Education Budgets: Types and Explanations

Subject: Economics
Pages: 9
Words: 2542
Reading time:
9 min
Study level: PhD

Case Assignment

Today, millions of students can get a free education in American schools, colleges, and universities. Much attention is paid to the process of how the public school system is developed and performs its main task that is to educate people of different ages (EdSource, 2007a). Many types of school budgets can be offered to modern students depending on their goals and resources, including line-item, zero-, performance-, student-, or site-based, outcome-focused budgets. All of them will be discussed and described in this case assignment, and several situations when particular budgets are appropriate will be identified to explain the effectiveness of each budget.

Special budgeting systems have to be developed in every district, and leaders should improve their ability to estimate students and money and make the system work effectively. Serious decisions about how funds have to be spent are made annually so that parents, educators, governments, and residents can examine school districts’ financial records (EdSource, 2007b). School budgets have to be regularly spent throughout an academic year so that an opportunity to justify money collection is observed (Emerson, 2013). Each type of budget has its pros and cons regarding purposes and situations. It is necessary to understand that a school budget is not some numbers only but a record of money with its history and a certain plan that can influence the future of many students (Perry, Oregon, & Frey, 2005).

Line-item budgets are defined as historical approaches with the help of which it is possible to revenue data and provide students with the required portion of financial help. The main advantage of this budget is its simple and easy usage and determination. Historical expenditures have to be developed to understand the types of needs to be covered. It is easy to justify this budget because historical needs only are considered. The only challenge that people who use line-item budgets should be ready for is a lack of analysis and the inability to introduce enough useful information (Rennie Center for Education Research & Policy, 2012). Mistakes or wrong conclusions may occur.

A zero-based budget is in opposition to the previously mentioned type of budget, meaning that no attention and references to the previous years’ achievements are given. Each time, the budget begins from zero using dividing various operations into specific decision units. The staff is involved in the promotion of a program evaluation in a proper way supporting public confidence and choice appropriateness. This type of budget helps to change spending regarding such factors as academic goals, program activities, organizational units, and resources (Rennie Center for Education Research & Policy, 2012). In comparison to line-item budgets or similar percentage add-on budgets where a certain percentage can be added to funding and improve a working process, a zero-based budget may be reduced. Still, much work has to be done, much information has to be analyzed, and much time is required to justify this method. Some people are not ready for such requirements and try to find some other easier ways of school budgeting.

Performance-based budgets are used to reduce the number of activities and steps in school funding. Programs and objects are investigated to make certain improvements, support transactions, and achieve goals. In this type of budget, less attention is paid to control (Rennie Center for Education Research & Policy, 2012). However, the possibility to limit opportunities and the inability to administer all organizational units challenge organizations where this type of budget is preferred.

In some organizations, student-based budgets are offered to cover the needs of students, introduce required resources, and develop necessary services. In this type of budgeting, a certain formula has to be developed to understand what a student may need, and when academic and financial help should be offered. The positive aspect of this budget is its transparency and narrowness. However, the fact that certain inputs and specific ways have to be chosen may become problematic challenges that require specific regulations and knowledge. Some organizations find themselves unprepared for such kind of work and prefer to use easy and simple ways.

In some situations, a decentralized budget authority has to be recognized promoting the development of site-based budgets when different resources may be offered to the staff allowing the alignment of goals (Rennie Center for Education Research & Policy, 2012). It is one of the most practical types of budget that can be offered to schools because great control is supported, and public support is included. However, the disadvantage of this type of budget includes much time, skills, and management that can lead to some conflict situations and the inability to make academic and financial solutions regarding personal goals and needs.

Finally, in some schools, managers prefer to use outcome-focused budgets regarding the achievements that have been already made or maybe predicted regarding their experience. This type of budget introduces enough resources to produce effective outcomes. In this budgeting system, a planning process plays an important role because people want to achieve certain results, and a good plan is the core of the work to be done. Innovations can be used to be as effective as possible. The only problem is the necessity to identify some goals beforehand. Therefore, a certain analysis, communication, and interaction with shareholders are usually required and cannot be ignored by students, parents, and facilities.

