Programme budgeting is the budgeting system that, contrary to conventional budgeting, describes and gives the detailed costs of every activity or programme that is to be carried out in a budget. The primary difference between a program budget and most other budget formats is that the program budget is focused on the requirements to get the job done and not on making sure there are the financial resources to do so. The program budget is developed to determine if the project can be financed or if it should be discontinued
In short, A budget prepared with program descriptions instead of expense line items.
Origin
The program budget derives from this concept; it attempts, however, to classify expenditures in terms of the outputs to which they are devoted. The program budget, in contrast, attempts to assign expenditures to specific outputs, categorizing them according to numbers of children completing various programs.
Need
In government, budgets have traditionally been constructed according to departments and agencies of government. This may be justified on historical or administrative grounds, but it does not necessarily correspond to the structure of activity. Every country organizes the civilian and military components of its foreign policy in separate departments, but this is frequently a serious obstacle to effective policy making. Again, the requirements of good administration suggest that there should be a single department of agriculture. But that department’s activities impinge on those of others, in both domestic and foreign policy. A budget constructed according to actual programs would cut across departmental boundaries. Program budgeting is an attempt to apply the economics of choice to public decision making.
Importance
Program budgeting also takes account of the time dimension in many government programs. New undertakings often take time to come into operation. A typical new program may have to pass through a research and development phase and an investment or construction phase before it reaches the operating phase. Alternative programs may differ considerably in this respect. The process of choosing among alternatives frequently involves trading the present against the future.
In most countries the usual procedure for deciding on government expenditure in a forthcoming year has been to assume that existing expenditure was appropriate and then.
The goals of budget execution
(1) Provide for an orderly
approach to achieve budgetary goals and objectives;
(2) Ensure that funds are expended only on
approved activities; and
(3) Have adequate stewardship over entrusted financial resources.
Responsibility for budget execution rests with municipal departments. They must account for the
expenditures and program outputs. Responsibility for monitoring may rest with the budget officer,
chief financial officer, or the deputy mayor, depending on your local government organization.
You should have a reporting system that compares actual expenditure and output against
budgetary plans. For most municipalities, your system should generate such reports monthly. The
person responsible for budget monitoring should identify any problems and meet with the
appropriate department to identify causes and resolve the problems
Area Of Concern
A program budget focuses on
- the expected results of services and activities that Companny carry out.
- attainment of long-term, community-wide goals.
- link revenues and expenditures to multiyear programs that meet municipality’s goals, objectives, and strategies.
- Importantly, a program budget identifies the anticipated results and outputs of these
investments.
Advantages of Program Budgeting
Producing a transparent budget. A program budget presents budget investments in a
format that enhances community understanding of the purpose and nature of the services
will provide.
Focusing attention on community goals, needs, and capabilities. With a program budget
you can bring budget investments in line with community objectives, anticipated or desired
Growth, priorities, and financial capabilities.
Achieving maximum use of the citizens’ taxes. The planning and management focus of a
program budget establishes an informed basis upon which you can make decisions, thus
helping you avoid costly mistakes. A program budget guides you in making sound annual
budget decisions.
Serving wider community interest. A program budget, once approved, keeps the citizens
and business community informed about community programs and activities that affect their
lives and enterprises. It also provides information on the results of budget investments.
Encouraging a more coordinated and efficient government administration. Using a
program budget to coordinate budget investments of municipal departments will result in
more efficient use of limited resources and will limit conflicts or overlap among projects.
Maintaining a sound and stable financial program. By programming investments over
many years, a program budget can limit the burden that these investments place on the
municipal budget. Where there is ample time for programming, you can select the most
economical means of designing and financing each project in advance..
Steps in Developing a Program Budget
- Establish Goals Goals represent the ends that a program or an
- Establish Objectives Objectives represent the specific results desired within a fixed period of time.
- Prepare a Budget Calendar The budget calendar establishes the process and schedule your community will follow indeveloping the budget. The calendar helps you prepare and enact the budget in a timely way.
- Define Roles in Budget Preparation
- Distribute Forms and Prepare Departmental Budget Request The budget officer distributes budget preparation forms and instructions to municipal departments and enterprises
- Review the Budget Requests
The mayor and general assembly are in the unique position of reviewing all requests and must thus be prepared to establish priorities in light of major issues or potential fiscal problems facing the local government.
7. Establish the Role of Citizens
Since the budget is your community’s policy tool, you must make a conscious effort to determine
what the citizens think about current policies and services, including where they think services
could be strengthened and what levels of priority they attach to various services
8. Prepare the Budget Document
The budget document is the final product of a lengthy process, and the quality of the budget
depends largely on the quality of that process. At each stage of development, the budget takes
on a different form. Proposed budgets are usually the most comprehensive and largest versions,
because they contain critical decision-making information.
10. Execute and Monitor the Budget
The main purposes of budget execution are to make the appropriations authorized in the adopted
budget and to monitor spending.. This person’s role is to
provide technical assistance and support so that departments can take
Disadvantages of a Program Budget
1. Adjustment Period
Because a program budget is developed without regard to available financial resources, it can take several years before you find ways to properly fund a program budget
2. Overlapping
Municipalities that develop several program budgets may wind up overlapping their efforts and causing budget planning issues
3. Over Budget
A program budget lays out the costs to run a program and what goes into those costs. When a program budget is approved, it is done so with the intention of providing services to a group. If the budget is incorrect, it cannot be adjusted.
4. Evaluation
A program budget that supplies a critical service to the community can be difficult to analyze. It can be challenging to try and place concrete performance measures on services that have multiple layers of administration