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PRINCIPLES AND PRACTICES OF BUDGETING IN SCHOOL FINANCE

MANAGEMENT

BY

EZEUGBOR CAROL O. Ph.D.

DEPARTMENT OF EDUCATIONAL MANAGEMENT AND POLICY
NNAMDI AZIKIWE UNIVERSITY, AWKA
ANAMBRA STATE
E-mail-co.ezeugbor@unizik.edu.ng: carolezeugbor@gmail.com
Phone no: 08068374278
Chapter Objectives
By the end of reading this chapter, you should be able to;
i. Explain the concept of budget, school budget and budgeting
ii. Discuss ten of budgeting decision making process as noted by
Adeogun (2004).
iii. Discuss in detail five major principles of budgeting.
iv. Identify three major plans involved in the preparation of the school.
budget as enunciated by Ikediugwu (2007).
v. Itemize five basic questions a good budget plan should have.
vi. Identify and elaborate six factors that should be considered in
planning and preparing a school budget.
vii. Carefully discuss the role of school manager in the budget
administration.
viii. Which of the six types of budget would you recommend to a school
manager and why?
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Introduction
It is apparently clear that in the whole world, education is regarded by every
government as a big industry. In the light of this, certain percentage of every
nation’s budget is allocated to education and Nigeria is not an exception.
These funds are needed to pay staff, maintain and improve facilities for
teaching and learning, teacher quality and welfare and curriculum delivery to
access over ten million out-of-school children and improve school safety
among other pressing needs of Nigerian education system.

Moreover, the expenditure on education has continued to rise as a result of

the rapid expansion of the education system at all levels. The fact remains
that the need and demands in the education sector are limitless but the funds
to satisfy them are limited and therefore the imperative of budgeting in order
to prioritize these needs. The school management relies heavily on a good
budgetary system for effective actualization of the strategic goals. Thus, the
identification of school goals, allocation of costs and their execution or
implementation holds the key to achieving these goals. This requires planning
which is crucial for schools to ensure that resources are used effectively to
improve student achievement. The budget is the product of a collaborative
process requiring a clear understanding of the school’s goals for improving
student outcomes and its plans for achieving them.

Budgeting is a process of preparing a statement of the anticipated income and

the proposed expenditure. It is an act of target setting. Educational
institutions design programmes and courses of study. Such programmes
according to Akinsolu (2008) can effectively be implemented only with
availability of funds. This is critical especially now that the government budget
for education lies far below the UNESCO guideline of 26%. It therefore
remains that the total allocation to education in Nigeria is below the
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international best practice and therefore not likely to meet the demands of the
education industry. To this effect, the school managers are required to
prudentially and judiciously account for every fund used. More importantly is
the fact that there is an unprecedented growing interest of the government
and the public on how funds are planned, controlled, and applied for specific
assignment to achieve specific goals. In educational institutions, the
attainment of expected educational goals and objectives mainly depend on
the efficient planning and management of school funds by the school
administrators. Given the overriding interest and involvement of both the
governments at all levels, Parents Teachers’ Association, philanthropic
organizations, NGOs and public spirited individuals in funding education in the
face of deplorable financial prospects besetting the sector, a need for control
instrument also becomes imperative. This control instruments could serve as a
measure to be used in allocating resources to education in line with specific
programmes, projects and other educational activities in a school within a
specified time frame. Thus the idea of school budgeting came into being.

WHAT IS A BUDGET?
The word `budget’ came from a French word `bougette’ meaning little bag.
In Britain, the word was used to describe the leather bag in which the
chancellor of the exchanger used to carry to the parliament; the statement of
government needs and sources as opined by Omolehinwa (2005). After
several thoughts of consensus, Omolehinwa continued, the budget became
the document contained in the bags which represent plan of government
expressed in money and submitted to the legislatives for approval.
Several definitions of budget have been presented by authorities. For
instance, Obi (2004) defines a budget as an estimate of probable future
income (revenue) and expenditure for a programme or project for a period of
time. He further noted that the institute of cost and management accountants
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of United Kingdom defined budget as, “A financial and or quantitative

statement prepared and approved prior to defined period of time, of the policy
to be pursued during that period for the purpose of attaining given objective.
It may include income, expenditure and the employment of capital”. It is
therefore an administrative instrument for strategic planning and implantation
of selected development strategy or project with precise specification of
sources and allocation of income within a given period of time, mostly a year.
For Ama in Oboegbulem and Kalu (2013), budget is a plan quantified in
monetary terms, prepared and approved prior to a defined period of time,
usually showing planned income to be generated and expenditure to be
incurred during that period. It is a decision making instrument, needed in
planning programme activities in a particular field, in numerical terms with
respect to their resource, availability and at times recourse accruals over a
specified period (Undia, 2014). As a blue print, the government explored it as
a means of allocating resources to various sections and different levels of the
government.

