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.
Individual study time: 6 hours
A school head as a financial planner
By the end of this unit you should be able to:
describe the responsibility of the school head as a
explain the nature and functions of budgeting in a
design and manage your own school budget.
Considering the different financial resources in your school:
(1) Who determines what financial resources you are to receive
(2) What role do you play in determining the resources and their
(3) What is expected of you as a school planner in determining
the resources and sources?
In the above activity you might have noted that you mainly
rely on resources that are determined by others, such as the
government or the Parent-Teacher Association (PTA), and assigned
by them to you. Thus you may operate under a financial environment
with two major elements:
1 Resources may be received from government which are usually
fixed for the duration of the fiscal year.
2 Resources may be received from the region or district directly
and from various community groups, which are not fixed and
are often far from certain.
However, as a school planner and finance manager, you should
take an active rather than a passive role in determining,
mobilising and acquiring financial resources. In such a way
you are more likely to ensure the effective implementation
of your school programmes. Thus your major tasks as a planner
are to ensure that:
you fully understand the financial situation in which
your planning is to occur
your planned resources are available when required
and are properly and effectively utilised to achieve the school
mission and objectives.
Essential to the accomplishment of the above tasks is effective
What is budgeting in a school?
Stages in school budgeting
Budgeting is a process of preparing a statement of the anticipated
income and the proposed expenditure. In other words, it is
a process for preparing a summary of the programmes of the
school reflecting the expected revenues and expenditures.
This statement is the school budget which guides a head through
the various school activities, as well as towards achieving
the objectives of the school.
Reflecting upon the situation in your school:
(1) Identify and list activities you want to be carried out
in your school this year.
(2) List the resources that will be required and the possible
(3) Give an estimated cost of each of these resources.
(4) Study the budgetary guidelines issued by your government
or funding agency and explain how you are supposed to present
(5) Using the guidelines write down the costs of each activity
against the expected resources.
In summary, the stages of budgeting which you have just gone
Stage 1: Identification of programmes, projects or
activities you wish to accomplish in the budget period.
Stage 2: Identification of the resources, in terms
of manpower,materials and time.
Stage 3: Costing of the resources - this is the most
important activity in budgeting since a budget is basically
a financial statement.
Stage 4: Presentation of the budget as per budgetary
guidelines formulated by the government or funding agencies.
Stage 5: Obtaining approval of the budget by the authorities.
Having considered these stages carefully, is it really necessary
to go through all of them? Is budgeting really necessary in
your school? Lst us consider this last question now.
Functions and purposes of school budgeting
Considering the budget in your school:
(1) What are the reasons why you have to make a school budget?
(2) Explain how the budget is assisting you to run the school.
(3) Describe the functions of the budget in your school.
Budgeting is a process of relating the expenditure of funds
in a systematic way to the achievement of the planned mission
and objectives of a school. Budgeting has three major functions:
1 It provides an operational cost-time framework for the
implementation of school programmes. It is therefore the major
planning instrument in your school.
2 It can serve as an instrument for the delegation of authority.
The school budget is designed to show which particular people
are responsible for specific programmes.
(Note: When a budget is approved by the authorities the delegation
of functions is automatically approved.)
3 It can be an instrument for controlling and evaluating
Your budget provisions offer you a simple guide to assessing
the rate of expenditure in any given activity. If your budget
is suitably designed, it will also readily provide you with
data on three elements to assist in the control and evaluation
function. These are:
rate of expenditure
Now check back to your answers in Activity 2.3 and see how
they compare with the three major functions identified above.
Your school budget is a forecast of future financial events
showing the anticipated revenue, expenses and financial position
of the school.
Consider your responses in Activity 2.3 and the comments that
(1) What do you consider as the purposes of budgeting in your
(2) What do you do to achieve these purposes?
The purposes of budgeting can probably be categorised into
1 To show what the results will be if the present school
financial plans are put into effect; in other words, the purpose
of your budget is to disclose areas that require attention
2 To evaluate the financial performance of the school: you
use the school budget to control the operations, revenues,
costs, and the persons responsible for the operations and
related revenues and expenditures. In effect your school budget
is a yardstick against which your financial performance may
be compared. You should always aim at having a budget that
promotes cost effectiveness, that is, a high level of school
output at low levels of expenditure.
