Budgeting & Financial Management Flashcards

A corrections executive is evaluating two proposals: Option A saves $500,000 but reduces program effectiveness by 30%, while Option B saves $200,000 with no program impact. Which financial management principle guides this decision?

Answer: Balance cost efficiency against mission effectiveness

Sound correctional financial management requires balancing fiscal responsibility with mission effectiveness, as cutting costs that undermine public safety may ultimately be more expensive.

In corrections, 'population-driven costs' refer to expenses that:

Answer: Vary proportionally with changes in the inmate census

Population-driven costs such as food, medical care, and clothing increase or decrease in direct proportion to the number of inmates in custody.

Which of the following BEST describes the purpose of an internal audit function in a correctional agency?

Answer: Providing independent assurance that financial controls and operations are effective

Internal audit provides independent, objective assurance that the agency's risk management, control, and governance processes are operating effectively.

A correctional facility has fixed costs of $2 million per year and variable costs of $28 per inmate per day. With an average daily population of 500 inmates, what is the approximate annual per-inmate cost?

Answer: $14,220

Variable costs = $28 × 500 × 365 = $5,110,000; total cost = $7,110,000; per inmate = $7,110,000 ÷ 500 = $14,220 annually.

Which type of budget format presents proposed expenditures organized by program goals and measured outcomes rather than by object of expenditure?

Answer: Performance-based budget

Performance-based budgets link appropriations to specific outcomes and program goals, allowing legislators to evaluate the value received for dollars spent.

When a correctional agency discovers that a vendor has been overbilling for medical services over three years, the appropriate financial recovery step is to:

Answer: Conduct a formal audit, quantify the overpayment, and pursue recovery through contract remedies

A documented audit establishing the overpayment amount is required before initiating formal recovery through contract provisions, legal action, or offset agreements.

A state legislature provides a correctional agency with a lump-sum appropriation rather than line-item appropriations. This gives the agency executive:

Answer: Greater discretion to allocate funds based on operational priorities

Lump-sum appropriations give agency executives broad discretion to allocate funds across categories as operational needs dictate, unlike restrictive line-item budgets.