A major element of financial data activity rests in the act of budgeting.

Budgeting is the process of allocating finite resources to the prioritized needs
of an organization. In most cases, for a governmental entity, the budget
represents the legal authority to spend money. Adoption of a budget in the
public sector implies that a set of decision has been made by the governing
board and administrators that culminates in matching a government’s
resources with the entity’s needs. It then follows that budget is a product of
the planning process. Budget is also the product of a collaborative process
requiring a clear understanding of the organization’s goals for improving the
system’s outcomes and its plans for achieving them. A carefully planned
budget is needed in any organization to enable management to properly
articulate and defend resource request by different units in the organization.
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MEANING OF SCHOOL BUDGET AND BUDGETING

In realization of the urgent need to implement every aspect of educational

policies which could be distributional policies, curriculum policies, and
pedagogical policies or resources policies makes funding imperative. The
school budget may be described as the process of preparing a statement of
anticipated revenue and the proposed expenditure over a period of time. In
other words, it is a process of preparing a summary of the programmes in the
school that will be reflected by the expected revenue. According to Griffin
(1990), school budgeting as the preparation of school budget (financial plan)
indicates the total and composition of all expenditures and the sources from
which all the intended expenditures are expected to be financed in the course
of the year. Corroborating this view Okunamiri in Akinsolu (2008), describes
school budgets as plans outlined for financing the education/ school system
for a given period aimed at translating objectives into reality. As such, it is the
laid down management plans in respect of the economic resources to be used
and the utilities to be produce.

All in all, it is a financial planning process. Budgeting sets out specific actions
for the implementation of plans, programmes and projects by determining the
level of resources needed to achieve specific plan objectives and setting out
yearly allocations within the overall availability of annual revenue, while
setting out performance criteria and control measures. The implication is
that a budget is a plan, though it has been noted that not all plans are
budgets because a budget is a special type of plan that bears credence on
money, (Alcinsolu, 2008).

Morphet, Johns and Reller (1974) sees a school budget as an aggregate of

educational plans with an estimate of the receipts and expenditure necessary
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to finance the services and facilities required to provide the desired

educational programmes. Educational budgeting entails planning
conscientiously on how to handle monetary plan or the effective
complementation of all educational activities/programmes (Akinsolu 2008).The
budget is the product of a collaborative process requiring a clear
understanding of the school’s goals for improving student outcomes and its
plans for achieving them. It is subject to ongoing change throughout the year
in order to stay in alignment with school needs and staffing changes. Major
changes in programmes plans or delivery models require that the
Comprehensive Education Plan (CEP) also be updated to align the school’s
plans, actual programme implementation and budget.

In relationship to school, Edger, Morphet et al in Ezeocha (1990), defines

budgeting as an aggregate of educational plans with an estimate of the
receipts and expenditures necessary to finance the services and facilities
required to provide the desired educational programme. Therefore, in school
finance management, budgeting stands to mean the fiscal interpretation of
educational programmes, involving how much the school plans to spend and
how the expenditure is to be effected. It is a blue print that guides the
judicious management of scarce financial resources of the school. Budgeting
in effect is a sequentially prepared financial statement indicating the various
sources of school money and the educational services this money will cater
for, during a given period of time. Budget making thus begins with a
statement of educational needs which is translated into money. It depicts the
determination, allocation and or development of funds and facilities for the
realization of school objectives. In a school, budget helps the principal and
staff to develop plans for future and staff to develop plans for future syllabus,
instructional procedures, guidance services and student activities as it helps in
allocating expended funds for labour, facilities and administration
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programmes, activities and projects (Obi, 2004). It therefore represents an

improvement tool for an organizational financial management.

