A budget transforms an institution’s goals into its reality. A budget plans the expenses and revenues of an institution and compares its income and expenses of the past years and accordingly sets a goal for the present as well as for the future. A well planned budget provides a forecast of revenues and expenditures, and also enables the actual financial operation of the business to be measured against the forecast.
Why does an educational institution need a budget?
By maintaining a budget , the school management can analyse the expenditure and incomes of school/college in order to plan efficiently the current academic year and achieve the goals envisioned by the Institution. A budget portrays a picture of how the money is utilised and note the transactions made by the institution. The budget of the institution gives management an overview of the coming academic year. It avoids various unnecessary expenses of the institution. Setting up and adhering to a budget helps educational institutions make profits or generate surpluses from the funds available to them.
Expenses vs Incomes
Most schools and other educational institutions receive money from the government or funds received from local governments in the form of donations. An educational institution is said to be financially strong when its expenditures are less than its income. The funds received by an institution is used for mainly two purposes-
- Educational expenditure such as departmental financial plans, Exam costs etc.
- Non-educational expenditure like change of office hardware, gardening, decoration etc.
The expenses directly or indirectly done on/by the school can be balanced by the income received by the school in the form of donation, prizes or other sources. Before using the institution’s capital, the administration should ensure that the information on expenditure and revenue from previous years is correct. The budget of previous years proves to be helpful in maintaining a budget for the current year. And according to previous year’s budget the administration can plan the financial years for the future and can predict the budgets of subsequent years. The administration can make small strategic changes over longer periods of time and by making these changes will ensure a better future of the institution. It also gives a greater control over funds so that sudden cuts are a thing of the past.
Aim Of A Budget
The main aim of maintaining a budget should be clear to the administration. The objective can span from student values and school facilities to exam results and a more efficient institution. The objectives should balance with the resources require to achieve the goal, and the subsequent expenditure required to meet them.
Technological help to maintain a budget for an educational institution can prove to be helpful and efficient. USM fulfils the requirement of Finance module to maintain the budget of the institution.