Period of school budget
Considering your experiences with budgets:
(1) How long do you think the period of a school budget should
(2) List the reasons for your response to (1).
(3) State the advantages and disadvantages of:
- a long budget period;
- a short budget period.
Generally the school budget period should be long enough to
show the effect of your financial management policies and
short enough so that school estimates can be made with maximum
The most commonly used school budgets are:
SCHOOL MASTER BUDGET
This is the overall school financial and operating plan for
a forthcoming fiscal period. This is usually prepared annually.
SCHOOL CAPITAL BUDGET
This interprets the school plans for major expenditure on
capital assets such as buildings. It may be a five year financial
SCHOOL DEPARTMENT BUDGETS
These are segments of the school master budget, relating to
the different school departments. They are the responsibility
of particular sub-heads, for example, heads of department.
They are usually prepared termly.
So far we have seen that a school budget has three major
a major planning instrument in the school
an instrument for delegating authority
an instrument for controlling and evaluating performance.
School budget designs
Types of design
Budgets can be designed in many different ways. However
in the case of schools, two basic designs have proved to be
The performance budget or school programme budget design
This is the budget which serves as an instrument for carrying
out a school plan. The emphasis in this budget design is on
what is going to be done and on the benefits accruing to the
school. In this budget design you not only state the income
and expenditure, but include also a brief description of what
is to be achieved after each item of expenditure.
The traditional or line-term budget design
In this design you merely list estimated income and items
to be funded. The emphasis is on the issue of financing rather
than on what is to be achieved.
In both cases the budget design should provide extensive
and accurate estimates of:
income or receipts
Income or receipts
The school's income mainly falls into two categories:
These are grants which come mainly from government and they
are clearly earmarked for a specific purpose, for example,
teachers' salaries, maintenance of buildings and construction.
These grants cannot be re-allocated at the school level for
any other purposes.
These are grants for use on expenditure items determined as
priorities in the school. These include contributions from
local authorities and community groups, for example, the PTA.
School expenditure essentially falls into two categories:
This constitutes the greatest percentage of the budget. It
includes items such as salaries and other benefits to administration,
supervision, teaching, special services and support staff,
maintenance and other operating costs in travel and communication,
and scholastic materials. This is the expenditure on consumables.
Capital or Development Expenditure
This is expenditure on capital assets such as buildings, furniture,
equipment and vehicles. They are investments made at irregular
intervals, but they cover a time span of several fiscal years.
The amount of recurrent expenditure you need in your school
is determined by the growth of your school, that is, by the
number of pupils and teachers, by the extension of facilities,
and by any improvements in the economic position of the government
or in the reallocation of finance by governmnet from some
other sector to education..
For ease of management you can sub-divide capital expenditure
by differentiating between level (primary, secondary and tertiary)
and within each of these between ongoing and new development
projects. The purpose of classification is to provide you
with a clear picture of the balance of resource allocation
between new and ongoing projects.
Obtain a budget statement either for your own school or some
(1) Is the design of your sample traditional or is it a budget
design which is related to school performance?
(2) What are the advantages and disadvantages of the design
of your sample budget statement?
(3) How might you improve the design of the sample to fit the
situation in your school?
A budget which is related to school performance is one which
presents the purposes and objectives of the school for which
funds are collectred, the costs of the school programmes proposed
to achieve the school objectives and the quantitative data
measuring the accomplishments and work performed under each
programme. This budget is suitable for long-term school strategies.
The advantages of such a budget are as follows:
1 It sets out each major school programme and what it is attempting
2 It may be used as a good control mechanism to show value
The disadvantage is that it is complex and costly to put
together, usually requiring a computer. It is only suitable
for big schools.
A traditional line budget looks at school programmes as if
they have just been started.
Managing school budgets
Implementing the school budget
After getting your budget approved by the appropriate authorities,
you enter the next phase in which you have to implement, monitor,
supervise and control the school budget. This is the most
important stage of the budget cycle since a well managed budget
should lead to more effective levels of achievement of the
mission and objectives of your school.
Considering the situation in your school:
(1) What do you do to implement your school budget?
(2) What procedure do you follow to release school money?