Undie (2013) opined that school budgeting today implies a process that
involves a careful determination of annual school needs in terms of
programmes or projects; a financial quantification of such educational
needs, a projection in the sources of generating revenues and a realization
of the projected revenue resources among the planned educational
programme or projects to satisfy the already determined educational needs
most efficiently. This implies that school budgeting is a system of
translating the needs, programmes and projects of the school into money
and its effective utilization with the aim of achieving the desired objectives
of the school within a stipulated time frame. In addition, it is believed that
budgeting controls the financial behaviour of a school, system with the fact
that whenever there are fluctuations in costs the budget helps the system
to adjust easily for effective instructional planning. It is however expedient
to state that a school budget is expected to last for one fiscal year though
budgetary needs are sometimes projected for some years in the future. It
is important that such fiscal year aligns with the school academic year to
enhance the flow-in of revenues for the proposed expenditures. Since the
academic year in Nigeria at all levels of the education system runs from
October to September of the following year, fiscal year for school budget
should follow the trend to avoid disruption. Given the fact that the school
budget aids the institution in determining her educational and financial
policy, its effectiveness must consider the following; (Morphet et al 1974 p.
476);
- The preparation of the budget in such a manner as to provide an
educational programme that gives effect to previously educational
policies;
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- The budget document, which may be desired as systematic plan and

statement that forecasts the expenditures and revenue of a school
system during a stated period of time;
- The presentation, consideration and adoption of the budget;
- The administration of the budget;
- The appraisal of the budget.

THE BUDGETING PROCESS

Budgeting process demands that educational managers and planners should
adopt a structural model for effective planning and control since budgeting is
part of the structured business model of planning and control (Akinsolu,
2008). The budgeting process is time consuming because it requires a
detailed and systematic analysis of all estimated revenue and expenditure
within a specified period. Both the expenditure and revenue should be
presented item by item and in expected sections. Ogbonanya (2002)
acknowledged that it involves in a way, the determination of the revenue that
would be available to execute the educational programme and allocating it in
such a manner as to minimize friction, duplication, waste and as well reduce
complaints. Educational budgeting process tends to ensure a given level of
output or sales and attempts to determine an appropriate level of spending.
As a matter of importance the budgeting process in any educational institution
should include the following;
- Study carefully educational needs of the school and making estimate of
the revenue necessary to meet these needs,
- Identify and list activities you want to be carried out in your school
within the year, plan for the resources that will be required and the
possible sources of revenue to implement the educational programmes
agreed upon,
- Give an estimated cost of each of these resources,
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- Study the budgeting guidelines issued by government and explain how

you are supposed to present the budget.

Furthermore, Lacey (1989) and Adeogun (2004) noted that budgeting

decision making process takes the steps of;
a) Determination of overall levels of spending;
b) Allocation of estimated available resources among sectors;
c) Responses to budget circular;
d) Preparation of draft budget document;
e) Approval of draft budget;
f) Preparation of final budget;
g) Consideration by the legislature (or similar body);
h) Release of fund;
i) Implementation of capital expenditure;
j) Procurement;
k) Monitoring and evaluation;
l) Cash management.
When these steps are properly considered, then the budgetary process would
be found to be most effective in promoting the development of adequate
educational programmes.

PRINCEPLES OF BUDGETING
It is quite ideal that educational managers who have the responsibility of
budget preparation and development should have a good knowledge of
budgeting principles for an efficient and effective financial management.
Inability of some organizations and educational institutions to adopt the right
principles and processes in budgeting spells doom to their financial and
managerial successes. Some of these principles are as follows
(www.leoisaac.combudget);
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1. Be Conservative not Optimistic

Budgeting is future oriented and the school manager should guide against a
high expectation of the achievement of every aspect of what was budgeted.
Given the fact that unexpected and unpredictable events beyond control may
crop up, there is a need to explore a strategy of developing in the budget an
additional expenses termed “contingencies”.
2. Team Work and Consultation
One of the most important principles of budgeting is that it requires team
work and consultation. Although one person may be responsible for the
overall compilation of the budgets, one person should not be responsible for
all the work involved. The task of budgeting should be split and allocated
among these individuals who have the best chance of knowing what
expenditure is likely to be needed and what income is reasonable to expect.
Involvement by many people in budgeting might slow down the process, but
the answer is far more likely to be accurate and dependable.

