Line Item Budgeting
It is an approach focusing on individual lines of past
expenditure as the basis for future planning (Lunenburg, 2010). It is on the
basis of those individual line items that allocations for various expenditures
are made. Typical line items may include salaries, textbooks, materials as well
as contracted services. Line item budgeting was the predominant approach in the
public sector for a very long time. Simplicity remains one of the key
advantages of this approach making it easily understandable even to people who
may not be very familiar with the budgeting process. It is also flexible in
that each line item can be expanded to provide more information. Used alone,
however, a line item budget does not provide adequate transparency for
stakeholders.
Program Budget
This is a situation where the classification of
information on the budget is done according to the objectives of the government
or the budgeting entity (Kim, Dorotinsky, Sarraf & Schick, 2008). Thus, one
of the objectives of the government in a particular financial year may be the
reduction of illiteracy rates even as another objective aims to increase home
ownership among the population. It is, however, not always clear from
governmental practices to distinguish between programs and implementing
institutions. For instance, the United States (U.S) military request funds in
terms of strategic goals such as missions while the Congress appropriates funds
to the military in terms of the army, the navy and the air force.
Performance Budget
A performance budget tends to link allocating of
resources to the various spending units to their performance
(Robinson&Brumby, 2005). Evaluation is done on the basis of outcomes as
opposed to how the implementers of the budget were able to stay within some
prescribed boundaries. This feature has been identified as an advantage as
managers or agencies have a greater leeway in redirecting budgeted funds
depending on their assessment of the situation.
References
Kim,D.Y.,Dorotinsky,W.,Sarraf,F.,&Schick,A.
(2008).Paths Toward Successful
Introduction of Program Budgeting in
South Korea. In J.M. Kim (Ed.,), From Line-Item to Program Budgeting: Global Lessons and the
Korean Case (pp.23-134).Seoul, South Korea: Korean Institute of Public Finance.
Linenburg,F.C.(2010).Systems of Budget Administration.
Focus on Colleges, Universities and Schools, 4(1), 1-8.
Robinson,M.,& Brumby,J. (2005).Does
Performance Budgeting Work?An Analytical Review of the Empirical Literature. International
Monetary Fund Working Paper Series, WP/05/2010.
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