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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 international best practice and
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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 of United
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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
to finance the services and facilities required to provide the desired educational
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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 programmes, activities and projects
(Obi, 2004). It therefore represents an improvement tool for an organizational
financial management.
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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?.
6) What is the qualification the teachers should have?
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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, vice principals and unit
heads among others should be given adequate opportunity to share in
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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
policies, goals and targets of the Federal, state and local government. The
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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 proposed expenditure. The
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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 programme
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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.

TYPES OF BUDGETING
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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.
c) Cost the programme and sub-programmes in step b.
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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;
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.
 23

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
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
 25

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 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
 26

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?

REFERENCES

Adeogun, A.A. (2004). Economics of education Lagos. Joja educational

publishers
 27

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
administration, concepts, practice, and issues New Jersey, Englewood
cliffs.

Obi Emenike (2004). Issues in educational administration. Enugu. Empathy

international.

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).
 28

Ogbonnaya, N.I. (2002). School business administration. In J.O. Mgbodile (Ed);

fundamental administration and planning. Enugu. Management business
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Omolehinwa, A.C. (2005, p 538). Work out management accounting Lagos, C10
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Principles of budgeting (n.d.). retrieved from www.leoisaac.combudget.

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