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st. i*23G. 8 7 4 Summary of r e p l i e s received i n answer to the Board*s l e t t e r St.Ul67 of July 29, 1924, subject "Expense Budget, w GENERAL S M A Y U MR 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. Since July 1, 1924 Too e a r l y to r e p o r t . (Operating Depts.:Jan. 1,1924 Has been a material (Agent*s Dept.: Foi .13 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. Sinc-e Jan. 1, 1921 I I Banks planning to i n s t a l l Budget System: 1. Richmond 2. Minneapolis January 1, 1925 As soon as possible 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 S M A Y U MR 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 Fiscal 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 others and f o r c e must be maintained to handle peak loads. 5. Trend i f ' expenses haa been downward during past two years: 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. N W YORK E 1. Has operated under ejgpense 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 follows: 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 past two years are submitted to department heads to a s s i s t them i n making estimates. Committee of three o f f i c e r s reviews these estimates and makes report to O f f i c e r 1 s Council and the budget i s then submitted to directors f o r f i n a l approval. - 2 - St. 4 6 3 6 ^ 3 7 5 b. A monthly, departmental expense report with c-croparative f i g u r e s shows whether expenses a r e running within "budget and a l s o whether they have increased or decreased over t h e same period of the year b e f o r e . 4. Supplementing 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 s e n i o r 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. c. 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 a r e made upon a s t r i c t l y competitive b a s i s , PHTLADEIPHIA 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 . CLEVELAND 1. Has j u s t e s t a b l i s h e d a budget f o r the l a s t s i x months of 1924, 2. Budgeted the expense u n i t s a s now reported i n the Functional Expense Reports. • 3* 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 w i t h a form showing cost f o r t h e f i r s t half of 192k of the expense utoits under h i s supervision and requested a report on the probable expenses f o r t h e l a s t half of year. Budget Commit tee r e viewed e s t i m a t e s and approved f i g u r e s were reported back to o f f i c e r s with statement t h a t 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 , BI OSMOND 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 designed t o maintain a r i g i d 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, a s 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 s u p p l i e s from s t o c k . m a m 1, Has never e s t a b l i s h e d a budget system. 2; Purchases a r e 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. 4, . CHICAGO 1. Operating departments now working under budget plan f o r f i r s t y e a r , although Agent's department has used budget f o r three y e a r s . 2. S u b s t a n t i a l reduction has been e f f e c t e d i n operating f o r c e and general ex-, 4*> penses 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 : °76 , 3 - 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 Comnittee reviewed estimates and made necessary r e v i s i o n s . Relationship between actual expense and budget i s shown i n monthly expense r e p o r t s . ST. LOCJIS 1, Ho budget system in e f f e c t as local procedure camiittee has been unable to r 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 succ.es sful* 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 w i l l be put in operation as soon as p o s s i b l e . 3. Points out t h a t there are some departments, f o r example, "Failed Banks" where the budget system would not be applicable, K N A CITY ASS 1. Ho 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 said any increase w i l l be immediately investigated. b. Believe i n budget system as a Whole but could not toaintain 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 . m m 1. Budget has not been established because i t was thought that on account of the size of the organization end 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 perf orming the character of operations performed by us we would be glad to give f u r t h e r consideration to the matter. SAN 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 i n 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 n o t , however, provide the e s s e n t i a l f a c t s f o r an • i n t srj9 i s t r i c t - xt oqiaris en. t>fexpenses. 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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