3. Allow Plenty of Time

Budgeting is inevitably time consuming. A good budget may be worked out
for several weeks, if not months, adding and changing figures as new
information comes to light. For this reason, budgeting process is lengthy
because much research and consultation have to be carried out before
people involved in the process can be confident of the figures they supply.

Interactive Process of Improving Budgets

Wild Intelligent Authoritative Reasonable confident Agreed
Guess Guess Guess Prediction Prediction Figure

4) Excellence in Documentation
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It is very important that the authors of the budget strive to produce

documents that can be read and understood by anyone if budget working
are unclear and figures are not clearly labeled, even the author will as time
passes, have trouble understanding where the figures come from and how
the calculations were made. It should be assumed that budgeting workings
will be circulated to many different people who may have lower levels of
financial literacy, useful again in a year’s time when the budgeting process
begins again. Unless workings are well labeled it may be difficult to
remember.

5) Provide Training
Ensure that people who have a significant role in the budgeting process have
a reasonable understanding of the principles of budgeting, how it relates to
the strategic and operational plans, and how everyone must live with the
consequences of the finalized budget in the year ahead. Training need only, is
a single meeting in which those who have experience of budgeting provide
knowledge to others involved who are less experienced.

7) Get sign off

This is another one of the budgeting process which agrees to the final
iteration of the budget. This agreement by those involved is often referred
to as “sign off”. In other words, those involved add their signature to the
final iteration of the budget. This ensures that there will be no argument
later about who agreed to what.

The Principles of Budget Process

There are four major principles of a budget process and they are:-
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1. Establish broad goals to guide government and educational decision

making; A government should have broad goals that provide overall
direction for the government and serve as a basis for decision making.
2. Develop Approaches to Achieve Goals; A government should have
specific policies, plans, programmes and management strategies to
define how it will achieve its long term goals.
3. Develop a budget consistent with approaches to achieve goals;A
financial plan and budget that moves towards achievement of goals,
within the constraints of available resources should be prepared and
adopted.
4. Evaluate performance and make adjustments; Programme and financial
performance should be continually evaluated and adjustments made to
encourage progress towards achieved goals.

IMPORTANT PLANS IN PREPARING A SCHOOL BUDGET

In educational institutions, the realization of desired educational objectives
and goals depend largely on the effective planning and management of school
funds by the school administrators. Budgeting process is a tactic employed in
an efficient implementation of activities and programmes requiring series of
planning process. When you create a budget you are creating a plan for
spending and saving money through control. Specific plans for implementing
the philosophy and purpose of the school system must be developed before
action can be taken. Educational plans must present the quantity and quality
of educational services being proposed. The statement of the proposed
educational plans will include both short-range plans for the academic year
and long-range plans reaching some years into the future (Morphet, John and
Reller, 1974).
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The major plans involved in the preparation of the school budget as noted by
Ikedugwu (2007) are;
1. The education plan which defines the policies of the school, its
programme and activities as well as other educational services to be
carried out.
2. The expenditure plan which translates each educational programme and
services into cost,
3. The financing plan which sets out the means of meeting the cost of the
educational programme and services.

To ensure a prudential and judicious spending of funds and accountability,

school managers (Principal) should plan and prepare budget for their schools.
In realization of this fact, Ama in Kalu (2013) regarded budget as a plan
quantified in monetary terms, prepared and approved prior to a defined
period of time, usually showing planned income to be generated and
expenditure to be incurred during that period. When a budget of an
establishment, department or ministry is created it means creating a plan for
spending and saving money. A good budget plan should include information
on such basic questions as;
1) Who are to be educated and what type of education should be
provided? What varieties of educational programmes should be
provided for junior and senior secondary schools?
2) What is the anticipated enrollment rate in each class or course
programme?
3) What additional human and material resources should be needed within
the budgeting period?
4) What will be the expected teacher student ratio?
5) Should the school plants be planned to serve both the community and
the regularly organized school progammes?.
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6) What is the qualification the teachers should have?

7) What provision should be made for exceptional children and physically
impaired?
8) What provisions should be made for clinical and guidance services?
9) What provision should be made for students’ transportation?
10) What provision should be made for boarding/hostel facilities?

