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St.4236*
Sumriary of r e p l i e s received i n answer to the Board's l e t t e r S t , 4 l 6 j of
July 29, 1924, subject "Expense Budget, M
GENERAL SUMMARY
I Banks having some form of Budget Control:
In e f f e c t
1. New York
2. Cleveland
3. Chicago
4. Kansas C i t y ( p a r t i a l )
Results
Big f a c t o r i n reducing
expenses.
Too e a r l y to r e p o r t .
Since July 1, 1924
(Operating Depts.: Jan, 1,1924 Has been a material
(Agent's Dept.: For .1} years, f a c t o r i n reducing expenses.
During l a s t 2 years
S a t i s f a c t o r y f o r some
departments.
Since Jan. 1, 1921
I I Banks planning to i n s t a l l Budget System:
1. Richmond
2. Minneapolis
Date
January 1, 1925
As soon a s p o s s i b l e
I I I Banks not operating under any form of Budget Control and which have made no plans
f o r i n s t a l l i n g such a system:
1. Boston
2, Philadelphia
3. Atlanta
4. St. Louis
5. Dallas
6. San Francisco
DETAILED SUMMARY
BOSTON
1, Has never undertaken to i n s t a l l a budget system,
2. Budget might be established and lived up to i n a few departments,
3- Certain expenses cannot be a n t i c i p a t e d : Example - Note issuance and F i s c a l
Agency.
4. Operations i n such departments aa Discounts, Transit and Currency are more
a c t i v e at c e r t a i n times of the month and at c e r t a i n seasons of the year
than at o t h e r s and f o r c e must be maintained to handle peak loads.
5.
Trend df' expenses has been downward during p a s t two y e a r s : Expenses covering
f i r s t half of 1924 are $80,000 l e s s than f o r corresponding period i n 1923.
NEW YORK
1. Has operated under expense budget since January 1, 1921.
2. Has been one of the biggest f a c t o r s i n reducing the operating expenses.
3. Plan i s as f o l l o w s :
a. Detailed f i g u r e s covering the p r i n c i p a l items of expenditure during the
p a s t two years are submitted to department heads to a s s i s t them i n making
e s t i m a t e s . Committee of t h r e e o f f i c e r s reviews these estimates and makes
report to O f f i c e r ' s Council and the budget i s then submitted to d i r e c t o r s
f o r f i n a l approval.
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b« A monthly departmental expense report with comparative f i g u r e s shows
whether ejqpenses a r e running within "budget and a l s o wBether they have
increased or decreased over t h e same period of the year before.
4, 3upplamenting t h e budget i s the following system of making purchases;
a,. Every r e q u i s i t i o n must be signed by o f f i c e r s i n charge of department
and i f i n excess of $100 must be approved by senior o f f i c e r as well.
b. Requisition then goes to Planning Division, which passes on i t s n e c e s s i t y
and whether or not the a r t i c l e i s standard both f o r manufacturer and f o r
bank.
e. Deputy Governor then v i s e s a l l purchase r e q u i s i t i o n s a f t e r which they are
made upon a s t r i c t l y competitive b a s i s .
.£«!£I!ElfHI A
1, Has not put any departments on a budget.
2, In a few i n s t a n c e s r e s t r i c t e d appropriations have been made.
3, Cost of food i n c a f e t e r i a i s limited to approximate r e c e i p t s .
1.
2*
3,
4,
Has j u s t established a budget f o r the l a s t s i x months of 1924.
Budgeted the expense u n i t s a s now reported i n the f u n c t i o n a l Expense Reports.
Too e a r l y to r e p o r t r e s u l t s .
Plan i s as f o l l o w s :
a. Furnished each o f f i c e r with a form showing cost f o r the f i r s t half of
1.92ft-of the expense u n i t s under Ms supervision and requested a report on
the probable expenses f o r t h e l a s t half of year. Budget Committee r e viewed estimates and approved f i g u r e s were reported back to o f f i c e r s with
statement that the amounts approved were the maximum amounts t h a t could be
expended and even these should be f u r t h e r reduced i f p o s s i b l e .
BICSMOHD
1. Has not yet i n operation a budget control but expects to i n s t a l l one by
January 1, 1925.
2, Present system of expense control i s a t a l l times under the c a r e f u l superv i s i o n of the executive o f f i c e r s and i s designad to maintain a rigid superv i s i o n over s a l a r i e s of employees, promotions and t r a n s f e r s , terminations and
replacements, as well as a l l purchases of supplies and equipment and the d i s t r i b u t i o n of supplies from stock.
ATLANTA
1, Has never established a budget system.
2, Purchases are made on a competitive bid b a s i s and approved by Managing
Committee.
3, Board of Directors reviews s a l a r i e s of employees every 30 days.
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GmC&GO
1. Operating departments now working under budget plan f o r f i r s t year, although
Agent's department has used budget f o r three years.
2. Substantial reduction has been e f f e c t e d i n operating f o r c e and general ex*
penges of bank and the establishment of the budget i s considered a m a t e r i a l
factor,
3. Plan i s as f o l l o w s :
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St.4236.
a. O f f i c e r s were furnished with forms showing detailed expenses f o r
1922 and 1923 and asked f o r estimates f o r 1924-. Procedure Conuiittee
reviewed estimates and made necessary revisions, Relationship between actual expense and budget i s shown i n monthly expense r e p o r t s .
ST. LOUIS
1. No budget system in e f f e c t as local procedure committee has been unable to
see wherein a b e n e f i t would be derived from i t s adoption.
2, If budget system i s established, i t should i n no way i n t e r f e r e with the
present p o l i c y of the bank regarding economy and e f f i c i e n c y , which has
been very successful.
MINNEAPOLIS
1. Has never established a budget system f o r the c o n t r o l of expenses.
2. Suggestion, however, appeals to Governor and such a system will be put
in operation as soon as p o s s i b l e .
3. Points out that there are some departments, f o r example, "Failed Banks"
where the budget system would not be applicable.
KANSAS CITY
1. No regular budget system although such a system p a r t i a l l y i n operation during l a s t two years.
2, Estimates of expenses made a t various periods and i f a c t u a l expenses exceed estimates, an i n v e s t i g a t i o n i s made.
3- At present operating costs are being compared with expenses f o r corresponding period of 1923 and any increase w i l l be immediately investigated.
4. Believe i n budget system as a whole but could not {maintain e f f i c i e n t
service i f kept within a cost of operation that was estimated during a
previous period when conditions may have been quite d i f f e r e n t .
DALLAS
1„ Budget has not been established because i t was thought that on account of the
size of the organization and t h e character of work performed, the expenses
could be controlled i n other ways.
2. If the Board concludes, a f t e r a f u r t h e r study, that the plan would work to
the advantage of a bank of t h i s size and performing the character of operations
performed by us we would be glad to give f u r t h e r consideration to the matter.
SW FRANCISCO
1. Has not adopted a budget system as a means of controlling expenditures.
2. Functional expense reports have been an admirable means of detecting any
material v a r i a t i o n in the cost of conducting the d i f f e r e n t operating functions
of the bank. These r e p o r t s do not, however, provide the e s s e n t i a l f a c t s f o r
an -intsry i s t r i c t ' -c arparis cn. +of expenses.
3- Greatest help we could receive would be a v i s i t from an operating representa t i v e ; of Board's Committee to determine whether or not the bank i s
economically and e f f i c i e n t l y conducting i t s various operations.
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