MODULE V: Financial Aspects of educational planning

LESSON 1: Budgeting: Its Implication to Educational Planning

The differences between line-item budgeting and performance budgeting are Line-item
budgeting is still the most widely used approach in many organizations, including schools, because of its
simplicity and its control orientation. It is referred to as the "historical" approach because administrators
and chief executives often base their expenditure requests on historical expenditure and revenue data.
One important aspect of line-item budgeting is that it offers flexibility in the amount of control
established over the use of resources, depending on the level of expenditure detail incorporated into
the document. The line-item budget approach has several advantages that account for its wide use. It
offers simplicity and ease of preparation. It is a familiar approach to those involved in the budget
development process. This method budgets by organizational unit and object and is consistent with the
lines of authority and responsibility in organizational units. As a result, this approach enhances
organizational control and allows the accumulation of expenditure data at each functional level. Finally,
line-item budgeting allows the accumulation of expenditure data by organizational unit for use in trend
or historical analysis. Although this approach offers substantial advantages, critics have identified
several shortcomings that may make it inappropriate for certain organizational environments. The most
severe criticism is that it presents little useful information to decision makers on the functions and
activities of organizational units. Since this budget presents proposed expenditure amounts only by
category, the justifications for such expenditures are not explicit and are often unintuitive. In addition, it
may invite micro-management by administrators and governing boards as they attempt to manage
operations with little or no performance information. However, to overcome its limitations, the line-
item budget can be augmented with supplemental program and performance information.

There is a correlation between budgeting with planning because first of all there is a lack of
articulation that resulted in: inequities in resources allocation, which led in turn to emergence of DDU
schools; poor implementation of plans due to lack of financial support and non-implementation of my
good plans.

In my local situations, the problems that I encountered is less freedom to act and to innovate
due to limited funds available, another is costing and change policy in-between planning and budgeting.
For the less freedom to act and to innovate the annual budget in education is committed to the
following; continuing services, programs and projects in operation; personal services including
Medicare, life insurance and retirement benefits and obligations already raised through contracts or
orders for services, goods and facilities. Next problem is the costing, the tendency in planning is to use
standard unit costs, worked out on the basis of the past trends. Actual costs are often grossly estimated.
But the budget has to be based on the actual operational costs. This refinement involves not only
revision of costs to make them conform to fluctuations in wages and prices, but also detailed analysis of
cost items for the purpose of grouping them under convenient operational units, institutions, programs,
projects. The example of the problem is the plan may include a sum of money for a staff development
program, one project of which is seminar-workshops. The budget has to show estimated unit costs,
number of beneficiaries or trainees. The last problem is Policy change, when the appropriate authority
decides to vary the policy in between planning and budgeting, the objectives as well as the priorities
assigned to some provisions and targets. When this happens, the budget has to supersede the plan. In
solving each of the foregoing problems, the budgeting process entails continual revision of the plan. This
may discourage or even demoralize the planners. But the rolling plan technique may be adopted as a
remedy to this problematic situation. It permits the plan for a given number of years to be readjusted as
well as made consistent with every revision in the budgeting stage. The conversion of a development
plan into a series of annual budgets is likely to be the most important stage in the planning process. By
examining the link between plan and budget, one can tell whether or not the government could carry
out such a plan. The budget is the key element between a medium-term plan and an annual budget. It is
prepared on the basis of an annual plan. An annual plan should reach its conclusion after due
consideration of all resources available in the country, including man, material, money, management
and market.
 MODULE V: Financial Aspects of educational planning
LESSON 2: PPBS and other budgeting innovations in the Philippines