The list is however inexhaustible, but decision must be made based on such
related issues before a budget that embraces educational plan is prepared.
Moreover, Adesina and UNESCO in Akinsolu (2008) specified that in planning
and preparing school budget, the following should be considered; Personnel,
educational plan/programmes of the school, the expenditure plan, the
financial plan, the draft budget, and the final budget

Personnel:
Personnel include all individuals who will have responsibilities in the budgeting
process and should possess remarkable qualities to be able to effectively
prepare the school budget. The educational manager and planner must follow
simple rules, standardize certain procedures, ensure personal flexibility and
must tailor all his approach in budgeting towards the school needs.

After identifying possible sources of funds, a school head as a financial

planner, has to draw up a plan for securing and expending the resources. For
the plan to be expressed as a school budget a head needs to have some
knowledge and experience of designing and managing a budget. He should
recoganize the fact that the process of preparing a budget should be highly
regimented and follow a set schedule so that the completed budget is ready
for use by the beginning of the fiscal year. School budget preparation should
not be an exclusive preserve of the manager/principal. Classroom teachers,
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vice principals and unit heads among others should be given adequate
opportunity to share in developing the educational plan. This is important
because it is only through the process of participation in the planning by all
the needed personnel that there can be genuine understanding of the budget.
This implies that the school head should at the onset study critically the
general needs of the school. He should also request his staff to submit to him
their needs with respect to their subject areas and the areas related to the
posts they are holding. He should however provide to these personnel a yard
stick for evaluating and articulating these needs.

Equally, the non-teaching staff members should submit on the principal’s

request their needs and the needs of their subject specifications. Ezeocha,
(1990) summarized that the aggregate of all these and their articulations into
a document forms the budget. A broad participation in school budget
preparation by the principal, members of his staff both academic and non-
academic, members of the education committee and Board of Governors
tends to result in a “community wide participation in the educational planning
and budget making.

EDUCATIONAL PLAN/PROGRAMMES OF THE SCHOOL:

Educational plan defines the policies of the school, its programmes and
activities including other educational services to be carried out. Budget
provides a vehicle for transporting educational policies, goals and programmes
into financial resources plans. This implies that developing an instructional
plan to meet students’ performance goals should be directly linked to
determining budgeting allocations.

In the process of preparing the budget, the school as a matter of importance

should identify the main programmes by making references to the educational
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policies, goals and targets of the Federal, state and local government. The
demand therefore is that the managers of different education institutions, the
finance officers, bursars, teaching and non-teaching staff should avail
themselves the opportunity of collecting vital data that constitute the needed
programmes. With this, they should formulate targets geared towards
successful implementation of the plan programmes of the institution within
the fiscal year.

Educational activities that are contained in the plan within the fiscal year
ranges from science programmes, computer related programmes, religious,
arts and exhibitions, language programmes, fine arts and music, agricultural
programmes, medicine, pharmacy and engineering programmes as well as
educational, environmental and health science programmes. Sports and
games are not left out. The plan also depicts the organizational set-up of the
system, the number of students in the school, teacher student ratio, the
number of personnel to be employed and their required qualifications,
provisions to be made for students transportation services, exceptional
students and physically impaired students, what health services should be
provided by the school and a host of other services that the institution should
provide, and finance within the planned year.

The Expenditure Plans

Clearly, every formal budget should specifically possess a statement of the
educational programme in the form of programmed budget and also show
statement of receipts and expenditure. The expenditure plan has as its
function the responsibility of translating the educational programmes or
service into cost. As soon as educational programme is accepted, estimates
can be prepared showing the possible costs. It is important that the budget
reflects as accurately as possible the funding needed to carry out the
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proposed expenditure. The school head should neither overestimate the funds
required nor under estimate the budgeting needs.

For proper accounting and easy management, the expenditure items are
classified and numbered. The state ministries of education usually outline the
classification order and it is important to stick to this standard so as to
maintain uniformity and clarity. Examples of simple expenditure classification
for a secondary school include; personal Emolument, Allowances, Ancillary
charges, maintenance charges and special expenditure equipment, purchase
of library books, among others. It is therefore incumbent on the school
manager in his bead to translate plan into cost to seek information from both
current cost and information collected over a period of time (Ikediugwu
2008). Excessive padding inherent in government budgeting should not be
allowed.

THE FINANCIAL PLAN

The end product of the overall budgeting process is the financial plans. This
shows all the sources of income of the school. Meanwhile, it is important that
school managers systematically state all the problems they encounter in
raising funds for various school programmes and projects.

