The Budget Process

The Budget Process

May 29, 2020 | Financial Management

One important purpose of budgeting is to provide the best possible educational opportunities for every student in an educational institution. Budgets should also reflect the administration’s ability to manage the financial affairs of the school.

A budget is an outline of educational programs and services with costs affixed to specific purposes to effectively direct the administration in achieving the charter’s goals and objectives. The adoption of a budget implies that a set of decisions have been made by board members and administrators which culminate in matching a charter’s resources with its’ operational needs. The budget also provides an important tool for the control and evaluation of a school district’s sources and uses of resources.

The budgeting cycle is usually summed up in three major phases: planning, preparation and evaluation.

Planning

The budgetary process begins with sound planning. Planning defines goals and objectives for the charter’s administration and support services and develops programs to attain those goals and objectives. The beginning of the budget cycle should be started early in the year preceding the prior budget year. By inviting administrative personnel to voice their suggestions, you allow teachers, principals, and managers to discuss and develop the roadmap for the charter’s yearly development – of which the school budget plays a significant part. The organizational structure of a charter, the size and complexity of its administrative structure, and the level of centralization in budget development will affect the budget development process and the time required to adopt the final budget document. The planning stage of the compilation of your budget is paramount to its success. Draw up a timeline that takes all planning factors into account.

Preparation

Once programs and plans have been established, budgetary resource allocations are made to support them. Budgetary resource allocations are the preparation phase of budgeting. The allocations cannot be made, however, until plans and programs have been established.  Preparations should include an assessment of the past to see if actual and estimated revenue resulted in favorable or unfavorable results. There should also be projections based on past experiences as well as future expectations such as new program needs, anticipated projects, anticipated enrollment trends, inflation, etc. This analysis may require personnel officers, transportation coordinators, food service managers, plant managers, federal program coordinators and at times assistance from outside consultants.

The budget preparation and analysis are followed by board review and adoption of the budget. The remainder of the year is devoted to budget control, which is comprised of comparing estimated revenues and appropriations with actual transactions and evaluating budget adjustment requests. This process is called the operating budget cycle.

Evaluation

Finally, the budget is evaluated, after the close of the year, for its effectiveness in attaining the charter’s goals and objectives. Evaluation typically involves an examination of how funds were expended, what outcomes resulted from the expenditure of these funds, and to what degree the outcomes achieved the objectives stated during the planning phase. This evaluation phase is important in determining the following year’s budgetary allocations.

A budget is not a “once-a-year” event, something you establish and never examine again. A budget must be abided by and it must be reviewed and amended on a regular basis as the needs of the academic counterpart change. This requires ongoing evaluation and revision. Nothing in life is perfect, and the same holds true for school budgets. Academic goals—while imperative to the budgeting process—have to be reorganized and adjusted from time to time. Action planning and goal development, academic improvement, and budget management must be integrated if charters intend to bring about greater educational excellence and increased student achievement.

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