Budget making is a multi staged process that allows an institution to make use of all the available resources in order to achieve their vision and ultimately meet their target. Creating an efficient budget that can last long is quite a challenge. It is worth noting that a budget can be exhausting and intimidating and they require a lot of attention. The budget structure provides the way for an institution to decide on how much money to use, what things to use it on, and the means to raise the money they have decided to use (Fryer and Will, 2011). In the course of the budget structure, the financial team determines the allocation of resources among the different departments within the institution. The decisions made in the budget process affect the whole institution and all the plans made to fulfill the company requirements. Many budget decisions have a recurring significance to the institution. The budget processes has 3main stages and each of them are interrelated with each other: Formulation of the budget by the select committee; Action by the committee members; and execution of the enacted budgets. The decision makers have a major role that involves considerations of the effects of economic as well as technical assumptions concerning the budget estimate (National Commissioner on Excellence in Education, 2003). Factors such as economic growth, interest rates, the rate of inflation, the rate of unemployment, and the number of persons eligible for a variety of benefit systems, affect an institutions expenditure and revenue. Minimal changes in the above named assumptions may alter a budget estimate by a hefty amount of dollars.
In New Jersey, most districts can add or eliminate tax or any other source of revenue or make any other change that may affect the amount of revenue collected. For Paterson Public Schools, the district financial committee does not endorse a budget as above. Through a planned process of taking up a planning document known as a budget resolution, a district select committee agrees on goals for total expenditures and revenues, the agreeable and allowed size of deficit or surplus, and the set debt limit. With a good budget resolution framework, there is provision of a structure where an individual district committee prepares appropriation bills and other expenditure and revenue legislations. The entire state of New Jerseys public system of education faces 2 conspicuous inequities: firstly, public schools rely heavily and almost wholly on local material goods taxes for its own funding. Consequently, the more property rich districts noticeably outspend the more property poor districts on a per student basis (Fryer and Will, 2011). The more economically advantaged students are more likely to out-achieve their less wealthy peers. It is simply assumed that the latter is a direct consequence of the former (Fryer and Will, 2011). This is why a budget is required. In creating a budget, the district committee determines all development goals for the schools. Here specific goals are set. After determination of goals and targets, the committee then reviews any existing financial documents for the entire districts schools. Then the district financial committee defines the cost categories for all schools included in the budget. The fourth stage involves filling in the budget by completing each class of expenses with the estimates based on the financial documents analyzed previously. Finally, the district committee cross-check the work against other numbers for equally-leveled departments and industry standards within the region (Kozol, 2001).
Zero base budgeting is applied within the district to make the school budget for all programs as well as projects. Zero-base budgeting is a process of budgeting that requires the parties involved in the process to make a feasible budget starting from scratch, from the ground going up. Zero base budgeting has a promise to move an institution away from incremental budgeting. This occurs where the previous years budget becomes the starting point of the current years budgeting. As an alternative, the starting point is taken from zero. This holds with the repercussion that earlier period patterns of expenditure are no more taken as certain. In the budgeting process, my mentor plays the principal position. The building principal plays an important role in the budgeting process that involves communication and coordination of resources (including human resource) from without or within the institutions in the district.
Revenues are the total gains receivable from activities that generate income to an institution. In accounting, revenue is documented when earned and compensation has been assured. From the local, state, and federal levels, revenue is generated via taxation, well wisher funding and fines imposed on various misdeeds (National Commissioner on Excellence in Education, 2003). Every level mentioned above has its own percentage of contribution from the variety of revenue avenues mentioned. Grants from the federal level make the highest percentage followed by those at the state level and finally the local contribution. Revenue budgets are those amounts of money that have been allocated for the growth and maintenance of an institution or business. Revenue budgets are very crucial to any institution and are the consequences of business forecasts of expenses, sales revenue as well as capital expenditure. The costs incurred during the course of running a business are called expenses. A budget must take into account all the expected expenses in the course of its development planning. Expenses are documented when they are incurred and the revenues related to those particular expenses are recognized. Additionally, assets produced or sold and services rendered in order to generate revenue also may result in related expenses.
The advantages of using the zero-base budgeting system include several efficiency gains that may result from it. The main strength of this system is the rational and comprehensive way of cutting budget. The system changes debate on cost for the better. Another major strength is that the implications of cut back decisions are clearly stipulated. The system is able to give the major decision makers an insight into the operations. This system highlights completely new means of provision of services (Robert et al., 2007). The system also encourages budget discussions that are healthy for the wellbeing of an institution. On the contrary, the system has its weaknesses. Firstly, the system has no structured way of considering different levels of service. There is a lot of work needed to develop decision packages (National Commissioner on Excellence in Education, 2003). There is a likelihood of reluctance from the chief decision makers to propose decision packages that are less of the present spending. Lastly, for this system, efficiency is not directly addressed (Robert et al., 2007).
In conclusion, revenue and expenses are a key part of any good budgeting system. There is a need to consider all the options for there to be a good budget free of assumptions. Building and district budgets are very sensitive and require good management since they affect pupils directly. Co and extracurricular budgets also need attention as one weighs all of the strengths and weaknesses associate with the type of budget chosen (Robert et al., 2007). Revenues and expenses not only need to be harmonized but also be in such a way that the expenses do not exceed the revenues. This will ensure a debt free project where the expenses do not out do the means of acquiring revenue.
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