Question

Define – then compare and contrast – line-item budgeting, performance budgeting, planning programming budgeting system (PPBS), and zero-base budgeting (ZBB). What are the features, advantages, and disadvantages of each? Which do you think public administrator in local government and nonprofit agencies should be suing today? Defend your answer.

Answer 1

Line Item budget:- Line item budget can be seen as the budget in which the groping of individual financial statement is done on the basis of cost centers of departments. This is mainly done to show the comparison between the financial data of the previous budget period and the forecasted figures for the existing or a future period. The main advantage of this budgeting is that it is possible to break down the budget in different categories and it facilitates easy comprehensions. The disadvantage is that it can present mid-year financial crisis and the interchange of funds between the classes is not possible.

.A performance budget can be seen as a budge which represents the input of different resources and the output of various services for individual organizational units. This is commonly used in the government organizations to express the relationship between the taxpayer funds and the results of the services being offered by federal, state or local governments.

Advantages:-

It facilitates the forward planning

It is possible to appreciate the existing cost of carrying the government objectives

Having better public disclosure

Improves government accountability

Disadvantages:-

It provides a rationale for the irrational activities

In order to have full rationality, it will require the listing of various alternative methods which can be used to spend the money.

Planning, Programming, and Budgeting System (PPBS) can be seen as the combination of various methods in a planning and budgeting process for recognizing , costing and assigning the density of resources for having the priorities and strategies in a vital program and for facilitating the cost forecasting, expenditure and accomplishments within the current financial year or a longer period of time.

Advantages:-

It can be used to give priorities of the projects

Facilitates the planning and delivering of the services in future

Finding out the fields requiring higher funds

Disadvantages:-

It is commonly used in public services and NGOs

The main focus remains on the programs

It is quite difficult and time-consuming process.

Zero-based budgeting (ZBB) can be seen as a budgeting method in which different expenses are justified for every new period. The main objective is to begin with a zero base and each organizational function is analyzed for the requirements and costs. Then on the basis of the requirements, the budget is created for the next period irrespective of each budget can be lower or higher than the earlier period.

Advantages:-

Determination of inefficient operations can be done

Increased involvement of manpower

Quick to respond to the changing business environment

Disadvantages:-

Focuses on short-term advantages

He budgeting can be too rigid

Demotivation of managers due to huge time spent on budget preparation

In my opinion, the public administrator in local government and non-profit agencies should go for performance budget as it expresses the relationship between the taxpayer funds and the results of the services being offered by federal, state or local governments