How To Prepare School Budget For One Fiscal Year

The concept, ‘Budget’ means different things to different people depending on one’s perception or background.

The term budget refers to an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for any entity that wants to spend money, including governments and businesses, along with people and households at any income level.

To manage your monthly expenses, prepare for life’s unpredictable events, and be able to afford big-ticket items without going into debt, budgeting is important. Keeping track of how much you earn and spend doesn’t have to be drudgery, doesn’t require you to be good at math, and doesn’t mean you can’t buy the things you want. It just means that you’ll know where your money goes, and you’ll have greater control over your finances.

A budget is an estimation of revenue and expenses over a specified future period of time and is utilized by governments, businesses, and individuals at any income level.

A budget is basically a financial plan for a defined period, normally a year that is known to greatly enhance the success of any financial undertaking.

Corporate budgets are essential for operating at peak efficiency.

Aside from earmarking resources, a budget can also aid in setting goals, measuring outcomes, and planning contingencies.

Personal budgets are extremely useful in managing an individual’s or family’s finances over both the short and long-term horizon. (https://www.investopedia.com/terms/b/budget.asp)

Koontz and O’ Donnell define, “Budgets are statements of anticipated results, in Financial terms as in revenue and expense and capital budgets or in non- financial terms as in budgets of direct labour-hours, materials, physical sales volume, on units of production.

In the words of Prof. Munro, “budget is a plan of financing the incoming fiscal year. This involves an itemized estimate of all revenues on the one hand and all expenditure on the other”. While Rene Stourn defines budget as, “it is a document containing a preliminary approved plan of public revenue and expenditure”.

A budget is a spending plan based on income and expenses. In other words, it’s an estimate of how much money you’ll make and spend over a certain period of time, such as a month or year.

Budget Preparation

Budget preparation is a process with designated organizations and individuals having defined responsibilities that must be carried out within a given timetable. This process is normally established and controlled by a legal and regulatory framework.

Budget preparation serves as an instrument for planning because it specifies financial procedures through which the goals and objectives of the school system can be achieved. Programmes and policies designed to achieve the objectives of the school system are implemented through the operation of a school budget.

According to Olufidipe (2003), budget preparation is a process of preparing and using budgets to achieve management objectives.

What is a budget for one fiscal year?

A budget for one fiscal year could also be referred to as an Annual Budget. An Annual budget can be described as a plan laid out for a company’s expenditures for a financial year. Laying down an annual budget helps companies balance out the expenditure with the income/revenue they are looking at for the year.

Relevance of school budget

Identify your income and expenses and prioritize your needs and wants. Set realistic and achievable financial goals and plan how to reach them. Control your spending habits and avoid impulse buying. Save money for emergencies, future plans or investments.

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.

A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home.

Dangers in Budgeting:

Budgets should be used only as a tool of planning and control. Some budgetary control programmes are so complete and detailed that they become cumbersome, meaningless, and unduly expensive. There is danger in over-budgeting, through spelling out minor expenses in detail and depriving managers of needed freedom in managing their departments. For example, a department head was underrated in an important sales promotion because expenditures for office supplies exceeded budgeted estimates; new expenditures had to be limited, even though his total departmental expenses were well within the budget and he had funds to pay personnel for writing sales’ promotion letters. In other departments, expenses were budgeted in such useless detail that the cost of budgeting of many items exceeded the expenses controlled.

Another danger lies in allowing budgetary goals to supersede enterprise goals. In their zest to keep within budget limits, managers may forget they owe allegiance primarily to enterprise objectives. The budget experts recall a company with a thorough budgetary control programme in which the sales department could not obtain information needed from the engineering department on the grounds that the latter’s budget would not stand such expense. This conflict between partial and overall control objectives, the excessive department independence sometimes engendered, and the consequent lack of coordination, are symptoms of inadequate management, since plans should represent a supporting and interlocking network, and every plan should be reflected in a budget in a systems way.

A latent danger sometimes found in budgeting is that of hidden inefficiencies. Budgets have a way of growing from precedent, and the fact that certain expenditure was made in the past becomes evidence of its reasonableness in the present; if a department once spent a given amount for supplies, this becomes a floor for future budgets. Also, managers sometimes learn that budget requests are likely to be pared down in the course of final approval and therefore ask for much more than they need. Unless budget making is accomplished by constant reexamination of standards and conversion factors by which planning is translated into numerical terms, the budget may become an umbrella under which slovenly and inefficient managers can hide.

ANNUAL BUDGET FOR OG INTERNATIONAL SCHOOL, UGHELLI, DELTA STATE

(Table by Fejiro Akpotu, Ph.D)