Assignment: Zero-Based Budgeting
Although there are different types of budgets, they all share similar characteristics. For example, all budgets list revenues and expenditures by type. Revenue is money collected through a variety of sources including taxes or federal grant funding in criminal justice systems. Expenditures detail how collected funds are paid out or spent. Usually the budget is printed on a spreadsheet clearly indicating revenue and expenditures.
Two techniques used to create budgets are incremental budgeting and zero-based budgeting. Incremental budgeting begins with the funding level from the previous year and then provides an incremental increase and/or decrease. Thus, additions or subtractions from the previous year’s budget occur when need is demonstrated. Zero-based budgeting requires justification of all budget requests by showing a need for both revenues and expenditures before funds are allocated. Although both types of budgeting techniques are used in public budgeting, zero-based budgeting is more commonly used in the private sector. Use of zero-based budgeting in the public sector may be more beneficial when an agency is facing financial stress or must reduce spending.
In zero-based budgeting, each budget heading begins with a zero balance and the budget is built from the ground up. Proposed budget items that cannot be justified as necessary or important are not approved or funded. In zero-based budgeting, three budgets may be submitted during the funding cycle in order to show the best-case scenario, the worst-case scenario, and the most-likely-case scenario with, for example, a 20% monetary difference between each. Each budget will prioritize spending by identifying high-priority items and low-priority items. If there are more budget items than money to spend, the high-priority items are funded first and the low-priority items are funded in a piecemeal fashion or not at all.
To prepare for this assignment:
Review Chapter 1 of your course text, The Basics of Public Budgeting and Financial Management, and focus on common characteristics in budgets. Pay particular attention to revenue and expenditures.
Review the article “‘Techniques’ for Governance.” Consider the advantages of using zero-based budgeting in public agencies.
Consider zero-based budgeting as a technique for creating budgets. Think about how expenditures are justified using zero-based budgeting.
Review the list of expenditures on the budget sheet provided in the Learning Resources.
Think about how you might prioritize the expenditures you reviewed from highest to lowest.
Consider the two expenditures with the highest priority and justify them according to your prioritized list of line-item expenditures.
The assignment (1):
Prioritize the expenditures from highest to lowest.
Using a zero-based budgeting technique, justify the two highest-priority expenditures according to your prioritized list of line-item expenditures.
The post Assignment: Zero-Based Budgeting Although there are different types of budgets, they all share similar characteristics. For example, all budgets list revenues and expenditures by type. appeared first on Homeworkaider.
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