No. 44 Role of Budgets in Educational Planning by Jacques Hallak
No. 44 Role of Budgets in Educational Planning by Jacques Hallak
No. 44 Role of Budgets in Educational Planning by Jacques Hallak
The opinions expressed in this lecture are those of the author and
do not necessarily represent the views of the Institute.
i
IIEP/TM/44/69
CONTENTS
Page
ii
I I E P / W W 6 9 - PaSe 1
1. Traditional budgets
Yet., even in their traditional forms, budgets can play an important role
in the development of plans in general and in educational plans in particular.
The basic reason is that it has increasingly become the custom to express the
consequences of educational plans in budgetary terms« It is therefore particularly
tempting to consider the budget as the most appropriate tool for controlling the
implementation of the plan through the programming of its costs and the insuring
of annual appropriations of funds needed.
Let us take two examples from socialist countries i USSR and Hungary» In
spite of traditional types of budget, these two countries make extensive use of
norms, standard and unit costs in budgeting and programming their educational plans
to the extent that their annual budget is considered as the most appropriate tool
for the execution of the plan. In Hungary«, for instance, each year during the pre
paration of the educational budget, the detailed planned costs of the five-year
plans serve as a basis for estimating the budgetary allocations. Small adjustments
of plan targets might occur due to budgetary constraints unforeseen in the plan*
In practice, the role of the budget will depend on several factors, the most
important of which are the following i
Estimates, 1968-69
690,800
Vocational Education 50,000
Apportionment No. 1. Head Office
50,000 of the Government
Specimen page from "The Estimates of the Revenue and Expenditure
of Ceylon for the Financial Year 1 October 1968 to 30 September 1969*,
Appropriation Act No, 38 of 1968.
hf
IIEP/TM/44/69 - P a S e
A sound and reliable plan should always be converted into definite pro-
jects of construction and development (creation of new staff postSj, etc.). Each
project having been costed carefully* and the budget should be drawn on the basis
of these items. In this ways the budget can have a significant role to play in
making available the funds necessary for actually achieving the targets» To a
certain extent, tnis is what has happened with the present educational plan in
Tanzaniaj although the large proportion of external aid expected in the financing
of the plan has been a major cause of the difficulties found in reaching the
targets.
With the generalization of planning procedures and the ever more striking
manifestation of an imperative need for a more rational management of public
finance, the question arises as to whether budgets of the traditional type can
continue to play an entirely satisfactory role in the implementation of educational
plans.
(1) 'New measures' and 'services voted' are the terminology used in the French
budgets, but they correspond to budgetary concepts admitted in all countries.
IIEP/TM/44/69 - page б
(b) programme the requirements in annual slices and allocate the funds
to administrative services сompartmented according to the nature
of their activities;
(c) exclude to some extent the necessary close reference between the
investment expenditure of one year and the operating costs
ensuing during succeeding years;
At the school level, management considerations and the need for cost
analysis have led to introducing in a few countries (U.S.A., Canada, etc., but
also Uganda, Thailand, e t c ) of functional breakdown of the budget items, distri
buting the expenditures by purpose and type through a uniformized system of
accounting«,
(Ë)- Such a system was introduced in a few countries among which the Philippines;
in the ILS« this system has been given the name of "performance budget'«
IIEP/TM/44/69 - page 8
Source: Thg_ French Republic. Budget for 19^5» Ministry of Finance and Economic
Affairs, Directorate of the Budget, Paris, Imprimerie Nationale
(Government Printing Office), 1965.
Yet the programme and performance budget, in spite of its degree of refine-
ment and sophistication, is still no more than a descriptive tool for the scope of
action of the government, insofar as it does not aim at examining alternative
means for reaching the targets, nor does it suggest the main programmes or projects
to be adopted by the public authorities.
To use the expression of William Gorham(l), the reform has "an overwhelmingly
long title': Planning-Programming-Budgeting Systems.
(1) William Gorham was until May 1968 Assistant Secretary in the Department of
Health, Education and Welfare in the Government of the United States»
IIEP/TM/44/69 " P a S e 10
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IIEP/TM/44/69 - Page 12
In other words, in the first case the budget is rationalized by being placed
at the service of the_plan and in the second case the plan is established for the
improvement of the budget.
As Novick said(l).
This means that the PPBS system implies a thorough systems analysis leading
to choosing the 'preferred mix" of a set of proposed projects which cannot all be
undertaken» Such decisions present very complex problems and require first
qualitative discussion of some of the more relevant non-quantifiable issues involved
in the decision: e.g» political factors, non-quantifiable "spillover8 effects and
the like, and second the adoption of a set of q_uantIf^blg__ggj^Ëg^gJl criteria to
which the costs and advantages of competitive programmes can be compared,(< )
The option stage can be regarded in more than one way, and the criteria will
naturally vary according to the viewpoint adopted. It is clear that programme
analysis for the purpose of rationalising budget choices can never take into account
all the possible consequences of the adoption of a given programme. To accomplish
that, it would be necessary to establish a "national satisfaction function5 by which,
for example, the respective consequences of the assignment of the same amount of
funds to education and to defence could be measured. Such a high level of decision-
making dealing with major matters of allocation must be (and are) based primarily on
intuition and judgment-
Analysis will be more helpful if it is to provide solutions for decisions on
a somewhat lower level, these solutions in turn might provide valuable information
for higher-level decisions. It is on these somewhat lower decision levels
(technically called "suboptimlzation") where the analytical studies are likely to
have the highest payoff. This is incidentally one of the advantages of PPBS insofar
that it leads to increased possibilities of decentralization and to the creation of
incentives for efficiency»
(1) 'QH^S^,_^-SLjjJ:fLc:0;TУ of_ Program Bu^^e^tinp-', The Rand Corporation, Santa Monica,,
California, October 19" .';•
(2) Taking as an example decisions to be made among alternatives proposed for water
resources projects,, G.H. Fisher from the Rand Corporation has established
Table 5 as a frame of a summary of results of such systems analysis, (TJ^IL
Analyticj^_jas_es_of ^S^stemsAnaJ.^sJ^s,, .May 1966).
IIEP/TM/44/69 - page 15
Table 5* The use of systems _алаlysis In choosing the preferred mix project
Proposed projects
Analytical factor 1 2 3 k „.. n
(a) Present value of estimated benefits minus present value of estimated costs.
(b) The rate of discount which reduces present worth to zero.
To come back to the selection criteria, there are numerous techniques used;
for instance cost-effectiveness, cost utility and cost-=benefit analysis» The
advantages and the limitations of such techniques are dealt with elsewhere« However,
two remarks should be made here:
The PPBS is a method which covers, in theory, a very wide field since it
brings together the planning, the budgeting, and the rational appraisal of the
possible options. In fact, however, PPBS is not a substitute for overall planning
since it cannot, in the present 'state of the art 1 , integrate eonerently the full
range of the nation's activities; and, further, in view of the difficulty of
establishing selection criteria, it does not yet provide by itself final solutions
to questions of budgetary choices.