THE DRAFT BUDGET

The draft budget is presented to a set of management teams or the budget
committee on education, the budget prepared will be reviewed in order to
bring it within the probable financial ceiling.

THE FINAL BUDGET

A fully prepared budget emerges with supporting documentation and
indications of output.
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In addition to the already discussed six plans in the budget preparation is the
“Revenue Plan”. The revenue plan is the detailed estimates of the receipt
which can be used in the financing of the educational plan.

The classification of revenue receipts for educational institution or school

system include; revenue from local sources, tuition fees, equipment fees,
Parents Teachers Association ( P.T.A.) levies, other revenue from local
sources and revenue from federal sources.

ADMINISTRATION OF THE BUDGET

In educational institution, the budget must be centrally administered in other
to keep the budget in balance. This is the responsibility of the school manager
who ensures that no expenditure should be incurred without his
preauthorization if the achievement of the entire educational plan could be
made a reality. Moreover, the budget should be at the bake and call of the
school head. This implies that the budget cannot serve as an instrument for
the implementation of educational plans and programmes if it is not regularly
referred to and consulted. The budget should guide the co-ordination of all
spending in the areas of programme organization, employment of staff,
supplies, construction and maintenance of buildings and equipment and other
school services. This will avoid over spending in some items while deficit may
be incurred in others. The detailed amounts budgeted for receipts and
expenditure should be entered into the account books or machine records for
both receipt and expenditures.

For the sake of maintaining the policy and principle of good management, the
manager or school head should ensure that he sticks to the budget
specifications. Ezeocha (1990) appreciates the fact that stability of
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programme and enhanced reputation in business matters are bound to accrue

from responsible and dependable budget administration. Also the contingency
budgeting should be prudently used. This is a device that could be employed
by the head to cater for emergencies beyond the control of initial planning
specifications of equal importance is the need for the school head/manager to
be disciplined in his budget administration. He should not see the forum as an
opportunity to make money illegally. As the chief accounting officer of the
school, he should ensure that all revenues and expenditures of the school are
judiciously accounted for.
STAGES IN A SCHOOL BUDGET
The following stages in budget development in schools should be followed in
line with unesco-iicba.org/English (n.d.);
1. Identify and list activities to be carried out in the school within the fiscal
year.
2. Identify and list the resources (human and physical) that will be
required and the possible sources.
3. Give an estimated cost of each of these resources. Since budget is
mainly a financial statement, costing of the resources is of great
relevance.
4. Study the budgeting guide-lines issued by the government through the
ministry of education or funding agency and clearly explain how to
present the budget.
5. Using the guidelines, write down the costs of each activity against the
expected resources and seek approval of the budget by the authorities.

Adhering to these stages gives the head a sense of direction for the future,
guides him in defining his proposals as well as limits him against financial
excesses.
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TYPES OF BUDGETING
There are most times a variety of budgets that can be prepared,
depending on the type, nature and objectives of each organization and
their programme plan. Meanwhile, the most vital types of budget identified
in the education sector are; Line item budgeting, Programme linked
budgeting, Performance budgeting,Zero-base budgeting, Planning,
Programming and Budgeting System and Incremental budgeting

Line Item
The term ‘line-item’ refers to the line items; teachers’ salaries, repairs,
consumables and the like, of which a particular amount of money is allocated.
Specific items of revenue and expenditure are listed on line-by-line basis. It
distinguishes requirements and funds by balancing item one against the other.
Line item budget is prepared with reference to the previous year’s budget
where possible sources of income and heads of expenditure remain the same.
It is backward looking in preparation and therefore does not deviate from the
budget of the previous year and follows the tradition. In most schools except
a few progressive ones, it is the line item or traditional budgeting that is
predominant.

PROGRAMME LINKED BUDGETING

This budget is prepared by a school for a specific purposes and specific
programmes. There is a linkage with government educational policies, goals
and targets in the budget.
a) Identify the main programmes in line with government educational
polices, goals and targets,
b) Identify the resources necessary for carrying out the programmes. This
focuses on items and sub items. A grouping of items/sub-items within a
programme is called a sub-programme.
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c) Cost the programme and sub-programmes in step b.

d) Prepare the budget, with support documentation, nominal rolls and so
on in the line with instructions for budget preparation.

