DEM 410- FISCAL MANAGEMENT

Reporter: Edlyn A. Nacional Professor: Dr. Florencia C. Domingo

BUDGETING, ACCOUNTING, AND AUDITING OF FINANCIAL RESOURCES, ISSUES AND PROBLEMS
Undie (2013)- This implies that school budgeting is a system of translating the needs, programmes and projects
of the school into money and its effective utilization with the aim of achieving the desired objectives of the
school within a stipulated time frame.
Basic Principles in the Administration of School Finance
1. Integrity- Fiscal management practices should be implemented in ways that promote and sustain the
integrity of the school district and the community, with schooling institutions earning the trust of citizens,
and citizens practicing civic responsibility. Crucial here is the avoidance of conflicts of interest, and of
the appearance of conflicts of interest.
2. Efficiency- A school district’s fiscal management system should use available resources in ways that
most directly and effectively meet the educational needs of students. Resource allocations and
expenditures should be justifiable in terms of their expected impact on teaching and learning.
3. Educational Excellence for all Children- Fiscal management practices should support the provision of
high quality learning environments, opportunities, and experiences that recognize the needs of
individual students and work toward the attainment of high levels of achievement for all students.
4. Funding Quality and Equity- Fiscal management practices should ensure that all schools and programs
are provided with sufficient resources to provide a quality education to all students. Policies and
practices should also ensure the fair distribution of resources to students taking into account the
individual needs of students and the diverse and unique circumstances of schools and school districts.
Significantly, funding equity is both an inter-district and intra-district concern—i.e., the distribution of
state funds to districts should reflect fairness in meeting the needs of individual districts; likewise, the
distribution of those funds by the district should reflect fairness in meeting the needs of individual
schools.
5. Public Involvement- Parents and community members have a major stake in how schools and districts
use public resources to educate their students and support their communities. Accordingly, fiscal
management systems should offer and encourage opportunities for significant involvement in the
process of creating, implementing, and monitoring budgets.
6. Transparency- Transparency in this context refers to an openness with regard to school finance matters.
Schools and districts should develop and implement a fiscal management system that provides parents
and community members with financial and accountability system information
that is clear and easily understood.
7. Accountability - Fiscal management systems should ensure that the processes involved in the
administration of public funds are conducted openly, and that those involved are held accountable to
the highest standards of professional ethics and competence. External audits should be an integral part
of any system of fiscal accountability.
8. Competence/Professionalism- The individuals who are responsible for handling and spending public
dollars for education should demonstrate a professional level of competence in fiscal management.
Local and/or state organizations should require and provide for training that will enable individuals to
reach the level of competence.
• Advantages of School Budgeting
1. As an essential part of the management process budgets compel planning, making people within an
organization think about the future. A formal budgeting procedure with specified deadlines compels
operations managers to divert their attention away from day-to-day business and get down to completing the
budget.
2. Budgets promote essential principles of communication and coordination.
3. Budgets are a guide for action.
4. A basis for performance evaluation is provided by budgets. They are an integral part of control and review
procedure in that they establish agreed targets to be achieved, and for performance to be monitored against.
This is why participation in budgets is so vital, since operations managers are effectively being asked to achieve
an agreed objective within agreed parameters.
5. Historically it has been argued that budgets can be used to identify considerable savings in overheads and
costs. This may be true, but what is important is that the budgetary control system keeps the organization fit,
monitors its progress and provides an important database in the decision-making-process.
• Disadvantages of School Budgeting
1. Budgets are bureaucratic.
2. Time Constraints. If an organization has clearly identified its Key Volume or Activity Indicators, why go for the
time consuming exercise budgeting? This idea is flawed since you need to consider what the Key Indicators
might be and suggest a day-to-day control system based upon them. Having the staff at your individual
schools control their individual budgets is more time-consuming overall than having an authoritative budget
prepared centrally. Budgeting involves more than just creating an annual budget; your school administrators
need to have time to monitor the budget, making adjustments as needed and creating regular reports. Your
school administrator will already have several other tasks in her day-to-day routine, and adding financial
planning to her duties can be more of a headache than a benefit for some.
3. Lack of Control. Site-based budgeting shifts the budget control from the entity that holds responsibility for the
schools to the administrators of the schools themselves. As a result, the individual schools control how money is
managed. This makes it difficult for a central agent to exert control over the financial affairs of the individual
schools. In such a case, budget efficiency will vary from school to school. Making changes to budgets in
response to market changes will be harder.
4. Need for Specialization. When you hire a school administrator you will hire someone who is an experienced
leader in the teaching profession. Although this person should be well-organized and capable of
administration, she may not be highly experienced in financial affairs. To operate using a site-based budget,
your administrator will need to have some experience in accounting and financial management. This means
that you may need to turn down otherwise excellent candidates or invest in further training for your
administrators.
5. Conflicts. Giving your individual school administrators the responsibility of managing their own budgets gives
them the freedom to make their own decisions. This provides numerous benefits, but it also has a negative
consequence; administrators must be accountable to their staffs for the way they allocate funds. This can
create conflicts between the teachers and the administrator if they have differences in views of how money
should be spent. Centralizing the budget system will remove the conflict between these parties.
LIMITATION OF BUDGET
• The Maintenance and Other Operating Expenses (MOOE) is the allocated funds for public elementary
and secondary schools that can be spent on activities and necessities (i.e. electricity and water) that
support learning programs and help maintain a safe and healthy environment in schools.
• REMINDER: In accordance with RA 9485 (Anti-Red Tape Act of 2007), schools are mandated by law to
have a Transparency Board on MOOE posting all school expenditures using the allocated funds.
Boncodin Formula
• Computation of School’s MOOE BUDGET PROPOSAL (BP) FY 2019
• School’s MOOE = Fixed amount + (Allowable amount x Number of Classrooms) + (Allowable amount x
Number of Teachers) + (Allowable amount x Number of Learners) + (Allowable amount x Number of
Graduating Learners)
• There are two components in the formula, the fixed and variable costs.
• The fixed amount for every school would be:
 Elementary School – P50,000
 Junior High School (IUs & Non IUs) – P96,000
 Senior High School *stand alone only – P100,000
Elementary Junior High Senior High Senior High School
Parameters (Basis)
School School School (stand-alone)
Elementary Junior High Senior High Senior High School
Parameters (Basis)
School School School (stand-alone)
Every Classroom P3,750 P7,200 P100,000
Every Teacher P5,000 P9,600
Every Learner P250 P480 P1,353 P1,353
Every Graduating
P313 P300
Learner

