THE IMPORTANCE OF ANNUAL BUDGET IN EDUCATION IN NIGERIA

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.

SCHOOL AND ACADEMIES BUDGET PLANNING PROCESS

Stage 1: Review

Reviewing past performance against budgets can be revealing. How accurate was the budget?
Where did the underspends and overspends occur? These questions can help you shape your
school budget and increase its accuracy. Look at the cost base too. It can give you a foundation
on which to build your budget and be a prompt to review expenditure. Benchmarking against
similar schools can help you understand how your spending compares and put it into context. It’s
also an opportunity to identify cost savings or improvements.

Stage 2: Planning

Once you’ve gathered your historical data and carried out the benchmarking, it’s time to think
about your resource, staffing and accommodation needs for the next year. The planning stage
shouldn’t be a one-step process. It’s important to model a range of income and cost scenarios
based on your most important data. To be as accurate as possible in your planning, consider data
such as:

1. Changes in funding (revenue and capital income)

2. Number of pupils and their characteristics

3. Class and group sizes

4. Staffing profiles and increments

 5. Pay and price increases

6. Procurement and maintenance

7. Longer-term development plans in areas such as asset management, premises, staff and
IT/ICT

8. Local Authority Plans/Central Government Plans

9. Ofsted reports

You can find more detailed guidance on the planning stage and the key areas for consideration
here.

Stage 3: Forecasting

Your three to five-year forecast should be more than your ‘best guess’ for it to be useful. Yet it’s
difficult to predict changes in areas such as funding, pupil numbers and the costs of staffing. It
can be beneficial to get involved in the local community to stay abreast of developments which
could impact your school. Being active within the wider education sector can also give you
insight into factors most likely to affect you. You can use this knowledge and your historical data
to model a range of income/cost scenarios to assess the impact of varying factors on the budget.
Factors to consider include:

 Funding over the next three years

 Changes in pupils and their characteristics

 Curriculum changes

 Likely staff profiles

 Teaching staff salary rises

 Inflation

 Aims of the school development plan

 Longer-term improvement and development aspirations

‘What if’ analysis is most useful when you model trends rather than one-off changes and apply
the highest probability and impact. This process is made much easier, quicker and more accurate
by using budget modelling software.

Multi-Academy Trusts (MATs) follow these same principles however there are a few more
considerations – you can learn more about them in the quick guide to school budget planning.

Stage 4: Implementation and evaluation

Once the budget gets approval from the governing body the budget is implemented, and
monitoring and evaluation should begin. Monitoring and reviewing your budget monthly will
highlight areas of potential risk early enough to act. It also makes life easier when it comes to
submitting budget monitoring returns to the DfE.

While evaluation is the final stage of the school budgeting process, it feeds back into the first
stage. Ongoing evaluation gives you a head start on the following year’s review and helps inform
forecasting. By keeping a close eye on the budget throughout the year, you can identify ways in
which resource and budget could be used more efficiently or differently. For example, where
there is recurrent underspend meaning money could be shifted to other resources in the future.

MEANING OF EDUCATIONAL 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.

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,
- 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.

THE PRINCIPLES OF BUDGET PROCESS

There are four major principles of a budget process and they are:-
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.

Evaluate performance and make adjustments; Programme and financial performance should be
continually evaluated and adjustments made to encourage progress towards achieved goals.

PROBLEMS EDUCATIONAL BUDGETING

The decline in the education sector of Nigeria is tied to many factors ranging from:

Poor funding

Misappropriation of funds

Incessant strikes by teachers

Non-availability of teaching materials

The after-effects of the aforementioned points are not just on the teachers, both the government
and the students suffer from it. When the education sector is not well funded, the teachers are not
motivated to discharge their duties effectively, and this will tell from the performance of the
students; as they will not be well equipped to compete with their counterparts in other countries.
This draws to mind why Nigeria still produces half-baked graduates annually.

However, the government is not left out as the growth of the country is threatened if the
education sector is not well funded. It will affect GDP, and even discourage foreign investors.
Also, the government will lose in that, a country without sound education system stands the
chance of being ride by other countries with vibrant educational system.

CONCEPTS IN EDUCATIONAL BUDGETING

EFFICIENCY: Is the (often measurable) ability to avoid wasting materials, energy, efforts,
money, and time in doing something or in producing a desired result. In a more general sense, it
is the ability to do things well, successfully, and without waste

EXPENDITURE: The action of spending funds or an amount of money spent on something.

EDUCATION EXPENDITURE: This refers to the current operating expenditures in education,

including wages and salaries and excluding capital investments in buildings and equipment.

UNESCO (United Nations Educational, Scientific and Cultural Organization): It is a specialized

agency of the United Nations (UN) based in Paris. Its declared purpose is to contribute to peace
and security by promoting international collaboration through educational, scientific, and cultural
reforms in order to increase universal respect for justice, the rule of law, and human rights along
with fundamental freedom proclaimed in the United Nations Charter

GDP (GROSS DOMESTIC PRODUCT): This is the broadest quantitative measure of a nation's
total economic activity. More specifically, GDP represents the monetary value of all goods and
services produced within a nation's geographic borders over a specified period of time.

IMPORTANCE OF BUDGETING IN SCHOOLS.

The principal of the schools should be responsible for the preparations of the budget document.
However, the head teachers need to consult the other relevant authorities and departments. The
budget therefore should be a result of corporate efforts of all those concerned with the needs of
their children.

Budgeting is important aspects that have and should be used in every activity. Some of these
importance include;

a) Budgeting helps to ensure that we have correct estimates of revenue and expenditure.

b) Budgeting help us to spend as budgeted, that is, expenditure will be as per the budget.

c) Budgeting helps institutions to meet their objectives.

d) Budgeting forms the basis of accounting and therefore institutions become more efficient.

e) Budgeting makes it possible to provide equitable allocation of resources.

f) Budgeting helps to determine the quality and quantity of services in the institution or in
an organization.

g) The budget itself confers authority to administrators or head teachers to collect and to
spend money appropriately and effectively.

h) The budget ensures economic use of resources and for the appropriate projects that are
needful to be funded.

i) Budgeting helps education institutions to achieve the purpose expected by the society.

j) Budgeting also cautions administrators or head teacher against unrealistic optimisms. In

other words it helps to check on the kind of decisions that are made by the administrators.

k) A budget also forms the basis of future budgets. The plan of a budget will help to
formulate and plan for the future budgets.

l) The budget will help in coordinating different units and departments towards general
goals of the school.
 A well-prepared budget should consist of three key components namely: revenue plan,
expenditure framework and educational strategy which is a long term plan.

A budget is important to an educational institution in the following ways:

Budgeting ensures that actions are carried out according to a budget plan. When the school uses
a budget this ensures that programs are implemented according to set plans and objectives.

A budget ensures the achievement of the school’s objectives- the plans that required the spending
of money is taken care of by the budget.

The budget compels persons to plan- the principal has to ensure that they plan in order to spend
from the budget.

A budget provides a framework for responsibility of accounting and to establish a system of

control. Individuals such as the principal, the superintendent, and the school board are highly
accountable for proper documentation of expenditure. Persons have to spend according the
revenue available hence their spending is controlled.

Budgeting motivates employees to improve on the performance- responsible persons will ensure
that books are up to date to reflect both revenue and expenditure. On the other hand, the principal
will ensure that the best measure is put in place to collect money such as school fee and book
rental fee. This money is usually included in the projected revenue.
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