PERFORMANCE BUDGETING
Performance budget is the type that concentrates more on outputs or
outcomes of services through the measurement of the achievement of each
programme or activity or any aspect of a given projects such as the
construction of a school building. This implies that allocation of funds and
resources are based on their potential results. Performance budgeting is the
practice of developing budgets based on the relationship between programme
funding levels and expected results from that programme. The process is a
tool that programme administrators can use to manage more cost-efficient
and effective budgeting out lays.

ZERO-BASE BUDGETING (2BB)

2BB is a system of budgeting that requires management to take a fresh look
at all programmes and activities each year rather than merely build on last
year’s budget (Judith in Akinsolu, 2008). That is to say that it does not
consider the previous year’s budget but assumes that the programme is
starting afresh and should be treated as such regardless of whether the
budget is higher or lower than the previous one. Zero based budgeting starts
from zero bases and every function within an organization is analysed for its
needs and costs. ZBB helps in identifying areas of wasteful expenditure and if
desired can also be used for suggesting alternative courses of action. It
forestalls the general tendency among managers to deal on provisions and
budget figure as a basis for computing current figures which may not be
realized at all times. Its gains lie on the efficient allocation of resources, as it
is based on needs and benefits rather than history.
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Zero-based budgeting enables the school administrator to prioritize projects,

programmes and commit resources in that line. However, this type of budget
is more time consuming, justifying every line item can be more problematic. It
is equally expensive and can lead to over exaggeration of benefits of project
and a resultant waste of resources.

Planning, Programming and Budgeting system (PPBS)

The PPBS is a formal systematic structure for making decisions on policy,
strategy and the development of forces and capabilities to accomplish
anticipated missions (Mohammed, 2013). It is one of the most modern and
innovative planning and management tool to provide a better analytical basis
for decision making and for putting such decisions into operation. Mohammed
went further to elaborate five elements that PPBS is made up of;
1. A programme structure which involves a classification of the courses of
actions open to an organization for attaining its objectives.
2. An approved programme document that includes precise, quantitative
data on needs, resources, inputs and programme out- puts extending a
number of years into the future.
3. A decision making process that establishes the function required by
PPBS,
4. An analysis process for measuring effectiveness;
5. An information system that supplies the data required to implement the
system.

Effective PPBS system depends greatly on already agreed upon goals and
objectives for the institution and the unit. Achievement of goals is directly
related to funding. It is important to note that PPBS is endowed with many
advantages which include;
 23

1. PPBS lie in the planning process which leads to making programme

policy decisions that anchors on a specific budget and specific multi-
year plans. In effect, this forms a long term plan to be pursued over a
number of years; each programme budget will disclose the cost of
providing a service to satisfy an objective.
2. The broken down of PPBS into time periods aids management to make
judgments about such effectiveness that would not have otherwise
been possible if programmes were fragmented in the departmental
budget concerned.
It should however, be pointed out that PPBS tends to be too sophisticated for
developing nations like Nigeria characterized by lack of reliable and timely
data and shortage of experts. PPBS has also been noted to be more
theoretical than practical oriented and thus, very difficult to implement and
manage higher education selling. Major short fall of PPBS approach to
budgeting lies on its weakness to adequately measure outcomes. This
especially applies in higher education, where a number of factors contribute to
the education of the student.

INCREMENTAL BUDGETING
Incremental budgeting makes use of the information in the budget of the
preceding year. In other words, it is a budget prepared using previous
period’s budget or actual performance as a basis with incremental amounts
added for the new budget period. In this instance, management does not
intend to spend a great deal of time formulating budgets or may not perceive
any great need to conduct a thorough re-evaluation of school needs.
It is however an easy, quick and cheap method of preparing budgets-and
ensures that departments are operated in a consistent manner for a long
period of time. Nonetheless, incremental budgeting fosters conservative
maintenance of the status quo and does not encourage risk taking.
 24

BUDGETING PRACTICES
Of all the functional areas of finance, the one mostly in need of guidance is
government budgeting. The practices advocate a goal-driven approach to
budgeting that spans the planning, development, adoption, and execution
phases of the budget. Practices encourage the development of organizational
goals, establishment of policies and plans to achieve these goals, and
allocation of resources through the budget process that are consistent with
goals, policies, and plans. There is also a focus on measuring performance to
determine what has been accomplished with scarce government resources.
What the practices can do is enhance the quality of decision making by
encouraging practices that illuminate the key issues and choices facing a
community.