Application: Assume that Basey I Central Elementary School has 250 enrollees, 6 teachers, 5 classrooms and 8
graduating pupils:

Applying the formula, the school’s MOOE would be:

Budget Control
Basic Principles in School Budgeting:
1. Be Conservative not Optimistic.
Budgeting is future oriented and the school manager should guide against a high expectation of the
achievement of every aspect of what was budgeted.
2. Team Work and Consultation.
One of the most important principles of budgeting is that it requires team work and consultation. Although one
person may be responsible for the overall compilation of the budgets, one person should not be responsible for
all the work involved.
3. Allow Plenty of Time.
Budgeting is inevitably time consuming. A good budget may be worked out for several weeks, if not months,
adding and changing figures as new information comes to light. For this reason, budgeting process is lengthy
because much research and consultation have to be carried out before people involved in the process can
be confident of the figures they supply.
4. Excellence in Documentation
It is very important that the authors of the budget strive to produce documents that can be read and
understood by anyone if budget working are unclear and figures are not clearly labeled, even the author will
as time passes, have trouble understanding where the figures come from and how the calculations were
made. It should be assumed that budgeting workings will be circulated to many different people who may
have lower levels of financial literacy, useful again in a year’s time when the budgeting process begins again.
Unless workings are well labeled it may be difficult to remember.
5. Provide Training
Ensure that people who have a significant role in the budgeting process have a reasonable understanding of
the principles of budgeting, how it relates to the strategic and operational plans, and how everyone must live
with the consequences of the finalized budget in the year ahead. Training need only, is a single meeting in
which those who have experience of budgeting provide knowledge to others involved who are less
experienced.

Guide to Planning and Managing School Budget

1. Make your budget work for your school improvement plan
When taking over your school’s budget, it’s easy to get bogged down by the numbers, but don’t just be driven
by how your school has budgeted in the past. Think about what you would like to do if you had unlimited
money, then look at how much you’ve actually got to spend and what you can achieve with it.

2. Understand the basic principles of school budgeting

The first thing you need to understand is the different funding streams by which the school receives its resources.
3. Get value for money when procuring resources
In the age of austerity, getting the best value for money has never been so important. The benchmarking
system is a useful resource for school budgeters as you can see how much neighbouring schools spend on
resources such as classroom assistants, catering, building maintenance and so on. It doesn’t show you why
differences occur, however, so it’s important to read between the lines.
4. Be confident demonstrating
Now you’ve got to break down the school budget for the governors. Come with easy-to-understand, clear
budget reporting sheets and be prepared to explain any holes with recommendations for avoiding them in
future. For example, if you overspent on building maintenance this year, you could suggest implementing more
regular building checks to spot problem areas or negotiating better terms with your insurers and maintenance
providers.
5. Help other teachers understand financial accountability
Finally, it’s easy for most teachers to think they don’t need to worry about the school’s finances unless they’re in
senior leadership, but sooner or later they’ll be coming to you for the petty cash.
The best way to explain the importance of financial accountability to your colleagues is by using real life
scenarios. Get your colleagues together at the start of the year for a short Q&A session on the school finances.
This will make you look approachable and the school finances transparent; it will also give you a chance to
gauge their financial knowledge. Ask them what trips they want to plan this year and walk them through the
steps they must take:
• Have they costed the trip properly?
• Included hidden costs and a small contingency fund?
• How much will they need to charge parents?
• Did they know they must bring back VAT receipts as these can be used to offset the school’s tax bill?