COLEGIO DE DAGUPAN

SCHOOL OF PROFESSIONAL STUDIES

DOCTOR OF PHILOSOPHY
Major in Educational Leadership and Management

Course Code: DELM 216

Course Title: MANAGEMENT OF HUMAN,FISCAL AND MATERIALS
Discussant: MS. EDITHA I. BALLESTEROS
Professor: DR. EUGENIA B. RAMOS

TOPIC/S: SCHOOL BUDGETING

 Advantages and Disadvantages of Budgeting

 Limitations of Budget
 Budget Control

Budgets are an essential feature of the control system and, as such, an integral
feature of effective management. Organizations will not improve if budgets are set the
wrong way, therefore, decision makers in an organization have to understand the
strengths and weaknesses of the budget system used in their organization so as to
ensure that prime decisions are taken at all times.
A common misconception made by management is that budgeting is wholly
the function of the accounting department, and this tends to cause inefficiencies and
problems with the budgets. A Good efficient budgeting system is a task for all
involved.
They are several budgeting system an organization can use depending on the
prevailing circumstances. These are
1. Activity based Budget 4. Incremental Budget
2. Fixed Budget 5. Rolling budget
3. Flexible budget 6. Zero Based Budget
Each one of these budgeting system carries their own unique advantages and
disadvantages, and management will have to consider them in detail before selecting
or combining them before using them.

The advantages of budgets are:

1. As an essential part of the management process budgets compel planning, making
people within an organization think about the future. A formal budgeting procedure
 with specified deadlines compels operations managers to divert their attention away
from day-to-day business and get down to completing the budget.
2. Budgets promote essential principles of communication and coordination.
3. Budgets are a guide for action.
4. A basis for performance evaluation is provided by budgets. They are an integral
part of control and review procedure in that they establish agreed targets to be
achieved, and for performance to be monitored against. This is why participation in
budgets is so vital, since operations managers are effectively being asked to achieve
an agreed objective within agreed parameters.
5. Historically it has been argued that budgets can be used to identify considerable
savings in overheads and costs. This may be true, but what is important is that the
budgetary control system keeps the organization fit, monitors its progress and
provides an important database in the decision-making-process.

As to disadvantages, it can be argued that:

1. Budgets are bureaucratic.
2. If an organization has clearly identified its Key Volume or Activity Indicators, why
go for the time consuming exercise of budgeting? This idea is flawed since you need
to consider what the Key Indicators might be and suggest a day-to-day control system
based upon them. In such circumstances, cash is an obvious answer and many
entrepreneurial forwarders still rely on managing the business with few indicators.
3. Budgets are coercive and although control is important, good management should
be able to control and motivate a work force without resorting to coercion.
‘Budgeting is about planning, and if one fails to plan then one is certainly planning to
fail.’