In different situations, educators want to find indicators with the help of which they can understand what operation is preferable, and which design is appropriate. An outcome is one of such indicators (Roza, 2009). It can be most appropriate in the situations when academic facilities can develop close relations with their shareholders and identify their goals to explain why funding is required and when changes are inevitable. Communication is the method of information exchange. It is possible to offer some changes anytime and justify the choices easily. If the decentralization of the budget is a frequent issue in schools, it is better to pay attention to site-based budgets. This budget introduces an opportunity to consider the needs of students and educators regarding the environment, not skills or goals. Organizations cannot control the activities of their students and suffer from the inability to change resource use. In such a situation, site-based budgets and the possibility to make changes are welcome.

Finally, if students take their first steps in school funding, they can use zero-based budgets because no past evaluations are required, and the establishment of new rules and regulations is possible. Public confidence is promoted, and different aspects of program evaluation are considered so that all people who are involved in funding can ask questions and get answers, clarify all points, and promote their safe academic and financial future.


In this project, the University of Maryland is chosen for the analysis and the recognition of its academic goals, opportunities for students, and requirements for educators. Specific missions have been already investigated, including the promotion of undergraduate education for all students and the creation of the opportunities to develop different projects with the help of which students’ potential can be discovered. Using online sources, it is possible to find an example of the chosen university’s budget. For example, the University System of Maryland Fiscal 2018 Budget. It contains an overview of the main financial decisions which are organizationally wide, including special funds, unrestricted funds, general funds, and other trends which require special attention and improvements regarding last year’s achievements, available standards, and research resources. Taking into consideration the fact that the University of Maryland focuses on the development of strategic plan management and the consideration of academic goals, relevant information, and various opportunities, the budget plan has to be properly developed and includes several issues. In this part of the work, the University of Maryland budget system will be discussed in terms of its usefulness, information relevance, and appropriateness.

While observing the budget of the University, it is possible to say that the organization does not find it necessary to utilize one particular type of budgeting but prefers to combine several options and take the best aspects to meet its goals, take the steps which are necessary for students, educators, and other stakeholders who may influence the development of the system or its contributing indicators. On the one hand, there is a line-item type of the budget in terms of which it is possible to use the historical evaluation of the achievements made before. Such expenditure helps to comprehend what kind of work was made, and it was successful. On the other hand, performance analysis and description of units occur. This decision reminds the main characteristics of a performance-based budget where certain attention is paid to different units of activities provided in a certain period (in this case, data from 2008 till present is taken into consideration). Therefore, the budgeting system chosen by the representatives of the University of Maryland can be defined as a program and planning type because it is characterized by a transitional formal between what is called a line-item budget and a performance-based budget.

With the help of a program and planning type of budget, the University of Maryland can plan, establish new goals and improve the already identified goals, modify different requirements, and determine costs and alternatives in regards to the needs and expectations of students, their families, and stakeholders instead of following the rules of the chosen site. People who follow the main principles of this budgeting system emphasize such factors as goals and outcomes (Rennie Center for Education Research & Policy, 2012). It is not enough to clarify what should be done and why. It is necessary to learn why each step taken matters and what cost may be spent.

The format of the chosen budget is useful because of three main reasons. First, it is possible to summarize broad and specific terms at the same time and clarify what decisions should matter. The second reason is based on the necessity to identify and use alternatives that may or may not be needed. Users have to understand that some alternatives may be available, but they can be unnecessary. It is necessary to be ready to make such decisions and to determine preferences. Finally, the last reason that proves the usefulness of this budget is the possibility to combine descriptive and analytical data at the same time. The University understands that, in some cases, the cost of a new program may differ from the cost of the same program in the last year due to unexpected contacts, needs, and the environment (Perry et al., 2005). Therefore, the program and planning budget is the best opportunity that allows long-range planning with the possibility to make corrections and improvements in case of emergency without neglecting previous achievements and steps that were taken.

