The effective use of budgeting as a functional tool in school financial management

Abstract

Management of a school's finances is one of the most important areas of school management and procedures of financial control should be established by the school to ensure that transactions are recorded accurately and that its financial position is correctly presented at appropriate intervals. If financial control mechanisms are properly designed, it should enable the role players to discover just where deviations from a specific budget occur and thus facilitates investigation. A large number of schools in the historically 'disadvantaged' areas in South Africa are not familiar with the process of budgeting, which naturally creates problems in the management of finances in these schools. These schools are not likely to operate within the allocated and adopted school budget and tend to overspend, purchase items that have not been included in the budget and they attempt to borrow from one budget account to supplement another budget account. Almost all township school budgets were negatively affected by poverty and unemployment of parents. Fund-raising projects pose a threat to schools if they are sustained for long periods and are too extensive, because it might be time-consuming to educators and learners. The Government should, however, ensure that especially the township schools do not have to rely on fund-raising to supplement the funds allocated by the Government. The school budget is the translation of educational needs into a financial plan which is interpreted to the public in such a way that when formally adopted, it expresses the kind of educational programme the community is willing to support both financially and morally. Translating those needs into a budget can follow the pattern of identifying needs, establishing goals, organizing objectives, building a programme in meeting those objectives, and providing a budget to fund those programmes. There is no comprehensive budgetary system that can be used by all educational schools in South Africa. The budgetary systems differ from school to school due to differences in needs, traditions and goals. A school has to select and develop a budgetary process that will satisfy the needs of that specific school. However, it remains important to ensure that the budgetary process is flexible, based on sound data as well as comprehensive inputs from all the stakeholders and integrated into the long term planning process of the school. Budgeting becomes the process of allocating finite resources to the prioritized needs of a school. In most cases, for a governmental entity such as a school, the budget represents the legal authority to spend money. As such, the budget is a product of the planning process. The budget also provides an important tool for the control, evaluation and the use of resources. Thus, the budget is implicitly linked to financial accountability and relates directly to the financial reporting objectives. It is essential for the financial leadership of a school to realize their accountability and responsibility in the management of school funds. In order to implement this issue, it is necessary for the financial managers to have the necessary knowledge of all the procedures involved in financial management, such as budgeting and fund-raising procedures. Finally, it should be kept in mind that leadership in financial management involves four aspects, namely, sound relationships, motivation of all the people concerned with school finances, communication with all the school stakeholders, internal as well as external, and consistent financial control which is discussed in detail in this study as well as in the financial model included as appendix.