Budgeting
William Hartman, author of School District Budgeting (1999), defines
education budgeting as a "working tool" for the successful operation of states and
local school districts, and as a "significant opportunity to plan the mission, improve
their operations, and achieve their education objectives" (p. 1). As such, the budgeting
process allows various levels of government to "make better financial and program
decisions, improve operations, and enhance relations with citizens and other
stakeholders" (National Advisory Council on State and Local Budgeting, p. 2).
Limitations of Budget
In more technical terms, a budget is a statement of the total educational
program for a given unit, as well as an estimate of resources necessary to carry out the
program and the revenues needed to cover those expenditures. A vertical budget
includes the various income and expenditure estimates (by line item, function, object,
and cost center) in a given fiscal year, while a horizontal budget will include current
estimates for a given fiscal year, compared to prior audited income and expenditures,
and a projection of costs into the future. Hence, the budget is a statement of purpose
and a review of income and expenditures by function–with a timeline to explain past,
current, and future financial practices.
 Education agencies, like businesses and other enterprises, have experimented
with various forms of budget organization: line-item and function/object budgeting
are basic to all systems; and planning-programming-budgeting systems, zero-based
budgeting, and site-based budgeting are attempts to link the budget to goals and
objectives while devolving the budgeting process to the school level.
 Line-item budgeting. Barry Mundt et al. define line-item, or "traditional,"
budgeting as "a technique in which line items, or objects of expenditures–e.g.,
personnel, supplies, contractual services, and capital outlays–are the focus of analysis,
authorization, and control" (p. 36). While helpful in tracking costs, line-item
budgeting is virtually useless for planning or management, since the functions of the
expenditures are not explained and the particular need, school site, and type of
students being served are lost in spending aggregated by "line." Thus, teachers'
salaries, for example, is a budget line-item; but which teachers, at which schools,
teaching which types of students (e.g., bilingual special needs) is not explained.
 Function/object budgeting. Most districts use function/object budgeting, since
it organizes spending around the basic functions of the system, such as instruction,
student support, operations, administration, and transportation. In addition, functions
are subdivided (e.g., into elementary instruction, high school operations), while the
object being purchased (e.g., elementary textbooks, high school cleaning equipment)
is also specified. Personnel services or salaries and benefits may be handled by
function; that is, for instructional, support, or plant maintenance staff, for example.
 While these broad categories, objects, and processes are generally the same for
education budgeting across the country, a strategic attempt has also been made to
determine the most effective and efficient uses of resources. These efforts have led to
such innovations as zero-based, program-planning, and site-based budgeting, which
attempt to be more mission-driven and constituent-friendly than traditional types of
budgeting in education.
 Zero-based budgeting (ZBB). Popular in the 1950s and 1960s, ZBB began
with the assumption that the school system starts out yearly with a "clean slate." Thus,
each function, program, and agency has to justify its expenditures annually, relating
all costs to system goals and objectives to avoid habitual spending. Because so many
costs, such as tenured teachers' salaries and benefits, are "fixed" across annual
budgets, and because the programs are so complex, zero-based budgeting becomes
more an exercise than a practical reality. As Hartman explains, "ZBB … forces
comparisons of and choices among programs and activities that are often difficult to
compare adequately" (p. 49). In addition, most programs are not "up for grabs" on an
annual basis, since, for example, schools cannot eliminate their elementary school
classes, making such a requirement difficult to justify.

BUDGETARY CONTROL METHODS

a) Budget:
 A formal statement of the financial resources set aside for carrying out
specific activities in a given period of time.
 It helps to co-ordinate the activities of the organization.
b) Budgetary control:
 A control technique whereby actual results are compared with budgets.
 Any differences (variances) are made the responsibility of key
individuals
who can either exercise control action or revise the original budgets.
Site-based (school-site) budgeting (SBB). SBB is concerned with who will do
the budgeting and where in the organizational hierarchy the decisions will be made. In
attempts to bring the budgeting process closer to "end-users"–the teachers, parents,
and school administrators–SBB encourages, if not requires, decision-makers in each
school to examine their programs and to set their budgets to meet their particular
needs as part of the process of shared decision-making. Allan Odden et al. explain that
school reform may require greater decentralization, a step "in which teams of
individuals who actually provide the services are given decision-making authority and
held accountable for results" (p. 5). Under site-based budgeting, districts must
determine who will serve on SBB committees; which decisions and resources are
devolved to schools–and using what formulas; how much autonomy is granted to
spend for local school needs; exactly how to analyze the budget at each school; and
what training and support are needed to make SBB work effectively.
In practice, school districts or divisions thereof will utilize variations of many,
if not all, of the above methods in compiling their budgets. For example, a school
principal may require teachers to justify their individual budget requests (zero-based)
in the development of a school (site-based) budget. A component of the district's
budget may include a proposal for a new educational program, including all
anticipated expenditures, revenues, and cost savings (program-planning budget). The
entire district budget may be compiled onto a state-mandated format that requires line
items to be categorized by fund, function, program, and object (function/object
budgeting). Once the fiscal year begins, the budget is transformed from a financial
plan into the initial baseline data for a working, dynamic financial accounting system.

References:

https://www.edu.gov.mb.ca/k12/specedu/aep/inclusion.html
https://www.pallisersd.ab.ca/inclusive-education/inclusive-education-philosophy
https://inclusiveeducation.ca/about/what-is-ie/