NAME: ALLEN INES YADAO, CPA

COURSE : MBA (NON-THESIS)

PERMANENT ADDRESS: SINAIT, ILOCOS SUR
UNDERGRADUATE: BS ACCOUNTANCY
BS MATHEMATICS/STATISTICS
WORK: TECHNICAL EDUCATION AND SKILLS DEVELOPMENT SPECIALIST II (IQA
AUDITOR, COMPLIANCE AUDITOR)
TESDA - CAR REGIONAL OFFICE

OTHERS: CERTIFIED LEAD AUDITOR, ISO 9001:2015

Public Budgeting
Public Budgeting
- is the process of creating a plan for the
accomplishment of programs related to objectives
and goals within a definite time period, including
an estimate of resources required, together with
an estimate of resources available, usually
compared with one or more past periods and
showing future requirements.
Four Perspectives according to Robert W.
Smith and Thomas D. Lynch
1.The politician
2.The economist
3.The accountant
4.The public manager
Leading theorists in Public Budgeting
 Frederick Cleveland: constructed a practical definition of budgeting.
 William F. Willoughby: describes the purpose of a budget document.
 V. O. Key, Jr.: sparked the normative question regarding how scarce resources
ought to be distributed to unlimited demands.
 Verne B. Lewis: argued for a budgeting theory based on economic values;
strongly contributing to the study of public finance.
 Richard A. Musgrave: the Father of Public Finance; identified the three roles
of government in the economy: allocation of resources, distribution of goods
and services, and economy stabilization.
 Aaron Wildavsky:suggested that budgetary decision making is largely
political, rather than based on economic conditions.
Three Functions of Budgeting (According to
Allen Shick)
1.Strategic Planning
2.Management Control
3.Operational Control
Important roles of budget in the national
economy
• Prioritization of the allocation of the public resources
• Achieving policy goals through prudent financial
planning
• Establishing accountability regarding the usage of the
tax payers money
• Financial controls also ensure compliance to rules and
increase in efficiency
Types of Budgets in Public Administration
1.Balanced Budget: As suggested by the name a balanced budget is that
which has no deficit or surplus.
2.Revenue Budget: It is just the details of the revenue received by the
government through taxes and other sources and the expenditure that is
met through it.
3.Performance Budget: This type of budget is mostly used by the
organizations and ministries involved in the developmental activities. This
process of budgeting, takes into account the end result or the performance
of the developmental program thus insuring cost effective and efficient
planning.
4.Zero based budget: Zero based budgeting has its clear advantage when the
limited resources are to be allotted carefully and objectively. It starts from a
zero base unlike traditional budgets where incremental approach is used.
Here, the needs and costs of every function of the organization are taken
Types of Public Budget according to
Expenditure
1.Operating budgets
2.Capital budgeting
Approaches to Public Budgeting
1.Line Item Budgeting is arguably the simplest form of budgeting, this
approach links the inputs of the system to the system. These budgets
typically appear in the form of accounting documents that express
minimal information regarding purpose or an explicit object within the
system.
2.Program Budgeting takes a normative approach to budgeting in that
decision making—allocating resources—is determined by the funding
of one program instead of another based on what that program offers.
This approach quickly lends itself to the PPBS budgeting approach.
Approaches to Public Budgeting
3.PPBS Budgeting or—Program Planning Budgeting System—is the link
between the line-item and program budgets and the more complex
performance budget. As opposed to the more simple program budget,
this decision making tool links the program under consideration to the
ways and means of facilitating the program. This is meant to serve as a
long-term planning tool so that decision makers are made aware of the
future implications of their actions. These are typically most useful in
capital projects.
Approaches to Public Budgeting
4.Performance Based Budgeting attempts to solve decision making
problems based on a programs ability to convert inputs to outputs
and/or use inputs to affect certain outcomes.
5.Zero-based budgeting is a response to an incremental decision
making process whereby the budget of a given fiscal year (FY) is largely
decided upon by the existing budget of FY-1. In contrast to
incrementalism, the allocation of scarce resources—funding—is
determined from a zero-sum accounting method. In government, each
function of a department's section proposes certain objectives that
relate to some goal the section could achieve if allocated x dollars.
Approaches to Public Budgeting
6.Flexible Freeze is a budgeting approach pioneered by President
George H. W. Bush as a means to cut government spending. Under this
approach, certain programs would be affected by changes in
population growth and inflation.
7.Program Assessment Rating Tool (P.A.R.T.) is an instrument developed
by the United States OMB to measure and assess the effectiveness of
federal programs that review the program’s purpose and design,
strategic planning, program management, and program results and
accountability. The scores are rated from effective (ranging between 85
and 100 points), moderately affective (70-84 points), adequate (50-69
points), and ineffective (0-49 points).
Approaches to Public Budgeting

8.Priority Based Budgeting is a response to poor economic conditions.

As opposed to incremental budgeting, where resource allocation is
determined based on marginal shifts in costs, priority based budgeting
fixes the amount of governmental resources and then allocates
resources across the various programs. The programs receive their
allocation based on their priority; priorities may include safe and
secure communities, health, education, and community development
among others. Outcome assessment then determines the efficacy of
the programs. Although this approach is pro-democratic, critics suggest
the administration of this process is extremely difficult.
Six steps of the budgetary process
1.Revenue Estimation performed in the executive branch by the finance
director, clerk's office, budget director, manager, or a team.
2.Budget Call issued to outline the presentation form, recommend
certain goals.
3.Budget Formulation reflecting on the past, set goals for the future
and reconcile the difference.
4.Budget Hearings can include departments, sections, the executive,
and the public to discuss changes in the budget.
5.Budget Adoption final approval by the legislative body.
6.Budget Execution amending the budget as the fiscal year progresses.
The Philippine Budgeting Process
What is government budgeting?
Government budgeting is the allocation of public
funds to attain the economic and social goals of
the country.
Why is government budgeting important?
Government budgeting is important because it
enables the government to plan and manage its
financial resources to support the
implementation of various programs and projects
that best promote the development of the
country.
What are the major processes involved in
national government budgeting?
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