A copy of the budget of the University of Maryland contains much helpful information which shows why certain decisions are made, and certain goals are established. For example, several trends are described to prove that similar institutions cannot neglect such issues and enrollment and student performance because they show the recent progress and the intentions to move further and achieve new goals. There is also instructional productivity that can be achieved in case the budget is properly introduced and supported. Finally, the rise of an undergraduate degree production proves that the University of Maryland understands the needs of students and meets them cooperating with the government, private stakeholders, and even parents. In this copy, the authors also identify several recommended actions and funds that can promote the overall progress of the University System of Maryland.

However, regarding several positive aspects of the format chosen by the representatives of the University of Maryland, several negative aspects have to be discussed due to a poor provision of important for users information. First, it is hard to understand the methods used to reach the government and to involve the government in the discussion of organizational issues in the University. Students, as well as their parents, face certain challenges in understanding this part of the information. Besides, the presence of limitations in this type of budget cannot be ignored. Though the point to meet the goals of a facility is mentioned, it is hard to comprehend which goals can or have to be achieved in terms of a particular budget. It is difficult to administer programs where several units are involved because much unpredictable time can be required (Rennie Center for Education Research & Policy, 2012). Finally, no guides and explanations are given on how the decision to choose this type of budget was made. Clear financial statements and organizational achievements are properly discussed. It is easy to understand what kind of work is done and why. However, the choice of the method (in this case, the type of the budget) is poorly discussed.

In general, the program and planning budget is useful for the University of Maryland due to its universality and the ability to combine data about student performance, historical expenditures, and future progress. The University of Maryland is the place where constant development and growth are observed. This type of budget is evidence that students may be involved in different activities and ask for help at different periods, educators may establish new rules and require new contacts and relationships to be developed, and stakeholders can introduce new frames and regulations that cannot be ignored and require new funds. Therefore, this budget can be more information for users in case of such points as past and future goals comparison is made, methodological aspects are covered, and historical data is given.

Discussion Question Assignment

As a rule, any budget process is the way of how a facility can create and develop its budget. It usually engages many people who take responsibility for implementing organizational goals and adhering to budgeting rules. A finance committee and senior workers have to share their thoughts and knowledge to create a process and set a timeline that has to be followed. Enough time should be given to investigating different situations, studying the history of the university, and gathering as much feedbacks and opinions about past steps as possible. As a part of the University, I am able to gather past information and perform a certain role in the budgeting process. It is not enough to prove that some changes occur, and some benefits are observed. It is important to compare the results of different departments and even focus on the work of other universities and schools in order to clarify if enough steps were taken and appropriate goals were established.

There are several opportunities I had for input in the University’s budget. First, it was necessary to develop deep research about the University and its recent improvements including organizational and personal changes. Second, student performance had to be investigated from different perspectives, including financial aspects and personal satisfaction. Finally, the evaluation of different stakeholders and their potential roles in the development of the facility had to be developed. Sometimes, it is hard to find a person who is aware and eager to support academic activities. Communication and collaboration with necessary people are the activities I am involved in to understand what promotes people make positive financial decisions in such organizations as the University of Maryland.


EdSource. (2007a). Keeping California school districts fiscally healthy: Current practices and ongoing challenges. Web.

EdSource. (2007b). The school district budget process. Web.

Emerson, N. (2013). School budgets 101. Web.

Perry, M., Oregon, I., & Frey, S. (2005). Understanding school district budgets: A guide for local leaders. Web.

Rennie Center for Education Research & Policy. (2012). Smart school budgeting: Resources for districts. Cambridge, MA: Rennie Center for Education Research & Policy. Web.

Roza, M. (2009). Breaking down school budgets: Following the dollars into the classroom. Education Next, 9(3), 28-33. Web.