There is also an emphases that budgeting should have a long-range

perspective, and not be simply an excuse in balancing revenue and
expenditure one year at a time. This focus on long-term financial planning
comes at a critical time. Recommended budget practices encourage
governments to consider the long-term consequences of such actions to
ensure that the impacts of budget decision are understood over a multi-year
planning horizon and to assess whether programme and service levels can be
sustained.

The budgeting practices in educational institutions follow a systematic

procedure. This includes budget planning, budget defense, budget approval
and adoption, budget implementation and budget evaluation. As a result of
the organizational structure of the secondary education system the budgeting
practices are controlled at the ministry of education and secondary education
 25

management board levels. These are the boards responsible for the
management of education at the secondary school levels. Oboegbulem and
Kalu (2013), attest that the principals of schools are not involved in all the
stages of the budgeting practices already mentioned. They are highly
engaged in the planning, defense and implementation stages while the
secondary education management board and ministry of education carryout
budget approval, adoption and evaluation. The ministry of education and
secondary education management board do these jobs through the account
supervisors who monitor and verify the financial activities of educational
administrators.

Summary
The ever growing need for proper accountability for the use of public fund in
the face of low fund allocation to education makes budgeting in schools and in
all sectors of education inevitable. In this chapter, several issues about
budget and budgeting in school finance management were x-rayed.

Budgeting in school stands to mean the fiscal interpretation of education

programmes involving how much the school plans to spend and how the
expenditure is to be effected. For any budgeting to be meaningful, it should
undergo a budgeting process. In this process, the revenue needed to
actualize the school programmes and how to allocate them to minimize
friction, duplication and waste would be determined.

The actualization of educational objectives depends solely on efficient

planning and management of school funds. This paper went ahead to fully
discuss the imperative of planning in preparing a school budget. The basic
factors that must be considered which include; personal educational plan, the
 26

expenditure plan, the draft budget and the final budget formed part of the
discuss.
The work succinctly showed that it is the responsibility of the school manager
to ensure adequate administration of the school budget. If this is set aside,
the budget cannot by any stroke of imagination serve as an instrument for the
implementation of educational plans. For budget to be effective, it should
undergo some systematic steps in order that the school head would have a se
direction for the future.

Budgeting is made up of different types. Knowledge of these types as

discussed here will expose the meaning, advantages and disadvantages of
such which will definitely guide the manager in his choice of the type to
adopt.

Review Questions
1. Explain these terms, budget, school budget and budgeting.
2. Discussion fully five important factors that must be considered in a
school budgeting process.
3. Outline and explain three major plans that are necessary for the
preparation of the school budget.
4. Highlight and discuss five types of budgeting bringing out carefully their
importance in school finance management
5. What significant role should a principal play in school budget
administration?
 27

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publishers

Akinsolu, A.O. (2008). Educational budgeting in J.B. Babalola & A.O. Ayeni
(eds) Educational management; theories and tasks. Lagos, Macmillan
Nigeria publishers limited.

Edem, C. (1987). Modern Economics; Hampshire Macmillan education Ltd.

Ezeocha, P.A. (1990). Educational administration and planning. Nsukka;

Optimal computer solutions.

Ikedugwu, N.P. (2007). Educational finance and school business

management. Enugu. Cheston agency Ltd.

Lacey, K. (1989). Principles of political economy; London. Longman.

Mohammed, W.A., (2013). Planning, programming and budgeting system

models, retrieved from my.studying Denmark dk/m/nlohpost.

Morphet, E, Johns, R.L. and Reller, T.L. (1974). Educational organization and
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Obi Emenike (2004). Issues in educational administration. Enugu. Empathy

international.
 28

Oboegbulem, A.I. and Kalu, F.A. (2013). Budgeting practices of principles of

secondary schools in South East, Nigeria. European journal of
educational studies (3).

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(Ed); fundamental administration and planning. Enugu. Management
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Omolehinwa, A.C. (2005, p 538). Work out management accounting Lagos,

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Undie, J.A. (2013). New insight to educational budget and budgeting; lessons
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