(3) What difficulties do you face while implementing your budget?
Managing the school budget includes the management of its
implementation. Once approved by the appropriate authority,
your budget becomes the basis for your financial decisions
in the school. Within the appropriation for various budget
headings you are entitled to make commitments to spend money.
Each type of expenditure you make can be subject to particular
norms designed to guarantee that you follow the rules and
good accounting practices.
School budgets are operated under specific headings called
votes. Whatever expenditure you make in school should always
be entered in a vote book under the appropriate vote headings.
The use of a vote book is mandatory in accounting systems.
Whatever financial transaction you make must be made on an
expenditure voucher. You will learn more about vote books
in Unit 5.
Using the school budget effectively
Budgets are estimates of income and expenditures and there
may be changes as your school financial situation becomes
more reliable. Your forecasts may therefore be revised during
the course of the year. However, any decision to change the
budget should follow the same procedure and restrictions as
the main budget so that the budget remains a meaningful document
and an effective tool of management and forecasting.
When you receive delivery of goods or services ordered, you
should always settle the account promptly. You should calculate
the exact amount involved as indicated on the supplier's invoice
and compare it with the amount on the order. You can also
settle the account by certifying that service was rendered.
This certification makes it possible to issue a signed payment
order, by which you instruct the school bursar to pay. It
is advisable, to ensure that school funds are handled in accordance
with the rules, that the authority of the head, who is the
school finance manager, and that of the bursar, who is responsible
for collecting the school funds and paying expenses, are kept
separate. Having two people working independently of one another
on the spending process leads to greater security in the choice
of expenditure and the use of funds.
The bursar verifies the payment orders signed by the head.
After checking that budget funds exist on the votes from which
the orders must be paid and that the envisaged expenditure
follow the rules, the bursar pays the creditor and records
that fact in the books which have to be kept in accordance
with the school ledger. In the case of a primary school, the
head works both as a finance manager and bursar.
The recording of expenses and income is done by making a
note of payments effected on a series of documents:
A log or journal: this lists in chronological order
the payments made per day.
A vote book: this lists the orders paid out of any
You should always draw up summary documents periodically,
A statement of expenditure: this allows you to see
to what extent school funds for various headings have been
A balance sheet: this allows you to check that there
are no discrepancies between the various votes and to know
the status of the school financial account at any one time.
Comment on the draft budget shown in Fig 2.
(1) Is this a line-term budget or a programme budget?
(2) How useful do you think it is?
(3) How could it be improved?
Fig 2 Draft budget for Thaba Primary School
|From Local Authority
|Profits from tuck
|| (chalk, etc.)
Design an expenditure procedure you feel will assist you to
use your school budget effectively.
Monitoring and supervising the school budget
Monitoring and supervising the school budget goes on throughout
the year. However, at the end of the year, the total amount
of income and expenditure is consolidated in a yearly financial
account which is drawn up according to a strict procedure.
This makes it impossible to camouflage operations in the books
and makes it possible for the Ministry of Education and other
bodies to check the accounts.
Monitoring your school budget requires you to do the following:
1 Check that expenditures are made in compliance with the
2 Note whether there is a surplus or a deficit at the end
of the year and whether there is the possibility of building
3 Assess the implementation of the budget with a view to preparing
subsequent budgets more accurately.
4 Provide continuity in the school's accounting system, in
as much as a financial account is established on the basis
of the balance sheet of the previous year, and leads to the
balance sheet of the following year.
The supervision of the school budget can be more or less
extensive. It requires you to check whether the school's budget
is really balanced and that all compulsory expenditures required
by law are included and fulfilled.
Controlling school budgets
Controlling a school budget requires you to understand the
financial status of your school and its priorities for expenditure.
Controlling the budget means controlling the votes, that is,
ensuring votes are not overspent, and that money received
is put under the appropriate vote headings. Before you agree
to any expenditure first check the vote to ensure there is
enough money to cater for the expenditure. If there is no
money you should either abandon the expenditure or seek permission
from the appropriate authorities to re-allocate funds on the
In this unit you have learned that:
budgets serve as a plan designed to achieve a set of
the school objectives
budgets serve as indicators of areas of the school
that require action
budgets are used as a means of evaluating performance
of the school head.