an officer’s hire date
25. A basic starting point for budget preparation is __________.
a.
the prior year’s budget
b.
the average of the last five years’ budgets
c.
knowing the total available revenues
d.
all of these
26. Some communities operate on a ______________ philosophy, which permits departments to shift
funds from one category to another as long as the total budget amount is not exceeded.
a.
zero-balance
b.
horizontal-flow
c.
bottom-line
d.
full-sum
27. Budgets are not infallible because _______ will always arise.
a.
variances
b.
changes before final approval
c.
disagreement with line items and costs
d.
none of the above
28. Cutback budgeting requires __________.
a.
that contingency funds be used to cover costs
b.
that not all factors can be measured in dollars
c.
using the same revenue to provide more services
d.
doing less for more
29. All are examples of ways to cut budgets according to your text except __________.
a.
cut equipment viewed as luxuries
b.
use precedent—cut items that have been cut before
c.
cut all requests for personnel increases
d.
all are ways to cut budgets
30. Program budgeting __________.
a.
requires much paperwork
b.
is perceived by many managers as unproductive
c.
both requires much paperwork and is perceived by many managers as unproductive
d.
neither requires much paperwork nor is perceived by many managers as unproductive
31. Personnel costs account for __________ percent of the average total police budget.
a.
25
b.
40
c.
65
d.
80
32. Most departments have ________ types of budgets.
a.
two
b.
four
c.
six
d.
nine
33. Subordinates should submit their ideas relating to budget items to __________.
a.
their most immediate supervisor
b.
their supervisor’s supervisor
c.
the police chief
d.
those of equal rank
34. The federal government’s fiscal year begins in __________.
a.
January
b.
April
c.
July
d.
October
35. The most important obligation by the government to the citizens is to __________.
a.
not spend tax money frivolously
b.
represent the population as a whole
c.
protect lives and property
d.
provide quality services to the citizens
36. Using the team concept, departments can cut costs and make improvements at the same time by
__________.
a.
using an employee suggestion program
b.
using a do-more-with-less policy
c.
by not subcontracting outside the agency
d.
using inmate labor
37. The quartermaster system helps officers maintain __________.
a.
ammunition
b.
fuel for patrol cars
c.
timesheets
d.
uniforms
38. Variance budget analysis involves __________.
a.
proactive budgeting
b.
the difference between actual costs and amount budgeted
c.
the difference between estimated costs and actual budget
d.
none of these
39. A ___________ grant is awarded to states or localities based on population and crime rates.
a.
formula
b.
discretionary
c.
utility
d.
blended
40. Costs that do not vary in total during a period even though the amount of service provided may be
more or less than anticipated are called ___________ costs.
a.
common
b.
sunk
c.
fixed
d.
variable
41. Many agencies have begun charging for traditional services, including __________.
a.
credit card fraud investigations
b.
larceny arrests
c.
burglary investigations
d.
DUI arrests
42. When managers at each level are responsible for the budget they need based on input from their
subordinates, it is known as _________________ budgeting.
a.
all-levels
b.
flexible
c.
holistic
d.
democratic
43. A budgeting system in which dollars are allocated based on productivity is called __________.
a.
activity-based costing
b.
performance budgeting
c.
program budgeting
d.
zero-based budgeting
44. Most budget items are __________.
a.
a continuous item
b.
derived from written commitments
c.
short term for the current year
d.
designed to address staff issues
45. The leading federal funding agency for law enforcement programs is the __________.
a.
DOJ
b.
DEA
c.
FBI
d.
ATF
46. According to your text, the asset forfeiture program has three goals. Which is not a goal of the asset
forfeiture program?
a.
enforcing the law while stripping criminals of their ill-gotten gains
b.
improving law enforcement cooperation
c.
creating revenue by taking property used in illegal activities
d.
enhance law enforcement through revenue through equitable revenue sharing
47. The budget is usually divided into two classes of expenses, __________.
a.
fixed and variable
b.
common and general
c.
long-term and short-term
d.
mandatory and compulsory
48. Of the total amount budgeted for salaries and wages, fringe benefits usually receive about
____________ percent of the allocation.
a.
5
b.
15
c.
25
d.
75
COMPLETION
49. A(n) ________________ budget deals with all expenses needed to run the department.
50. ______________ control and guide how resources are used and make those in charge of them
responsible for their wise use.
51. _____________________ are set aside for such unforeseen emergencies, but the precise total of
allowable expenditures is difficult to ascertain.
52. A(n) ________________ budget deals with “big ticket” items such as major equipment purchases and
vehicles.
53. Budgets are formally approved statements of future expenses throughout the ___________ year.
54. ________________ consists of comparing actual costs against what was budgeted and analyzing
differences.
55. A modern version of the program budgeting system that breaks costs down by activity is called
_______________ costing.
56. _________________ laws at the federal level, and in most states, allow law enforcement to use
proceeds of certain seizures for equipment and other needs, especially when the seized property is
drug-related and there are no victims to compensate.
57. The first step in solving cost problems is to identify ___________ areas.
58. A formula grant is also called a ______________ grant.
MATCHING
Match each statement to the item listed below
a.
fixed costs
e.
fiscal year
b.
budget
f.
overhead
c.
contingency fund
g.
variable costs
d.
financial statement
59. expenses that do not vary in total during a period, for example, rent and insurance
60. costs that are relatively constant, for example rent or insurance; also called overhead.
61. the 12-month accounting period used by an agency
62. costs that will change depending on the level of service provided, for example personnel.
63. a list of probable expenses and income during a given period
64. a periodic report summarizing the financial affairs of an agency
65. money set aside for unforeseen emergencies
ESSAY
66. Discuss the advantages and disadvantages of a quartermaster system.
67. Discuss the various ways departments might reduce costs and increase revenue.
68. List the basic types of grants available to law enforcement agencies, identify the various sources of
funding, and explain how an agency should go about applying for such grants.
69. Discuss the creative mechanisms employed by police administrators to enhance their budgets.
70. Describe the various budgeting systems and discuss the advantages and disadvantages of each.
